North Dakota’s low rates and 40% exclusion
North Dakota has one of the lightest taxes on gains of any income-tax state. For 2026 the first $49,575 of taxable income for a single filer is taxed at 0%, then 1.95%, then 2.5% above $250,400. On top of that, 40% of net long-term capital gain is excluded, which caps the effective rate on an eligible long-term gain at 1.5%.
For a single filer whose North Dakota taxable income, after that exclusion, goes from $60,000 to $110,000, tax rises from $203.29 to $1,178.29. Short-term gains get no exclusion, and losses must be netted before the 40% is applied, so the exclusion is figured on the net long-term total rather than on each sale.
| Parameter | Value | Effective | Primary source |
|---|---|---|---|
| 2026 single schedule | 0% to $49,575; 1.95% to $250,400; $3,916.09 plus 2.5% above | 2026 tax year | 2026 Form ND-1ES rate schedules |
| 2026 joint and surviving spouse schedule | 0% to $82,800; 1.95% to $304,850; $4,329.98 plus 2.5% above | 2026 tax year | 2026 Form ND-1ES rate schedules |
| 2026 head of household schedule | 0% to $66,400; 1.95% to $277,600; $4,118.40 plus 2.5% above | 2026 tax year | 2026 Form ND-1ES rate schedules |
| 2026 married filing separately schedule | 0% to $41,400; 1.95% to $152,425; $2,164.99 plus 2.5% above | 2026 tax year | 2026 Form ND-1ES rate schedules |
| Long-term gain exclusion | 40% of net long-term capital gain over net short-term capital loss, only to the extent the gain is allocated to North Dakota | Current chapter 57-38 | N.D.C.C. 57-38-30.3(2)(d)(1) |
| Qualified dividends | Also reduced by 40% while federal law taxes them below ordinary rates | Current chapter 57-38 | N.D.C.C. 57-38-30.3(2)(d)(2) |
North Dakota approved resident annual comparison
North Dakota’s actual 2026 ND-1ES publishes four filing-status schedules. The single zero-rate band ends at $49,575, followed by 1.95% and 2.5% bands; joint and qualifying surviving spouse status uses a zero-rate boundary of $82,800. The printed cent-based schedule anchors are used directly for an annual estimate, rather than replacing them with rounded marginal sums.
North Dakota’s 40% capital deduction is based on the eligible positive net long-term category after short-term loss netting and relevant prior state exclusions. It is not 40% of gross sale proceeds or every positive individual sale. Qualifying dividend treatment also requires the actual federal and state classification. Prepare the complete ND taxable-income reconciliation before entering either annual scenario.
Supply independently approved whole-dollar state taxable balances and full usable nonrefundable credits in the resident mode. Keep the deduction worksheets available because federal gain input never auto-prepares the ND base. This cent schedule estimate does not assert final filing-table or whole-dollar return equivalence. Other taxes, residency allocation, refundable credit changes and unsupported preferential categories require final prepared liabilities.
North Dakota preparation checklist
- Actual state taxable bases after approved basis, netting, deductions and exemptions
- Net long-term / short-term loss reconciliation
- Printed 2026 cent anchors and deductions