North Dakota Payroll Tax Guide (2026)
North Dakota keeps one of the lightest income tax withholding loads in the country, just two taxable brackets at 1.95 and 2.50%, but it pairs that with one of the largest unemployment wage bases anywhere at $46,600 for 2026, and it hits brand new construction employers at 9.67%.[4]
North Dakota payroll at a glance
North Dakota runs two state payroll taxes: income tax withholding taken out of employee pay, and unemployment insurance contributions that employers fund alone on the first $46,600 of each worker’s wages.[4]
What changed for North Dakota payroll in 2026
Six items moved for North Dakota employers this year. Anything below is what have changed since the 2025 tables, so a rate card carried over from last year will be wrong in at least one place.
2026 North Dakota payroll tax calculator
Enter one employee’s annual gross wages to see what the employer owes, what comes out of the paycheque, and the true cost of employment.
Employer pays
Withheld from the employee
State income tax withholding is not included above: it depends on the employee’s Federal Form W-4. North Dakota has no separate state withholding certificate. Residents of Minnesota and Montana who qualify under reciprocity file Form NDW-R to be exempted, and must renew it by February 28 each year. and filing status, so it cannot be estimated from gross pay alone.
Payroll tax rates & the nexus question
North Dakota runs two state payroll taxes. The table below is the whole state layer for 2026.[4]
The state payroll taxes
| Tax | Paid by | 2026 rate | Wage base |
|---|---|---|---|
| UI | Employer | 0.07%–9.67%; 1.00% new | $46,600 |
| Income tax withholding | Employee | 1.95%–2.50% | No limit |
Job Service North Dakota publishes one pair of rate schedules each year. For 2026 positive balance employers run from 0.07% to 1.10% by reserve ratio, and negative balance employers run from 6.07% to 9.67%. A new non-construction employer starts at 1.00%, or 6.07% if the predecessor account it inherits is negative, and a new construction employer starts at 9.67%. The wage base is reset every year at 70% of the calculated statewide average annual payroll.[4]
Supplemental wages have their own rate. Bonuses, commissions and other supplemental payments are withheld at 1.50% when paid separately from regular wages. That is a state rate only; federal supplemental withholding is a separate 22% layer.[1]
Who has to register
Register within 20 days of meeting any threshold. A regular employer is liable after paying $1,500 or more in wages in a calendar quarter, or after having one or more workers in 20 different weeks in a calendar year. Agricultural employers are liable at $20,000 of wages in a quarter or 10 or more workers in 20 weeks, and household employers at $1,000 of cash wages in a quarter.[4] Income tax withholding is administered separately by North Dakota Office of State Tax Commissioner, so most employers end up with two state account numbers, not one.
Multistate and remote employees
When an employee works in more than one state, the four-part test below decides which state the wages are reported to. The tests run in order: you stop at the first one that gives an answer.
- 1. Localisation of service→
- 2. Base of operations→
- 3. Place of direction & control→
- 4. Employee’s residence
One remote employee is usually enough. A single person working from home in North Dakota generally creates an obligation to register and report wages here, even if the business has no office, property or customers in the state.
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Ask a Payroll SpecialistRegistration & return filing
Registration is online and free. The unemployment account and, where one exists, the withholding account are opened separately and carry different numbers.[4]
How to register
- Cross the wage threshold→
- UI EASY→
- Receive account number→
- File & deposit online
Register within 20 days of meeting any threshold. A regular employer is liable after paying $1,500 or more in wages in a calendar quarter, or after having one or more workers in 20 different weeks in a calendar year. Agricultural employers are liable at $20,000 of wages in a quarter or 10 or more workers in 20 weeks, and household employers at $1,000 of cash wages in a quarter.[4]
Deposit schedule
Withholding is reported and paid quarterly on Form 306. An employer may switch to a single annual Form 306 due January 31 only if it filed all four quarterly returns for the prior year, paid each of them in full and on time, and withheld less than $1,000 for the whole year. Electronic filing is mandatory if withholding for the previous calendar year was $1,000 or more, or if a third party payroll provider files the employer’s federal returns electronically.[1]
Returns, reports & due dates
| Form | What it is | Due |
|---|---|---|
| Employer’s Contribution and Wage Report, filed electronically through UI EASY or Secure FTP | Quarterly unemployment return | April 30, July 31, October 31, January 31 |
| Form 306, Income Tax Withholding Return, each quarter, and Form 307, Transmittal of… | Income tax withholding returns | Withholding is reported and paid quarterly on Form 306. An employer ma |
| Annual reconciliation | Year-end withholding reconciliation | January 31 |
| Form 941 | Federal quarterly return | Last day of the month after quarter end |
| Form 940 | Federal unemployment, annual | January 31 |
| New hire report | Report of newly hired employees | Within 20 days of start date |
Quarterly unemployment returns are due April 30, July 31, October 31, January 31. A return filed one day late is delinquent, and in most states the penalty attaches to the return, not the payment.[4]
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Subject wages vs. exempt payments
Not every dollar an employee receives is a taxable wage. The split below governs what goes into the unemployment wage base and what is reported at year end.[4]
Subject wages
- Salaries, hourly pay, overtime and piece rates
- Commissions, bonuses and incentive pay
- Most cash tips reported by the employee
- Vacation, holiday and paid sick leave when taken as wages
- Severance and payments in lieu of notice
- The cash value of meals and lodging provided as compensation
- Employer contributions to a non-qualified deferred compensation plan
Not subject
- Reimbursements of genuine business expenses under an accountable plan
- Employer contributions to a qualified retirement plan
- Employer-paid premiums for accident and health insurance
- Most third-party sick pay after the sixth calendar month
- Payments to a genuine independent contractor
- Workers compensation benefits
The wage base is per employer, per year, not per job. If you hire someone in August who already earned $46,600 elsewhere, your unemployment clock still starts at zero. The one exception is a successor employer taking over an existing payroll, who inherits the wages already paid.
Glossary of key terms
- Taxable wage base
- The slice of each employee’s annual pay that unemployment tax is calculated on. In North Dakota that is $46,600 for 2026. Earnings above it are still wages, they are simply no longer taxed for unemployment.
- Experience rating
- The method Job Service North Dakota uses to set each employer’s own unemployment rate from its history of claims. Employers with fewer charged claims move down the schedule; those with more move up.
- New employer rate
- The rate assigned before an employer has enough history to be experience rated. It normally applies for two to three years, then the account moves onto the experience schedule.
- Federal Form W-4. North Dakota has no separate state withholding certificate. Residents of Minnesota and Montana who qualify under reciprocity file Form NDW-R to be exempted, and must renew it by February 28 each year.
- The state withholding certificate. It sets how much income tax comes out of each cheque and is filed with the employer, not with North Dakota Office of State Tax Commissioner.
- Reserve account
- The running balance of contributions an employer has paid in, less the benefits charged against it. The ratio of that balance to taxable payroll is what drives the assigned rate.
- Successor employer
- A business that acquires another’s payroll may inherit both its experience rate and the wages already paid toward the wage base for the year. Getting this wrong is a common acquisition error.
- Localisation of service
- The first of four tests deciding which state a multistate employee’s wages are reported to. If substantially all the work is in one state, that state wins and the remaining tests are never reached.
- FUTA credit reduction
- A reduction in the 5.4% federal unemployment credit applied to states that have carried an outstanding federal loan for two or more consecutive Januaries. It raises the effective FUTA rate and is settled each November.
- Supplemental wages
- Bonuses, commissions, awards and similar payments made outside the regular payroll cycle. Many states set a separate flat withholding rate for them.
North Dakota payroll tax, layer by layer
Federal tax applies everywhere and is the larger number. The state layer is what changes when you cross a border.
Layer 1: Federal
| Tax | Rate | 2026 base |
|---|---|---|
| Social Security | 6.2% each side | $184,500 |
| Medicare | 1.45% each side | No limit |
| Additional Medicare | 0.9% employee only | Over $200,000 |
| FUTA, standard | 0.6% net | $7,000 |
| Federal income tax | Per Form W-4 | No limit |
North Dakota has no FUTA credit reduction for 2026, so the standard 0.6% net rate applies, $42 per employee. The final list is not published until 10 November 2026.[12]
Layer 2: State
| Tax | Rate | 2026 base |
|---|---|---|
| UI, new employer | 1.00% | $46,600 |
| UI, experienced | 0.07%–9.67% | $46,600 |
| Income tax, standard | 1.95%–2.50% | No limit |
| Income tax, supplemental | 1.50% | No limit |
Layer 3, county & city: no payroll tax, but a wage floor
No county or city in North Dakota levies its own payroll or income tax withheld by employers. The local layer shows up as minimum wage, not as tax.[9]
The state minimum wage is $7.25 an hour, which is the federal floor, effective 2009-07-24. The tipped cash wage is $4.86. No local ordinance sets a higher floor. No North Dakota city or county sets its own minimum wage. The state rate has matched the federal floor since July 24, 2009. North Dakota caps the tip credit at 33% of the minimum wage, which is stricter than the federal rule, so the lowest direct cash wage for a tipped worker is $4.86 an hour.[9]
Overtime exemption is a separate test. A salaried employee is exempt from overtime only above $35,568 a year ($684.00 a week) federal FLSA, and only if the duties test is also met. Paying a salary is not by itself enough.[9]
North Dakota payroll FAQs
It is $46,600 per employee, up from $45,100 in 2025. Job Service North Dakota resets it every year at 70% of the calculated statewide average annual payroll. Once a worker’s year to date wages pass $46,600 you stop paying unemployment tax on that person for the rest of the year.
No. North Dakota withholding is calculated straight from the federal Form W-4, and the 2026 rate booklet handles both pre-2020 and post-2020 versions of that form. The only separate state form is Form NDW-R, which a qualifying Minnesota or Montana resident files to be exempted from North Dakota withholding under reciprocity, and it must be renewed by February 28 each year.
Quarterly is the default, with returns due April 30, July 31, October 31 and January 31. You can move to a single annual Form 306 due January 31 only if you filed all four prior quarters, paid each on time and in full, and withheld less than $1,000 for the whole prior year. Filing is electronic if you withheld $1,000 or more last year or your payroll provider files your federal returns electronically.
If the bonus is paid separately from regular wages or is separately identified on the pay stub, you may simply multiply it by 1.5%. The alternative is to combine the supplemental payment with regular wages and run the whole amount through the regular withholding tables. The 1.5% shortcut covers bonuses, commissions, overtime pay, severance, accumulated sick leave payouts, awards, prizes, back pay and taxable fringe benefits.
No. There is no municipal, county or school district income tax anywhere in North Dakota. State withholding filed with the Office of State Tax Commissioner and unemployment tax filed with Job Service North Dakota are the only two state level payroll obligations.
For unemployment insurance you must register within 20 days of crossing a liability threshold, which for most businesses means paying $1,500 in wages in a calendar quarter or having a worker in 20 different weeks in a year. Agricultural employers cross at $20,000 in a quarter or 10 workers in 20 weeks, and household employers at $1,000 in a quarter. Separately, you apply to the Office of State Tax Commissioner for an income tax withholding account.
$7.25 an hour, which matches the federal floor. No local ordinance sets a higher rate. The tipped cash wage is $4.86.
April 30, July 31, October 31, January 31. A return is delinquent the day after the deadline even if the tax itself was paid on time, so file the return whether or not you can pay.
Sources & methodology
- North Dakota Office of State Tax Commissioner – Income Tax Withholding for Businesses
- North Dakota Office of State Tax Commissioner – 2026 Income Tax Withholding Rates and Instructions
- North Dakota Office of State Tax Commissioner – Income Tax Withholding and Information Returns Guideline
- Job Service North Dakota – 2026 Unemployment Insurance Tax Rate Schedules
- Job Service North Dakota – Learn About Unemployment Insurance Taxes
- Job Service North Dakota – About Reporting and Payment of Taxes
- Job Service North Dakota – Unemployment Insurance Tax Resources
- North Dakota Department of Labor and Human Rights – Wage and Hour Topics
- North Dakota Department of Labor and Human Rights – North Dakota Minimum Wage and Work Conditions Summary Poster
- U.S. Department of Labor, Wage and Hour Division – State Minimum Wage Laws
- U.S. Department of Labor, Employment and Training Administration – Significant Provisions of State Unemployment Insurance Laws, January 2026
- U.S. Department of Labor, Employment and Training Administration – FUTA Credit Reductions
- Job Service North Dakota – 2025 Unemployment Insurance Tax Rate Schedules
- Job Service North Dakota – Employer’s Guide to Unemployment Insurance Tax
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