As a proud member of the Great Plains region, North Dakota is truly a place for growth and adventure, especially for various enterprises. With so many opportunities, understanding sales tax in North Dakota is essential to achieving a bountiful harvest for your business.
This guide breaks down everything you need to know about North Dakota’s sales tax, from determining the right sales tax rates to understanding exemptions and filing processes. By the end of this comprehensive guide, you’ll be equipped to handle North Dakota’s sales tax with confidence and ease.
Sales Tax Nexus in North Dakota
When a business creates either a physical or economic nexus, it is required to collect sales tax in North Dakota.
Physical Nexus
A physical nexus means having a significant physical presence or engaging in enough activities within a state to require the collection and payment of sales tax. The factors that determine a physical nexus in North Dakota include:
- Physical Location: This includes having an office, a place for distribution, sales, or showcasing products, a warehouse or storage facility, or any other place where you conduct business.
- Inventory in the State: This covers situations where you store your products within the state, even if it’s done through a third-party fulfillment center or 3PL (like Amazon FBA) or an online marketplace.
- Employees, independent contractors, agents, or other representatives operating on your behalf.
- Affiliate Nexus: An out-of-state seller without a physical presence in North Dakota may still have a nexus if the seller has an affiliate. This applies when the affiliate has a physical presence in North Dakota and acts on behalf of the seller.
- Presence at Trade Shows: In North Dakota, having a temporary sales location still creates a nexus with the state. Thus, an out-of-state seller with a presence at trade shows can still have nexus in North Dakota.
Economic Nexus
States have established regulations to collect sales tax from out-of-state sellers who meet certain revenue and/or transaction thresholds. This rule is known as economic nexus.
Beginning October 1, 2018, the threshold for economic nexus in North Dakota is $100,000 in gross revenue in the previous or current calendar year’s sales.
While the nexus criteria mentioned above generally apply to most businesses, additional methods exist for establishing sales tax nexus. To access a comprehensive list of these rules, please refer to the
governing laws for economic sales tax nexus requirements in North Dakota.
North Dakota Sales Tax on Goods and Services
One of the first things you need to know is whether the goods you’re selling or services you’re offering are taxable in North Dakota.
Tangible Products
Almost all goods are taxable in North Dakota, including:
- Cosmetics
- Electronics
- Clothing
- Furniture
- Jewelry
- Home Goods
- Personal Hygiene
- Feminine Hygiene Products
The goods that are exempt from sales tax are:
- Grocery Food – In North Dakota, most food and food ingredients sold and used for home consumption are not subject to sales tax. However, certain types of food and drinks, such as candy, soft drinks, and alcoholic beverages, including prepared food, do not qualify for this tax exemption.
- Children’s Diapers, incontinent pads, and adult diapers
- Prescription Medications
- Textbooks
- Medical Devices
- Agricultural Supplies such as Seeds, fertilizers, and machinery used directly in farming
Services
In North Dakota, most service-based transactions, such as personal or professional services, advertising, and cleaning services are not subject to sales tax.
However, there are specific situations where certain services are taxable. For instance, taxable services are:
- Communication services
- Lodging
- Tire repairs
- Picture framing – only exempt from sales tax when the buyer performs the labor of installing the photo inside the frame, and the photo is the buyer’s personal property
- Printing services
Software as a Service (SaaS)/Digital Products
SaaS is not taxable in the state of North Dakota.
Digital products, such as digital audiovisual works, digital audio works, and digital books, are not considered tangible personal property and are generally exempt from sales tax. Prewritten (canned) software, whether delivered electronically or on physical media, is taxable.
Shipping/Handling
Shipping and handling charges in the state of North Dakota are
taxable. However, shipping and handling charges can be exempt from sales tax when selling a non-taxable item.
Sales Tax Permits and Licenses in North Dakota
Now that you’ve got a handle on when sales tax nexus applies and which products are taxable in North Dakota, the next important step is getting your North Dakota Seller’s Permit, also known as a sales tax permit.
Seller’s Permit
You can register for a North Dakota sales tax permit online at the North Dakota Taxpayer Access Point (ND TAP) or follow our detailed step-by-step guide for assistance.
Ensure you have specific information on hand when registering for a seller’s permit, including, but not limited to:
- Business Identification Information (name, address, phone number, email address)
- Business Entity Structure (sole proprietorship, partnership, corporation, LLC, etc.)
- Federal Employer Identification Number (EIN or FEIN)
- Owner/Partner/Officer Information
- Business Activity Details (description of products or services sold, sales volume, date of the first sale, or the expected date to start dates)
- NAICS code
Registration fee
There is no fee to register for a sales tax permit. However, the state may require a bond to secure your permit. After 2 years of remitting accurate and timely returns, you can request an early bond refund.
Renewal
In North Dakota, you don’t have to renew your sales tax permit as long as the business exists without any changes in ownership or structure.
Resale Certificate
A resale certificate is a document that allows businesses to buy products without paying sales tax on them as long as they plan to resell those items to customers, who will then pay the tax. As a seller, you can also accept resale certificates from others looking to buy for resale.
In North Dakota, sellers use resale certificates to buy goods from their suppliers that they intend to resell. The issuance of the certificates is always done in good faith that the seller would report tax on the final sale of the items.
You can fill out the Certificate of Resale Form provided by North Dakota after you receive your sales tax permit. You can also fill out the Streamlined Sales and Use Tax Certificate of Exemption if you would like to get sales tax exemption for multiple states simultaneously. If you don’t want the hassle of registering, sign up for our all-inclusive service that includes sales tax registration.
Streamlined Sales Tax (SST)
The Streamlined Sales Tax (SST) is an initiative to simplify and standardize sales tax regulations across multiple states. North Dakota is a party to the program, meaning it follows the uniform rules and definitions established by SST.
Check with the North Dakota Office of State Tax Commissioner for the most current information on North Dakota’s participation in the Streamlined Sales Tax initiative.
Calculating and Collecting Sales Tax in North Dakota
Sales Tax Computation
In North Dakota, sales tax isn’t just one simple rate; it’s a combination of state and local taxes. To figure out the total sales tax for your calculation, you’ll need to add up the rates for the state, county, and city (if applicable) where your transaction occurs.
Here’s an example. Suppose an out-of-state seller satisfies the economic nexus criteria in North Dakota and sells to a customer in Fargo, ND, with a ZIP code of 58102. In that case, the seller has to charge the customer a total sales tax, which can be broken down as follows:
 |
SALES TAX FORMULA |
RATE |
| State: |
North Dakota |
5.00% |
| County: |
Cass |
0.50% |
| District: |
Twenty Seventh |
0.00% |
| City: |
Fargo |
2.00% |
| Combined Sales Tax Rate = |
7.50% |
|
Origin-based vs. Destination-Based
When making in-state sales, it is important to determine if you are located in an origin-based state or destination-based state to figure out what rate to charge for sales tax.
North Dakota is a destination-based state, meaning sales tax is determined based on the buyer’s location. That means for a North Dakota-based seller, sales tax is generally based on the location of the buyer when selling within the state.
For out-of-state or remote sellers, the sales tax rate is always determined by the buyer’s location. For instance, if you’re selling a product from California to a customer in Bismarck, North Dakota, where you have nexus, you’d apply Bismarck’s sales tax rate to that sale.
To make life easier, consider using sales tax software or consulting a tax professional, like TaxHero, to ensure accurate tax calculations and collections. Understanding these tax rules helps you stay compliant, whether you’re in-state or out-of-state.
Filing and Remitting Sales Tax Returns in North Dakota
The next step after collection is filing and remitting your North Dakota sales tax returns. Filing and remittance can vary in frequency, typically monthly or quarterly.
- Quarterly Filing: Businesses with sales and use tax liability under $333,000 in the previous year must file quarterly unless they opt for monthly filing. Returns and payments are due by the last day of the month after each quarter ends.
- Monthly Filing: Businesses with a sales and use tax liability of $333,000 in the previous calendar year are required to file their sales tax returns monthly. Filing must be done electronically through the North Dakota TaxPayer Access Point website. Returns and payments are due by the last day of the month following the month when the return is filed.
It’s crucial to keep accurate records of your sales and tax collections and adhere to the filing schedule set by the state to remain compliant with North Dakota’s sales tax regulations.
Due Dates
In North Dakota, the due date falls on the last day of the month. For instance, sales tax collected in January is due by February 28th (or 29th if it’s a leap year) for monthly filers.
However, if this day is a holiday, weekend, or in the rare occurrence of a natural disaster, the deadline is typically extended to the next business day. For instance, if you’re a monthly filer and filing sales tax for the month of April, and the May 31st deadline falls on a holiday or weekend, you’ll have until June 1st, the following business day, to submit.
Filing Sales Tax Returns
When filing your sales tax return for North Dakota, a few options are available:
- File online through the North Dakota Taxpayer Access Point (NDTap).
- File with TaxHero – Let TaxHero take care of it so you don’t have to worry about missing a payment or return.
Timely Filing Discount
Some states offer a discount to businesses for collecting, filing, and remitting sales tax on time as an incentive to process sales taxes promptly. North Dakota’s timely filing discount amount is determined using specific formulas based on the tax due. The maximum discount available for sellers in North Dakota is 1.5% of tax due, allowing you to retain a total of $110 per month.
Sales Tax Holiday
Currently, for 2025, there are no planned sales tax holidays in North Dakota.
North Dakota Sales Tax Penalties
Like in most states, sales tax is a big part of how North Dakota generates revenue. Thus, maintaining compliance with sales tax regulations is of utmost importance. Failure to do so can lead to consequences and sales tax penalties. Therefore, it is crucial to always ensure you are up-to-date in filing, collecting, and remitting sales tax to the state.
Here are the specific penalties for non-compliance with sales tax regulations in North Dakota:
- Late Filing Penalty: Failure to file taxes on time results in a 5% penalty of the total sales tax due or $5, depending on the greater amount. This penalty may not exceed 25% in the entirety.
- Late Payment Penalty: Also have the same penalty rates but with an added 12% interest rate per year.
- Criminal offenses: Any sales and use tax law violations will result in Class A misdemeanors in North Dakota.
Frequent offenses may result in more penalties, such as your records being assessed, having a lien placed on your personal property, or your business license being revoked.
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