North Dakota’s use tax is a 5% state tax on tangible personal property that you bought without paying North Dakota sales tax and then store, use, or consume in the state. It exists so out-of-state sellers who skip collecting tax at checkout do not get a price advantage over in-state retailers. If no North Dakota sales tax appeared on your receipt and the item came into the state, you likely owe it.1North Dakota Office of State Tax Commissioner. Sales and Use Tax
When You Owe Use Tax
The most common trigger is buying from an out-of-state seller who does not collect North Dakota sales tax. That covers online purchases, mail-order catalogs, and phone orders where no tax line appears on the invoice. Driving to Montana, buying equipment, and hauling it home to Bismarck works the same way: you owe use tax on the full purchase price.1North Dakota Office of State Tax Commissioner. Sales and Use Tax
Businesses run into it most often when ordering specialized machinery, office supplies, or raw materials from national distributors that have no North Dakota tax collection presence. The tax applies broadly to all tangible personal property purchased at retail for storage, use, or consumption in the state.2North Dakota Legislative Branch. North Dakota Code 57-40.2 – Use Tax
Property that was not originally bought for use in North Dakota but later comes into the state is also taxable. In that case, the tax is calculated on fair market value at the time the property enters the state, not the original purchase price. Relocating business equipment from another state to a new North Dakota office is a typical example.1North Dakota Office of State Tax Commissioner. Sales and Use Tax
The Rate: 5% Plus Local Tax
The state rate is 5% of the purchase price.2North Dakota Legislative Branch. North Dakota Code 57-40.2 – Use Tax Cities and counties can add their own sales and use taxes on top. What matters for your calculation is where the goods are delivered or stored, not where you bought them.3North Dakota Office of State Tax Commissioner. Local Taxes – City and County Taxes
The Office of State Tax Commissioner publishes a Local Taxes by Location guideline that lists the supplemental rates by city and county.4North Dakota Office of State Tax Commissioner. Local Taxes by Location Guideline Some areas add a fraction of a percent; others push the combined rate several points above 5%. Look up your delivery address before you calculate.
When You Don’t Owe It
Use tax does not apply when you have already paid the full North Dakota sales tax to a registered retailer. The tax is there to fill the gap, not to double-tax.5North Dakota Legislative Branch. North Dakota Administrative Code 81-04.1-01 – General Rules
Goods bought strictly for resale are also exempt. If you hold a sales tax permit and purchase inventory to sell to end customers, you are not the final consumer, so use tax does not attach. Keep proper resale documentation on file to back up the exemption.5North Dakota Legislative Branch. North Dakota Administrative Code 81-04.1-01 – General Rules
Credit for Tax Paid to Another State
North Dakota gives you credit for sales or use tax you legally paid to another state on the same property. Buy an item in Minnesota, pay Minnesota sales tax, and you subtract that amount from what North Dakota would otherwise charge. You pay only the difference if the North Dakota combined rate is higher. When the other state’s rate equals or exceeds North Dakota’s, you owe nothing further.1North Dakota Office of State Tax Commissioner. Sales and Use Tax
How to Report and Pay
Individuals
Residents who owe use tax on goods bought tax-free from out-of-state sellers can submit a One Time Remittance form through the Office of State Tax Commissioner. The form is built for individual consumers making a single use tax payment rather than filing recurring returns.1North Dakota Office of State Tax Commissioner. Sales and Use Tax
Businesses
If you hold a North Dakota sales tax permit, report use tax through the North Dakota Taxpayer Access Point (ND TAP), the state’s online portal for electronic returns and payments.6North Dakota Office of State Tax Commissioner. ND TAP Information Use tax owed is included on your regular sales and use tax return. Filing is typically monthly or quarterly, on a schedule the Tax Commissioner sets based on your taxable activity.
What Late Payment Costs
North Dakota treats unpaid use tax the same as unpaid sales tax. Interest runs from the original due date, and the state can add penalties for late filing or underpayment. The balance grows the longer it sits, so catching up early limits the damage.
The Office of State Tax Commissioner can audit past returns. If unreported purchases turn up, you owe the original tax plus accumulated interest and any penalties. Keeping organized records of out-of-state purchases, including small ones, is the simplest defense.
Purchases That Catch People Off Guard
Most people understand that a large untaxed online order creates a use tax obligation. A few categories trip up even careful taxpayers:
- Vehicles bought out of state fall under a separate motor vehicle excise tax handled during registration through the Department of Transportation, not the standard use tax return. The rate and process differ, so check with the DOT before assuming 5% use tax is all you owe.
- Property you move into the state is taxed on its fair market value when it enters, not the price you originally paid.1North Dakota Office of State Tax Commissioner. Sales and Use Tax
- Items bought for an exempt purpose (resale inventory, for instance) and later converted to personal or business use become subject to use tax at the point of conversion.
There is no minimum dollar threshold. A $15 book from an out-of-state seller owes the same percentage as a $15,000 piece of industrial equipment. Auditors focus on larger amounts in practice, but the legal obligation covers everything.