Does North Dakota tax Social Security benefits?

No. North Dakota eliminated state income tax on Social Security benefits beginning with the 2021 tax year. Your Social Security income is fully exempt from North Dakota income tax regardless of your other income.

Is military retirement pay taxed in North Dakota?

No. North Dakota allows a full deduction for military retirement pay, so military pensions are exempt from state income tax. Check the military box in the tool to apply this exemption to your pension entry.

How does North Dakota tax pensions and 401(k) withdrawals?

Civilian pensions and distributions from IRAs, 401(k)s, and similar defined-contribution plans are taxed as ordinary income in North Dakota. However, the state's rates are very low, with a 0% band followed by 1.95% and a top rate of just 2.5%.

Why are North Dakota's retirement taxes so low?

North Dakota's 2023 income tax reform created a large zero-percent bracket and cut the top rate to 2.5%. Combined with the Social Security and military exemptions, many retirees owe little or no North Dakota income tax.

Does this include the federal tax on my retirement income?

No. This tool models only North Dakota state income tax. Your federal tax on Social Security, pensions, and retirement-account withdrawals is calculated separately and can be larger than the state amount.

North Dakota Retirement Income Tax Calculator

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North Dakota is one of the more retirement-friendly states. It fully exempts Social Security and military retirement pay, and even the income it does tax — civilian pensions and retirement-account withdrawals — faces some of the lowest rates in the country. This calculator shows exactly what the state taxes.

How it works

Each income stream is classified, then the taxable portion runs through North Dakota’s graduated brackets:

Social Security        → exempt (0 taxed)
Military pension        → exempt when flagged
Civilian pension        → taxed as ordinary income
IRA / 401(k) withdrawals → taxed as ordinary income
ND brackets: 0% / 1.95% / 2.5%

Because North Dakota starts its calculation from your federal taxable income, the federal standard deduction has already reduced the base before these low state rates apply, which is why the effective rate is often near zero.

Example

A married couple with 30,000 dollars of Social Security, an 18,000 dollar civilian pension, and 20,000 dollars of 401(k) withdrawals exempts the Social Security entirely. The 38,000 dollars of pension and 401(k) income falls largely in North Dakota’s 0 percent band, so the state tax is minimal — often under a few hundred dollars.

Notes

This estimates North Dakota state income tax only, not your federal liability. It does not model state credits, the marriage penalty relief, or part-year residency. Whether a specific pension qualifies as military retirement for the deduction depends on the source of the payments. Verify at tax.nd.gov.