Does North Dakota tax capital gains?

Yes, but at a reduced level. North Dakota excludes 40% of net long-term capital gains from state taxable income, then taxes the remaining 60% at its ordinary graduated rates, which top out at just 2.5%. Short-term gains receive no exclusion and are fully taxed.

What is North Dakota's 40% capital gains exclusion?

Under N.D.C.C. 57-38-01.6, North Dakota lets taxpayers subtract 40 percent of their net long-term capital gain when computing state taxable income. Only the remaining 60 percent is taxed, which makes North Dakota's effective rate on long-term gains very low.

How are federal long-term capital gains taxed?

Long-term gains are taxed at 0%, 15%, or 20% depending on your total taxable income, with the gain stacked on top of your ordinary income. A 3.8% Net Investment Income Tax may also apply above $200,000 (single) or $250,000 (married filing jointly) of modified AGI.

Are short-term gains treated differently?

Yes. Short-term gains (assets held one year or less) are taxed as ordinary income at both the federal and North Dakota level, and North Dakota's 40% exclusion does not apply. You enter your federal marginal rate for the short-term federal estimate.

Is this an exact tax figure?

No. It is a planning estimate. It does not model the alternative minimum tax, state credits, deductions beyond bracket stacking, or special asset rules such as collectibles or qualified small business stock. Confirm your figures with a tax professional.

North Dakota Capital Gains Tax Calculator

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Selling an investment in North Dakota triggers tax at two levels: the federal government and the state. North Dakota is unusually friendly to long-term investors because it excludes 40 percent of net long-term gains and then taxes the rest at very low rates. This calculator combines both layers.

How it works

The federal long-term tax stacks your gain on top of your other taxable income and fills the 0, 15, and 20 percent brackets in order. The Net Investment Income Tax adds 3.8 percent on investment income above the modified-AGI threshold for your filing status.

For the state piece, North Dakota first removes 40 percent of a net long-term gain, then taxes the remaining 60 percent at its graduated rates:

ND included gain = gain × (1 − 0.40)   (long-term)
ND tax = bracket tax on (other income + included gain) − bracket tax on other income
ND brackets = 0% / 1.95% / 2.5%

Short-term gains skip the exclusion and are fully included, taxed at your ordinary federal rate and North Dakota’s ordinary brackets.

Example

A single filer with 80,000 dollars of other income realizes a 20,000 dollar long-term gain. Federally most of it falls in the 15 percent bracket. North Dakota excludes 8,000 dollars (40 percent), taxes the remaining 12,000 dollars, and because that slice sits in the 1.95 percent band the state tax is only a few hundred dollars — one of the lightest state capital-gains burdens in the country.

Notes

This is a planning estimate, not tax advice. It does not handle the AMT, state credits, or special asset categories. The 40 percent exclusion applies to net long-term gains; capital losses must be netted first. Verify federal rules at irs.gov and North Dakota rules at tax.nd.gov.