North Dakota Capital Gains Tax (2026)
North Dakota capital gains tax rate: Taxed as ordinary income at 2.5%
North Dakota taxes capital gains as ordinary income at the flat 2.5% rate. This is among the lowest state-level capital gains tax rates of any state that taxes capital gains. No additional surtax or separate capital gains schedule.
Federal Capital Gains Rates Still Apply to North Dakota Residents
All North Dakota residents also owe federal capital gains tax. Federal long-term capital gains rates are 0% (income up to ~$47,025 single), 15% (income up to ~$518,900 single), or 20% (above). High earners may also owe the 3.8% Net Investment Income Tax (NIIT).
Short-Term vs. Long-Term Capital Gains in North Dakota
Assets held less than one year are taxed as ordinary income at federal rates (10%–37%). Assets held over one year qualify for the preferential 0%/15%/20% federal rates. North Dakota taxes capital gains as ordinary income at the flat 2.5% rate. This is among the lowest state-level capital gains tax rates of any state that taxes capital gains. No additional surtax or separate capital gains schedule.
Planning Considerations for North Dakota Investors
- Tax-loss harvesting can offset gains at both state and federal levels
- Timing asset sales to control income year and bracket placement
- North Dakota taxes capital gains at Taxed as ordinary income at 2.5% — factor this into net-of-tax return calculations
- Qualified Opportunity Zone investments can defer federal and potentially state gains
Frequently Asked Questions
What is the capital gains tax rate in North Dakota?
North Dakota taxes capital gains as ordinary income at the flat 2.5% rate. This is among the lowest state-level capital gains tax rates of any state that taxes capital gains. No additional surtax or separate capital gains schedule. Federal rates (0%, 15%, 20% for long-term gains) also apply regardless of state.
Does North Dakota have a different rate for long-term vs. short-term capital gains?
North Dakota does not distinguish between short- and long-term capital gains — both are taxed as ordinary income at up to 2.5% flat. Only federal law provides preferential long-term capital gains rates.
How do I reduce capital gains tax in North Dakota?
Strategies include: holding assets over one year for federal long-term rates, tax-loss harvesting to offset gains, contributing to retirement accounts (401k, IRA), investing in Qualified Opportunity Zones, and timing sales across tax years. In North Dakota, capital gains are taxed at up to Taxed as ordinary income at 2.5%, so these strategies reduce both federal and state tax.
Is this capital gains tax calculator free for North Dakota?
Yes. Enter your gain amount, holding period, and annual income. The calculator applies both federal rates (0%/15%/20% long-term) and North Dakota's Taxed as ordinary income at 2.5% state rate to estimate your total tax owed.