Payroll tax in North Dakota: What employers need to know [2024]

For businesses operating in the United States, navigating the complexities of payroll taxes isn't limited to just federal regulations—individual states like North Dakota have their own requirements.

If you own a business in North Dakota, you’re responsible for understanding the federal and state payroll taxes you must pay—including Medicare and Social Security. State payroll taxes vary depending on where your employees reside, so knowing and following the tax regulations in every state is crucial.

North Dakota has a progressive tax system, meaning higher income leads to higher income tax rates and liability. Growing your business and hiring more employees also increases employer tax contributions and deductions from employees' paychecks.

Let's dive into the details of the different types of payroll taxes in North Dakota, including their rates, who pays what, and when.

The 2 North Dakota payroll taxes

North Dakota has two state payroll taxes: unemployment insurance (SUI) tax and state income tax. Two North Dakota state agencies oversee these payroll taxes—Job Service North Dakota and the North Dakota Office of State Tax Commissioner, respectively. 

North Dakota employers must pay taxes if they have one or more workers for 20 weeks in a calendar year or pay $1,500 or more in wages during a calendar quarter. Employers must also report new hires within 20 days of the employee’s first work day via Form W-4—and if you have more than 25 employees, you must report new hires electronically. There is a $20 fine for each failure to report on time.

Unemployment insurance tax

The Unemployment Insurance Program offers temporary financial assistance to individuals who have lost their jobs due to circumstances beyond their control and are actively seeking new employment. Job Service North Dakota oversees the SUI tax that pays for the program. 

Employers liable for unemployment insurance are assigned a new employer rate. Tax rates are recalculated annually based on the employer's history. The maximum taxable wage for each worker is 70% of the yearly statewide average payroll.

It's important to note that the state-run unemployment fund is distinct from federal unemployment taxes, which employers must hold back at a rate of 6% on the first $7,000 of an employee's wages. However, according to the IRS, employers may be eligible for a 5.4% tax credit on their federal unemployment contributions.

North Dakota state income tax 

Employers in North Dakota are responsible for withholding personal income tax that increases progressively based on an employee's income. Employers must ensure their employees' withholdings align with the current North Dakota tax rates and withholding tables. Unlike some states, North Dakota doesn’t have a state-level W-4 form and instead relies on the federal Form W-4.

Native American employees aren’t subject to North Dakota income tax if they live on a North Dakota Indian reservation and are enrolled as a member of a federally recognized Indian Tribe.

Non-residents working in North Dakota are subject to income tax, which employers must withhold from employee paychecks. But if your employee lives in Minnesota or Montana, you don’t need to file the state income tax because of reciprocity agreements. Those non-resident employees can provide you with a form NDW-R, which means you don’t need to withhold North Dakota taxes.

Managing payroll in North Dakota can be daunting, requiring in-depth knowledge of changing tax regulations and familiarity with different tax forms and tables. Thankfully, Rippling’s payroll software can simplify the process and make compliance easier. The software automates tax calculations, files your tax documents and payments, and ensures compliance with federal and North Dakota state tax laws. Rippling’s PEO can register and maintain your state tax accounts on your behalf, further streamlining the payroll tax process.

Payroll tax due dates in North Dakota

North Dakota employers must electronically file Form 306 – Income Tax Withholding Return and remit the amount of state income tax withheld to the Office of State Tax Commissioner. 

If you have an employee living in Minnesota or Montana who qualifies for the reciprocity exemption, you must submit the NDW-R form by March 31.

Employers must submit quarterly Contribution and Wage Reports and remit the state unemployment insurance tax owed to Job Service North Dakota. 

Reports for both SUI taxes and state income tax withholdings are due on the last day of the month following the end of the quarter:

• First quarter (January-March): Due April 30
• Second quarter (April-June): Due July 31
• Third quarter (July-September): Due October 31
• Fourth quarter (October-December): Due January 31

If the due date happens to be on a weekend or state holiday, it’ll be due the next business day. 

Late income tax returns will incur a 12% annual interest rate by the Office of State Tax Commissioner, starting from the original deadline until the date you file or the extended due date—whichever comes first. Failure to submit your Contribution and Wage Report, on the other hand, will incur a penalty fee of up to $500 for each missed report.

How to submit payroll taxes in North Dakota

Now that you’re familiar with the North Dakota payroll taxes you need to collect and the deadlines for paying them, the next step is to file the taxes. The filing methods vary for each type of tax, but you can file both electronically. Below are the available options.

Unemployment insurance tax

Employers can make SUI tax payments to Job Service North Dakota using UI EASY. You can submit electronic payments anytime, plus view your filing status and file quarterly Contribution and Wage Reports.

North Dakota withholding tax

North Dakota withholding tax can be paid electronically using the North Dakota Office of State Tax Commissioner’s ND TAP. If your total withholding amount in the previous year exceeded $1,000, you must file and pay your taxes electronically. As of January 2023, you must electronically file all information returns (such as Forms W-2, 1099, and 1042S) and annual returns (Form 307 and Form RWT-941) via ND TAP.

Rippling’s full-service payroll software

Rippling’s payroll software simplifies payroll tax management in North Dakota. It automatically calculates and files your taxes with the correct agencies, ensuring compliance and on-time payments. Never worry about keeping up with changing tax regulations again. 

FAQs about North Dakota payroll taxes

Are there local tax laws in North Dakota?

No. North Dakota doesn’t have any local income tax laws. 

Can your tax returns be audited in North Dakota?

Yes. The North Dakota Office of State Tax Commissioner conducts audits to ensure taxpayers, including employers, comply with North Dakota tax regulations and withholding tax filings.

Are nonprofit organizations subject to payroll taxes in North Dakota?

Nonprofit organizations in North Dakota are accountable for payroll taxes, as stated by the Job Service North Dakota. They may qualify for exemption from federal and North Dakota income tax under section 501(a) of the Internal Revenue Code, provided they’re classified as a Section 501(c)(3) exemption organization.

Nonprofit organizations classified under Section 501(c)(3) become liable for North Dakota SUI taxes only after they’ve had four or more employees in each of 20 weeks within the current or past calendar year.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.