North Dakota 2026 Tax Changes — What Residents & Business Owners Must Know
Beginning January 1, 2026, significant federal tax changes take effect due to the expiration of major provisions in the Tax Cuts and Jobs Act (TCJA) and updated rules under the One Big Beautiful Bill Act (OBBBA).
North Dakota residents — who pay state income tax based on federal AGI — will feel these federal adjustments more directly than many states.
These changes affect:
- W-2 earners in Fargo, Bismarck, Grand Forks, Minot, West Fargo
- Oilfield workers, energy-sector employees, and trades
- Farmers, ranchers, and agricultural households
- Small business owners, LLCs, freelancers, and S-Corps
- Real estate investors and rental owners
- Short-term rental hosts
- Families with children
- Retirees drawing taxable income
- Dual-income households
Below is the complete North Dakota–specific breakdown of the 2026 tax changes.
Key 2026 Federal Changes Affecting North Dakota
Standard Deduction Shrinks
The enhanced standard deduction from TCJA expires in 2026. OBBBA did not extend this portion of the law.
- Single: about $8,300
- Married Filing Jointly: about $16,600
- Head of Household: about $12,400
This increases federal taxable income for most North Dakota families and individuals.
Because the state starts with federal AGI, state taxable income also increases.
Federal Income Tax Brackets Increase
- 12% → 15%
- 22% → 28%
- 24% → 31%
- oilfield workers with high overtime
- trades, construction, and manufacturing employees
- teachers, nurses, and state workers
- dual-income households
- households earning $50K–$200K
QBI Deduction Made Permanent Under OBBBA
OBBBA made the 20% Qualified Business Income (QBI) deduction permanent.
- contractors
- LLC owners
- S-Corp owners
- agricultural service providers
- real estate professionals
- certain rental property owners
Beginning in 2026, new QBI eligibility rules apply, including updated income thresholds and documentation requirements.
North Dakota does not apply a matching state-level QBI deduction.
Child Tax Credit Shrinks
- from about $2,000
- To roughly $1,000 per child
- with reduced refundability
Families across Fargo, Bismarck, West Fargo, Minot, and Grand Forks will see smaller refunds.
Marriage Penalty Returns
TCJA’s marriage penalty relief expires in 2026, and OBBBA does not extend it.
- Married couples reach higher brackets sooner
- Credits phase out faster
- Combined incomes increase both federal and North Dakota taxable income
This affects many dual-income households.
North Dakota–Specific Tax Considerations for 2026
1. North Dakota Uses Federal AGI as the Starting Point
North Dakota’s progressive state income tax system begins with federal AGI.
- lower federal deductions
- higher federal taxable income
- fewer federal credits
…all raise North Dakota state taxable income.
Even if North Dakota state tax rates do not change, most residents will owe more.
2. Real Estate & Rental Property Owners Will Feel the Impact
- Fargo
- Bismarck
- Grand Forks
- Minot
- West Fargo
- capital gains
- depreciation
- rental loss rules
- STR participation requirements
- sale timing and recapture
With property appreciation rising in parts of the state, capital gains exposure increases.
3. Short-Term Rental Owners Face Stricter Rules
- reduced bonus depreciation
- stricter IRS participation tests
- updated safe harbor rules
- tighter rental loss limitations
STR hosts must maintain stronger documentation in 2026.
4. Oilfield & Energy Workers Face Unique Challenges
- high overtime
- per diem income
- rotational schedules
- multi-state tax considerations
Higher federal brackets and reduced deductions increase federal tax liability for these workers.
5. Agriculture & Rural Households Are Significantly Impacted
- grain and crop farming
- cattle and livestock operations
- ranching
- agricultural service businesses
- equipment depreciation
- treatment of land and livestock sales
- farm income averaging
- operating losses
Agricultural households must plan deductions and sales carefully around the 2025–2026 transition.
6. Retirement Income Planning Remains Critical
North Dakota taxes many forms of retirement income, including IRA and 401(k) withdrawals.
- withdrawals
- pension income
- investment withdrawals
more expensive for retirees.
Who Is Most Affected in North Dakota (2026)
- Dual-income households
- Energy-sector and oilfield workers
- Agricultural and rural households
- Business owners and contractors
- Real estate investors and landlords
- STR hosts
- Families with children
- Retirees with taxable income
- Middle-income earners
What North Dakota Residents Should Do Before December 31, 2025
- Review federal and state withholding
- Maximize retirement contributions
- Consider Roth conversions before bracket increases
- Review business structure for optimal QBI
- Prepare STR participation documentation
- Assess capital gains exposure
- Plan equipment or property sales strategically
- Build a 2025–2026 federal + state tax strategy
North Dakota 2026 Tax FAQ
Does North Dakota conform to QBI?
No. QBI is federal-only.
Will North Dakota taxes increase?
Rates remain the same, but taxable income will rise due to federal changes.
Are families affected?
Yes. Child Tax Credit reductions and higher taxable income shrink refunds.
Are STR owners impacted?
Yes. Depreciation and participation rules become more restrictive.
Are retirees affected?
Yes. Federal bracket increases raise the tax cost of retirement withdrawals.
Get your 2026 North Dakota Tax Strategy
North Dakota residents face substantial changes under the 2026 federal tax rules. Reduced deductions, higher brackets, shifting credits, and new business and rental requirements make early planning essential.