North Dakota sales tax starts at a 5% state rate on most retail purchases of tangible goods, with cities and counties adding local tax that can push the combined rate as high as 8.75%. A short list of categories carries special rates, groceries and prescription drugs are exempt, and anyone selling into the state has registration, collection, and filing duties enforced by the Office of State Tax Commissioner.
What You Pay as a Buyer
The baseline state sales tax is 5% on gross receipts from retail sales of tangible personal property and certain services.1North Dakota Legislative Branch. North Dakota Century Code 57-39.2 – Sales Tax That applies to furniture, electronics, household goods, building materials, and clothing. North Dakota does not exempt apparel, so every clothing purchase gets the full rate.
Cities and counties layer their own sales and use taxes on top. The state collects local tax for the jurisdictions and distributes it back.2North Dakota Legislative Branch. North Dakota Code 57-39.4 – Streamlined Sales and Use Tax Agreement Larger cities typically add 2% to 2.5% in combined city and county tax. The Tax Commissioner’s rate locator gives the exact combined rate for any address, which is worth checking before a large purchase since cities change rates when they pass new measures.
One quirk matters on big-ticket purchases: most North Dakota jurisdictions cap the local tax on any single transaction. Bismarck caps local tax at $37.50 per sale, Fargo at $56.25, Minot at $100, and Dickinson at $100. Smaller towns often cap at $25 or $50. Langdon and Mapleton have eliminated the cap entirely.3North Dakota Office of State Tax Commissioner. Local Tax Refund – Local Maximum Tax Amounts The 5% state portion is never capped; only the local tax hits a ceiling.
A few purchases don’t follow the standard 5%:
- Alcoholic beverages carry a separate 7% gross receipts tax on all retail sales, whether consumed on or off the premises.4North Dakota Legislative Branch. North Dakota Code 57-39.6 – Alcoholic Beverage Gross Receipts Tax
- Farm machinery and irrigation equipment used exclusively for agriculture are taxed at 3%.5North Dakota Legislative Branch. North Dakota Century Code 57-39.5 – Farm Machinery Gross Receipts Tax
- New mobile homes purchased for residential use are taxed at 3% rather than 5%.6North Dakota Office of State Tax Commissioner. Sales and Use Tax
If you buy something from an out-of-state retailer that doesn’t collect North Dakota tax and bring it into the state, you owe the 5% use tax directly to the state.7North Dakota Legislative Branch. North Dakota Century Code 57-40.2 – Use Tax Leasing or renting property is treated the same as buying it.
What’s Exempt
Food and food ingredients purchased for home consumption are exempt. That covers produce, meat, dairy, bread, and the rest of a normal grocery run.1North Dakota Legislative Branch. North Dakota Century Code 57-39.2 – Sales Tax Several items that feel like food are carved back out and remain taxable: prepared food sold heated or combined by the seller for immediate consumption, candy, soft drinks, and dietary supplements.8Legal Information Institute. North Dakota Administrative Code 81-04.1-03-03 – Food and Food Products A deli rotisserie chicken or a fountain drink is taxable.
Drugs sold under a doctor’s prescription are exempt. Over-the-counter medications are taxed at the full rate.
Residential heating costs are tax-free: natural gas and other fuels used for heating are exempt, as is electricity.9North Dakota Office of State Tax Commissioner. Sales Tax Exemptions and Incentives
Sales to the U.S. government, the state of North Dakota, local political subdivisions, and tribal government agencies are exempt. These buyers present a certificate of exemption to the seller. The tribal exemption covers agencies performing government functions, not tribally owned commercial enterprises.
Nonprofit health associations and nonprofit medical research institutes with 501(c)(3) status are exempt on their purchases. Revenue from educational, religious, or charitable activities is also exempt when the full net proceeds go to those purposes, with limits for events in publicly owned facilities and for nonprofits running regular retail operations.1North Dakota Legislative Branch. North Dakota Century Code 57-39.2 – Sales Tax
Admissions to recreational activities and lodging rentals are generally taxable, but admissions to state, county, and local fairs are exempt, and so are admissions to athletic, musical, or dramatic events held by colleges and universities when students are the primary performers.
Digital Goods and Software
Most digital goods are not taxed. Downloads of music, video, e-books, digital magazines, newspapers, and ringtones are exempt whether you buy permanent access or a subscription. Software as a service is treated as a service and is not taxable. Prewritten software delivered electronically or on physical media is taxable, as are computer-generated statistical reports and graphs sold in their original form.
Rules for Sellers
Any business selling taxable property, providing taxable admissions, or renting lodging in North Dakota must get a sales and use tax permit before its first sale. The Tax Commissioner asks for applications at least 30 days before you open. Applications go through the ND TAP online portal, and you’ll need your federal EIN (or Social Security Number for a sole proprietorship), your business structure, and owner or officer names.6North Dakota Office of State Tax Commissioner. Sales and Use Tax The permit isn’t transferable, so buying an existing business means applying for a new permit in your own name.
Remote Sellers and Marketplaces
Out-of-state sellers without physical presence in North Dakota must collect and remit sales tax once their taxable sales into the state exceed $100,000 in the current or prior calendar year. Only taxable sales count toward the threshold; exempt sales and sales through a registered marketplace facilitator are excluded.10North Dakota Office of State Tax Commissioner. Marketplace Facilitator
Marketplace facilitators such as Amazon, eBay, and Etsy carry their own collection duty. When a facilitator runs the platform, processes payments, or handles fulfillment, it collects North Dakota sales tax (including local tax) on behalf of its third-party sellers. Once the facilitator certifies to its sellers that it’s handling collection, those individual sellers are no longer liable for tax on marketplace sales. Companies whose only role is processing payments between buyer and seller don’t count as marketplace facilitators.
Resale and Exemption Certificates
Inventory bought for resale can be purchased tax-free using a Certificate of Resale (form SFN 21950). You’ll provide your sales tax permit number, a description of what your business sells, and your signature certifying the goods are for resale. If you end up using the property yourself, you owe the tax plus any penalties.11North Dakota Office of State Tax Commissioner. Certificate of Resale
Exempt buyers like government agencies and qualifying nonprofits use a Certificate of Exemption (form SFN 21999). A seller who takes a properly completed exemption certificate is relieved from liability if the buyer turns out to have claimed the exemption improperly, as long as the seller didn’t participate in or solicit the false claim. These certificates can work as blanket certificates for recurring purchases and stay valid as long as the buyer makes at least one purchase every 12 months.
Filing and Paying
Returns and payments go through the ND TAP portal.12North Dakota Office of State Tax Commissioner. ND TAP Information The Tax Commissioner assigns a filing frequency when you receive your permit — monthly, quarterly, or annual — based on how much tax you expect to collect. You can ask the office to adjust your frequency if sales volume changes.
Payment by electronic transfer from a checking or savings account is free. Credit and debit card payments carry a 2.5% convenience fee. Businesses that file and pay on time get a vendor discount of 1.5% of the tax due, capped at $110 per month. That discount compensates for the administrative cost of collecting tax for the state, and it’s worth claiming every period.
Penalties for Late Filing or Payment
Falling behind gets expensive quickly:
- Late filing: 5% of the tax due (or $5, whichever is greater) for the first month late, plus an additional 5% for each additional month, up to a 25% maximum.
- Late payment: a flat 5% penalty on any tax not paid by the deadline (or $5, whichever is greater).
- Interest: 12% per year, calculated from the filing deadline until all tax, penalties, and interest are paid in full. Interest doesn’t accrue during the first month a return is late.
Filing a return with an estimated payment is better than not filing at all. The state can also pursue collections and revoke a sales tax permit for chronic non-compliance.