North Dakota levies a state sales tax rate of 5 percent for most retail sales. Certain items have different sales and use tax rates. The state also allows cities and counties to levy an additional sales tax, lodging taxes, and other special taxes.
This guide does not fully describe all of North Dakota’s laws and regulations regarding taxes. Businesses should contact a business attorney or visit the North Dakota Tax website to learn more about the rules, regulations, tax laws and tax information associated with their industries and the types of taxes due.
Types of taxes
North Dakota has several taxes in addition to the sales and use tax for the state, counties, and cities.
Sales and use tax for sales of goods and services
The sales tax rate for North Dakota is 5 percent plus the applicable rate for local jurisdictions. Additionally, the state reduces the tax rate for business taxpayers purchasing new farm machinery for exclusive agricultural use to 3 percent and new mobile homes to 3 percent.
The use tax works in conjunction with the sales tax. The use tax rate is the same as the sales tax rate. If a business filer or individual purchased taxable tangible personal property but did not pay tax at the time of the purchase, the business or individual must file a sales and use tax return and pay the use tax. If a business purchased items that it planned on selling but instead used or stored the items, the business owes use tax.
Lodging (Hotel room occupancy tax)
While North Dakota does not charge a lodging tax, cities and counties can charge a tax as long as it does not exceed 2 percent. The lodging and restaurant tax is 1 percent on sales. The tax collected goes to the local government instead of the state.
Vehicle rentals
If a city has an airport within city limits, it can charge a local motor vehicle rental tax. Currently (2022), only Bismarck, Grand Forks and Minot impose a vehicle rental tax. The rate is 1 percent and is paid at the rental facility in the airport. The tax is distributed to the local government that imposed the tax.
Alcohol tax
Breweries, wineries, and distilleries, along with alcoholic beverage wholesalers, microbrew pubs, and out-of-state direct shippers, need a license from the Office of the State Tax Commissioner. The licenses expire, so they must be renewed by January 1 of each year.
Suppliers also need a license, but their license does not expire. Business taxpayers must file taxes through the North Dakota Taxpayer Access Point.
The taxes vary per type of alcohol and may vary per type of filer. North Dakota Tax provides various forms for businesses to download and complete before entering the information online. Each form has the appropriate tax.
Tobacco taxes
Wholesalers pay a tobacco tax, as do retailers who sell untaxed cigarettes and tobacco products. If an individual purchases untaxed cigarettes or tobacco products from out-of-state sources, they must also pay the tax. Individuals can file taxes using Form 44UT.
Gray market and repatriated cigarettes are illegal to sell and possess in North Dakota. The state does not stamp cigarette packs. Stamped packs are subject to seizure and assessment of tax if the state finds them available for sale to consumers.
North Dakota taxes cigarettes using mills. A mill is 1/10 of a cent.
- 22 mills per cigarette for those weighing less than 3 pounds per thousand. A pack of 20 cigarettes is 22 mills times 20 cigarettes, which is $0.44 tax. A carton is 200 cigarettes. Multiply 22 mills by 200 for a tax of $4.40.
- 22.5 mills per cigarette for cigarettes weighing more than 3 pounds per thousand.
- Roll-your-own tobacco: 1 cigarette is .09 ounces of tobacco. Sales of bulk tobacco are converted to taxable cigarettes.
- Pipe tobacco and cigars: 28 percent of the wholesale purchase price.
- Snuff: $0.60 per ounce.
- Chewing tobacco: 16 cents per ounce.
Motor fuel taxes
North Dakota has three types of motor fuel tax:
- Motor vehicle fuel tax: Includes gasoline and gasohol. $0.23 per gallon sold to retailers and consumers.
- Special fuel tax: Includes diesel, kerosene, biodiesel, compressed natural gas, liquefied natural gas, liquified petroleum gas (propane), soy oil, waste oil, and other blending components. The tax is $0.23 per gallon for use in licensed vehicles, $0.04 per gallon on dyed (red) diesel, biodiesel, kerosene, waste oil, CNG, soy oil and other blending components. If LPG is not used in a vehicle, the tax is 2 percent.
- Aviation fuel tax: $0.08 per gallon for gasoline and jet fuels.
Oil and gas severance tax
Businesses that produce oil and gas must pay an extraction tax.
- Oil gross production tax: 5 percent on the gross value at the well. If the well is produced from a state, federal or municipal holding or from an American Indian holding within a reservation’s boundaries, it is exempt from the tax.
- Oil extraction tax: 5 percent on the gross value at the point of extraction of oil from the earth. Stripper wells that qualify based on production are exempt. The tax is reduced to 2 percent for qualified production wells that are outside the Three Forks and Bakken formations.
- Gas gross production tax: This tax is adjusted annually and is a flat rate per 1,000 cubic feet of nonexempt gas produced in the state. The annual adjustments depend on the average producer price index for gas fuels. Businesses can find the rate at The Office of State Tax Commissioner on June 1. The new tax takes effect on July 1.
Prepaid wireless 911 fee
The prepaid wireless 911 fee is collected by sellers of prepaid wireless services, including downloading digital content and products. The fee is charged in lieu of the 911 feet collected from telecommunications providers for landlines and wireless services. The fee is 2.5 percent of the sale.
Telecommunications companies pay a 2.5-percent tax on gross receipts in lieu of property tax on any property that the companies use in two-way communication service.
Discretionary taxes (Local tax rates)
North Dakota’s counties and cities can levy sales and use taxes and special taxes. Changes and new local sales taxes are posted 60 days before the changes become effective. They usually become effective on the first day of a new quarter. The tax percentage depends on the business location.
Registering for and filing North Dakota's taxes
Any business that has sales of tangible personal property, charges admissions to recreational activities, and rents lodging accommodations must have a sales tax permit. Businesses should apply for a tax permit at least 30 days before opening the business. Permits are not transferable, so anyone that purchases an existing business must apply for a new permit.
Whether a business files monthly, quarterly, or annually depends on the amount of tax collected during the period. When you apply for your permit, North Dakota Tax will determine how often the business pays the tax. A business can change the filing frequency by contacting the office.
A business can file tax returns and remit payment electronically.
Due dates for North Dakota’s sales taxes
North Dakota keeps a calendar for tax due dates.
- Monthly sales tax returns and payments are due on the last day of the month following the month they were collected. For example, taxes collected in January are due on or before the last day of February.
- Annual returns and payments are due on or before January 31 of the next year. For example, taxes collected in 2022 are due on or before January 31, 2023.
- Quarterly collections are due on the last day of the month following the quarter. For example, taxes collected during the second quarter – April through June – are due on or before July 31.
North Dakota sales tax holiday
North Dakota does not have a sales tax holiday.
North Dakota sales tax exemptions
North Dakota has several sales tax exemptions by industry, including:
- Agricultural commodity processing plant construction materials.
- Carbon dioxide for enhanced recovery of oil and gas or secure geological storage.
- Coal gasification byproducts.
- Coal mine machinery or equipment.
- Computer and telecommunications equipment.
- Data centers.
- Electrical generating facilities.
- Fertilizer and chemical processing facilities.
- Gas processing facilities.
- Liquefied gas processing.
- Manufacturing, agricultural, or recycling equipment.
- Oil refineries.
- Straddle or fractionator plant.
Nonprofits are not exempt from paying sales taxes. However, certain businesses are exempt, including:
- Federal, state, and local governments.
- Public and private schools.
- Hospitals and nursing homes.
- Intermediate and basic care facilities that are licensed by the Department of Health
- Nonprofit voluntary health groups that are recognized by the Trusts National Health Council.
- State and local fairs.
- Nonprofit meal delivery groups, but only on items that pass to the final consumer of the meal, including containers, wrappers and packages.
- Remote and Marketplace Sellers
A business that is not located in North Dakota but sells tangible personal property, certain digital products, and services in North Dakota is a remote seller. Marketplace facilitators must also collect taxes.
If a remote seller or marketplace facilitator does not have sales that exceed $100,000 in the previous year, it may qualify for the small seller exemption. They will not have to collect sales tax. However, most businesses collect sales taxes on behalf of their consumers and marketplace sellers as a convenience.
FAQs
North Dakota’s sales and use tax is 5 percent. Businesses must also add the percentage that local jurisdictions charge for sales and use taxes.
Download a resale certificate, complete it and give a copy to the seller. Make sure you keep a copy for your records.
In most cases, yes. Check with each state’s rules. Most states have a small seller exemption of $100,000 in gross receipts or 200 separate transactions. However, most sellers collect sales tax for the convenience of the buyer.
