North Dakota Salary Paycheck Calculator
If you have employees in North Dakota, you have a number of compliance tasks to complete. There are state and federal payroll taxes, payroll wage reports, and several paycheck rules you’ll need to follow. But don’t sweat it. We’ve answered the most common questions about payroll taxes in North Dakota below.
North Dakota state payroll taxes
How do employers calculate North Dakota withholding tax?
Most employees will need to have North Dakota state income taxes withheld from their paychecks. The exception is for workers who are residents of Minnesota and Montana. These residents are exempt from having North Dakota tax taken out of their pay through a tax agreement. Each year, these employees need to complete Form NDW-R, Reciprocity Exemption from Withholding.
All other workers will need to complete federal Form W-4, Employee’s Withholding Certificate. Unlike most states which have their own state withholding certificate, North Dakota relies on the federal form to help determine how much tax to take out. With information from Form W-4 and your employee’s gross wages, you’ll need to look at the tax withholding tables or use the percentage method calculations to figure the withholding amount.
When does North Dakota withholding tax need to be paid to the state?
Nearly all employers will pay their withholding tax quarterly—but if you withhold less than $500 a year, you can pay annually.
When you make quarterly payments, you’ll also need to send in a payroll report on Form 306, Income Tax Withholding Return. For prompt and accurate posting, North Dakota suggests that you file and pay online. But they will accept paper reports and checks.
There is also an annual report all employers need to complete. Use Form 307, North Dakota Transmittal of Wage and Tax Statement, and send copies of your federal Form W-2, Wage and Tax Statement as well as Form 1099.
How is North Dakota’s unemployment tax calculated?
Employers pay unemployment tax on the first $38,400 of each employee’s pay each year. This amount is called the wage base, and it can change.
New employers pay rates between 1.02% and 9.69% depending on their industry. Typically construction industry employers will pay the highest rates. Established employers with a history of using the unemployment system will pay rates based on that history. Rates currently range from 0.08% to 9.69%. Each quarter, payroll reports and tax payments are due, and North Dakota requires that both be done online.
What’s the salary threshold in North Dakota?
Because the state of North Dakota doesn’t have its own salary threshold, it adheres to the federal salary threshold, which is now $684 per week (equivalent to $35,568 per year for a full-year worker). The Department of Labor permits employers to count some bonuses, commissions, and other incentive payments toward meeting the standard salary level (up to 10%). Employees who earn at least $107,432 per year may qualify as “highly compensated.” See this Department of Labor fact sheet for details.
Do new employers need to report new employees to the state?
Employers have 20 days from the new hire’s or rehired employees’ first day of work to report them to the state directory.
When is Workers’ Compensation insurance required in North Dakota?
Requirements to obtain Workers’ Compensation vary by state, this table outlines some of these requirements. If you determine that your company is required to purchase Workers’ Compensation insurance in your state, learn how to sign up for this insurance with Gusto. Sometimes, companies get a request for a workers’ comp audit—head to this article and click the workers’ comp audit reports dropdown for more information.
When are final paychecks due to employees?
Employers have until the next regularly scheduled payday to provide final wages to any worker who resigns or is let go.
Federal payroll taxes
In addition to state taxes, you’ll need to stay on top of federal payroll taxes.
Which federal payroll taxes apply to my company and employees?
There are four federal payroll taxes that either your business pays or you withhold from your employees’ paychecks.
|Federal Payroll Taxes|
|Paid by Employee||Paid by Employer||Paid by Employee and Employer|
|Federal Income Tax (FIT)|
Additional Medicare Tax
|Federal Unemployment Tax (FUTA)||FICA (Social Security and Medicare)|
What is FICA tax, who pays it, and how?
The Federal Insurance Contributions Act, or FICA tax, is made up of the Medicare tax and the Social Security tax. In 2022, the Social Security tax requires employers and employees to each contribute 6.2% of wages up to $147,000. The Medicare tax requires each to contribute 1.45% of all wages. See the IRS webpage for details, like maximum thresholds.
Do I have to pay the federal unemployment tax?
Yes. Like the state, the federal government also has an unemployment tax. It’s called FUTA and it’s an annual tax employers pay on the first $7,000 of each employee’s wages. The FUTA rate for 2022 is 6%, but many employers only have to pay 0.6% each year.
How will I know the amount to withhold from my employees’ paychecks for the federal income tax?
The federal income tax (FIT) withholding is driven primarily by the information on Form W-4.
Each employee should complete a W-4 when they begin working for you. You’ll input information from the W-4 into your payroll software to calculate the withholding. New Form W-4s are not required each year, but employees should consider updating it when their tax situation changes.
What is the Additional Medicare tax?
The Additional Medicare tax is relatively new compared with the other federal payroll taxes. It was established in 2013 as a part of the Affordable Care Act. Whether or not your employee owes this tax depends on their earnings and tax filing status. However, as an employer, you’re responsible for withholding this tax for any employee with wages over $200,000 in a year. The withholding rate is 0.9% of the excess wages.
When do I have to pay the federal payroll taxes?
Your payment and filing frequency is controlled by the amount of tax you owe. You’ll pay annually, quarterly, monthly, or semi-weekly.
|Federal Payroll Tax Payment Frequency|
|Monthly or semi-weekly||Quarterly or annually|
|Federal income tax|
|Additional Medicare tax|
The IRS has a helpful guide to help you understand federal tax deposits.
With your most pressing North Dakota payroll questions answered, you’re on your way to processing payroll with ease. If you don’t want to do it manually, try Gusto!