North Dakotans See Lower State Income Taxes Tied to Federal Policy Changes

Tax Commissioner says federal tax cuts have reduced state tax liability for many residents

Apr. 15, 2026 at 9:53pm

Got story updates? Submit your updates here. ›

A composition of overlapping triangles and rectangles in shades of blue, green, and red, conceptually representing the complex interplay of federal and state tax policies and their impact on individual North Dakotans.Federal tax cuts provide North Dakotans with unexpected state income tax relief, but the savings may be short-lived.Bismarck Today

Many North Dakotans are receiving larger state income tax refunds this year due to recent changes in federal tax policy, according to the state's Tax Commissioner Brian Kroshus. The federal One Big Beautiful Bill Act reduced federal taxable income for many people, which in turn lowered North Dakotans' state tax liability. This includes provisions like no taxes on tips up to $25,000 and no tax on overtime earnings.

Why it matters

The federal tax changes are expected to reduce North Dakota's state income tax revenue by $130 million over the 2025-27 budget cycle. This includes $55 million in savings for individuals and $74 million in savings for businesses. The changes are particularly beneficial for North Dakotans who earn tips or work overtime, as well as seniors who can claim an additional $6,000 deduction.

The details

So far this tax season, North Dakota state tax refunds are averaging about $430 per filer, an increase of just under $22 compared to last year. As of Tuesday, the Tax Commissioner's Office had processed 375,000 tax returns with a total state refund amount of $72.5 million, up $3.1 million from last year. Merab Bennett, a server in Bismarck, said she received a refund triple the amount of previous years due to the new provision exempting tips up to $25,000 from federal taxes. Accountant Nick McCann has also seen North Dakotans benefit, especially seniors and workers who earn tips or work overtime.

  • Tax Day 2026 was the deadline for North Dakotans to file their state income taxes.
  • The federal tax changes, including no taxes on tips and overtime, are set to expire at the end of 2028 unless Congress takes additional action.

The players

Brian Kroshus

The North Dakota Tax Commissioner who provided details on the impact of federal tax changes on state income taxes.

Merab Bennett

A server at Peacock Alley in Bismarck who received a larger tax refund this year due to the federal provision exempting tips up to $25,000 from taxes.

Nick McCann

An accountant with Padgett Bookkeeping in Bismarck who has seen North Dakotans benefit from the recent federal tax policy changes, especially seniors and workers who earn tips or work overtime.

Got photos? Submit your photos here. ›

What they’re saying

“I got back triple of what I got back in previous years.”

— Merab Bennett, server

“For North Dakota, we have a lot of health care workers, we have a lot of overtime workers, and we have a lot of seniors. So I think it's been beneficial.”

— Nick McCann, accountant

What’s next

Some provisions of the federal policy, including no tax on tips or overtime, expire at the end of 2028 unless Congress takes additional action. 'Take advantage of it while we can because we don't know if this is going to stick around,' Bennett said. 'And we don't know what's next.'

The takeaway

The federal tax changes have provided significant savings for many North Dakotans, especially those who earn tips or work overtime, as well as seniors. However, these provisions are set to expire in 2028, so residents are encouraged to take advantage of the savings while they can.