North Dakota Retirement Income Tax: A Guide for Seniors (2026)

North Dakota lets every filer deduct the taxable part of their Social Security, and its 2025 tax rates on other income run from 0 to 2.5 percent.1 Since the 2021 tax year, the income cap that used to limit the state's Social Security deduction is gone, so benefits come off the return no matter how much else you earn. Other retirement income is still taxable here, but at those rates the bill is usually small. The North Dakota retirement income tax leans on low rates rather than on senior carve-outs.

This guide breaks down how Social Security, pensions, and IRA or 401(k) withdrawals are each treated, and why the low rates matter as much as the exemptions.

In This Guide

• North Dakota Retirement Income Tax at a Glance
• North Dakota Retirement Income Tax: How It Works
• Social Security
• Pensions
• IRAs and 401(k)s
• Putting It Together
• Frequently Asked Questions
• Next Steps

North Dakota Retirement Income Tax at a Glance

North Dakota's story has two parts, and both work in a retiree's favor. The federally taxable part of Social Security comes off the return. Everything else, pensions and account withdrawals alike, stays on the return, but it runs through a rate schedule so low that it rarely produces a large bill. The table below lays out each income type.

For tax year 2025, North Dakota's income tax starts with a 0 percent bottom bracket and tops out at 2.5 percent, and the bracket levels are adjusted for inflation each year.1 At that ceiling, income the Social Security deduction does not reach costs a North Dakota retiree relatively little in state tax.

North Dakota Retirement Income Tax: How It Works

North Dakota does not sort retirement income into separate public-versus-private pension buckets. Instead it leans on two levers: an uncapped Social Security deduction and a low rate schedule on everything else.

The Social Security change is the headline. Beginning with the 2021 tax year, the state removed the adjusted-gross-income limit on its Social Security deduction, which for tax years 2019 and 2020 was available only at an AGI of $50,000 or less ($100,000 or less married filing jointly).1 The North Dakota Office of State Tax Commissioner documents that change in its income tax history. With the cap gone, every filer can deduct the federally taxable part of their benefits.

Retirement income other than Social Security is not covered by that deduction and stays subject to North Dakota income tax. That sounds harsh until you look at the 2025 rates: a schedule running from a 0 percent bottom bracket to a 2.5 percent top rate.1 A flat exemption matters less when the rate on the income it would have shielded is already tiny.

The low rates are recent. North Dakota replaced its old five-bracket income tax with a three-bracket schedule carrying overall lower rates, including a first bracket set at zero and a top rate cut to 2.5 percent.1 For tax year 2025 the three brackets work like this: taxable income up to $48,475 is taxed at 0 percent, income from there up to $244,825 is taxed at 1.95 percent, and anything above $244,825 is taxed at 2.5 percent.1 For most retirees, that means a large share of taxable retirement income falls in the 0 percent or 1.95 percent range, and only unusually high incomes reach the 2.5 percent top rate at all.

Social Security

Since the 2021 tax year, North Dakota has let every individual deduct the federally taxable part of their Social Security benefits from North Dakota taxable income, with no income limit.1 The deduction used to come with an income cap, and Senate Bill 2351 removed it, so the deduction now covers everyone however high their other income runs.

This is a clean rule with no age test or income test attached. A retiree with a large pension gets the same Social Security deduction as a retiree living on benefits alone. For higher-income seniors who lost the deduction under the old cap, this is the single most valuable piece of the North Dakota retirement income tax.

Pensions

Pension income is retirement income other than Social Security, so the Social Security deduction does not reach it and it stays subject to North Dakota income tax.1 If your pension comes from a particular system, ask the Office of State Tax Commissioner whether any other subtraction applies to it.

What softens this is the rate. Pension income that lands on your return is taxed on the same schedule as any other income, and for tax year 2025 that schedule tops out at 2.5 percent.1 For a retiree whose pension lands in the top bracket, that 2.5 percent is the ceiling on what the state can take. The practical upshot: whatever the Social Security deduction does not reach was taxed at 2.5 percent or less for 2025.

IRAs and 401(k)s

Traditional IRA and 401(k) withdrawals are retirement income other than Social Security, so they stay subject to North Dakota income tax on the same schedule as pensions.1 So a taxable distribution counts toward North Dakota income in the year you take it.

Again, the low rates do the heavy lifting. A retiree drawing steadily from a 401(k) to cover living costs or care faces a state bill measured against a top rate of 2.5 percent, with the first $48,475 of a single filer's 2025 taxable income taxed at 0 percent.1 If you are weighing how much to draw from these accounts to cover care, retirement accounts for care walks through the tradeoffs.

Putting It Together

The practical takeaway is that North Dakota rewards retirees in a different way than the exemption-heavy states. It does not carve out pensions or account withdrawals, but it takes the federally taxable part of Social Security off the return and then taxes whatever remains at rates so low the total bill stays small.

Picture a single retiree with $24,000 in Social Security and $40,000 in pension and IRA income. Whatever part of the $24,000 in Social Security is federally taxable is deducted, so it never enters the North Dakota calculation. The remaining $40,000 is taxable, but at the state's 2025 rates, with the bottom bracket at 0 percent and the top at 2.5 percent. Even if the entire $40,000 were taxed at the 2.5 percent top rate, the state bill would be $1,000, and because the lower brackets are taxed at less than 2.5 percent (the bottom bracket at 0 percent), the actual figure is lower still.1 The figures here are hypothetical and shown only to illustrate how the low rate schedule shapes the result; they are not a real case and not a prediction of your own outcome.

This is general information rather than personalized tax advice, and the exact brackets and any year-to-year changes are worth confirming with the North Dakota Office of State Tax Commissioner or a tax professional before you plan withdrawals. If retirement savings are part of how you will fund care, building a senior care funding plan is a useful next step.

Next Steps

If you are retired in North Dakota, the math is short. Social Security comes off the top, and everything else is taxed lightly.

• Confirm the Social Security deduction applies; it carries no income limit for 2021 and later.
• Expect pensions and account withdrawals to be taxable, since the Social Security deduction does not reach them.
• Anchor on the rates: for tax year 2025, the three-bracket schedule runs from a 0 percent bottom bracket through 1.95 percent to a 2.5 percent top rate.1
• Estimate your bill against that top rate, which keeps even fully taxable income modest.

If you are mapping out how to pay for care, how to pay for senior care covers the main routes.

Learn More

Find personalized help making sense of the North Dakota retirement income tax at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.