What Is North Dakota Payroll Tax?
North Dakota payroll tax refers to the state payroll taxes that employers must withhold from employee wages or pay directly to state agencies. These taxes fund unemployment benefits and the state income tax system.
North Dakota keeps its payroll tax structure relatively simple: there is no state disability insurance program, no local income tax in any North Dakota city or county, and no employment training tax. North Dakota payroll taxes are administered by two separate state agencies Job Service North Dakota (unemployment insurance) and the North Dakota Office of State Tax Commissioner (income tax withholding).
Most North Dakota employers are responsible for two primary state payroll tax requirements:
- Unemployment Insurance (UI), administered by Job Service North Dakota
- North Dakota Personal Income Tax withholding, administered by the Office of State Tax Commissioner, at graduated rates
Because North Dakota has no state disability insurance program and no local income tax layer, employers generally have fewer types of taxes to manage than in many other states though North Dakota UI wage base itself runs notably higher than most neighboring states, which is worth budgeting for.
North Dakota Payroll Taxes at a Glance
| Payroll Tax | Paid By | Purpose |
|---|---|---|
| Unemployment Insurance (UI) | Employer | Provides temporary income for eligible unemployed workers |
| Personal Income Tax (state) | Employee (withheld by employer) | Graduated state income tax withheld from employee wages |
Understanding this shorter list helps employers avoid over-complicating payroll setup North Dakota payroll compliance centers on these two taxes, filed with two different agencies.
North Dakota Employer Payroll Tax Responsibilities
Every employer with workers in North Dakota has payroll tax responsibilities beyond simply issuing paychecks. Depending on your business, you'll generally need to:
- Register your business with Job Service North Dakota for unemployment insurance and with the Office of State Tax Commissioner for withholding tax.
- Determine whether your business has met the wage or employment threshold that makes you liable for UI.
- Calculate taxable wages up to the annual UI wage base.
- Withhold state income tax from every paycheck based on current withholding tables.
- Pay employer UI contributions.
- File quarterly UI wage reports and periodic state withholding returns.
- Maintain payroll records for state compliance.
Many businesses automate these tasks using payroll software, reducing the risk of manual errors and missed deadlines.
Understanding North Dakota Unemployment Insurance (UI)
Unemployment Insurance is an employer-funded payroll tax that provides temporary financial assistance to eligible workers who lose their jobs through no fault of their own. In North Dakota, it's administered by Job Service North Dakota, and is funded entirely by employers.
Employers pay this tax directly it is never deducted from employee paychecks.
North Dakota recalculates its UI taxable wage base every year using a specific statutory formula: 70% of the statewide average annual wage, rounded to the nearest $100. This formula tends to produce a considerably higher wage base than most neighboring states use North Dakota 2026 wage base is more than three times higher than South Dakota, for example, which is worth factoring into per-employee cost projections when comparing the two states.
Key Facts
- Paid entirely by employers North Dakota has no employee UI contribution
- Calculated on an annual wage base set at 70% of the statewide average annual wage, recalculated every year after September and effective each following January 1
- North Dakota uses two separate rate schedules Positive Balance and Negative Balance depending on an employer's account standing
- New employers pay 1% under the Positive Balance schedule, or 6.07% if assigned to the Negative Balance schedule
- New construction employers are subject to a considerably higher flat rate of 9.67%, regardless of balance status
- Experienced employers range from 0.07% to 1.1% (positive-rated) or 6.07% to 9.67% (negative-rated)
- Must be reported to Job Service North Dakota every quarter excess wages (amounts over the annual wage base) are reported only for the quarter in which they occur, not accumulated across the year
North Dakota Personal Income Tax (PIT) Withholding
North Dakota has one of the lowest state income tax structures in the country, with graduated rates currently ranging from 0% up to 2.5%.
Employers are responsible for:
- Withholding the correct graduated amount from every paycheck, based on current Office of State Tax Commissioner withholding tables
- Reporting withholding to the North Dakota Office of State Tax Commissioner
- Depositing withheld taxes on a monthly or quarterly schedule, depending on the amount withheld
- Filing periodic withholding returns and an annual reconciliation, including W-2 filing with the state
North Dakota has no local income tax the same graduated state schedule applies regardless of which North Dakota city or county an employee lives or works in.
Which Payroll Taxes Are Paid by Employers vs Employees?
| Tax | Employer Pays | Employee Pays |
|---|---|---|
| Unemployment Insurance (UI) | YES | NO |
| Personal Income Tax (state) | NO | Withheld from wages (graduated) |
North Dakota keeps this split simple: employers fund UI entirely out of pocket, while employees fund the entire state income tax withholding.
North Dakota Payroll Tax Rates for Employers
Understanding current North Dakota payroll tax rates is essential for calculating payroll accurately. Because the UI wage base recalculates every year based on statewide wage growth, and because published rate figures vary noticeably between sources, always verify the latest numbers directly with Job Service North Dakota before processing payroll.
North Dakota Payroll Tax Rates at a Glance
| Payroll Tax | Who Pays | General Rate | Taxable Wage Base |
|---|---|---|---|
| Unemployment Insurance (UI) | Employer | New employers: 1% (Positive Balance) or 6.07% (Negative Balance). New construction employers: 9.67%. Experienced employers: 0.07%-1.1% (positive-rated), 6.07%-9.67% (negative-rated) | $46,600 for 2026, up from $45,100 in 2025 |
| Personal Income Tax (state) | Employee | Graduated, 0% to 2.5% | Applies to taxable wages under current withholding tables |
According to Job Service North Dakota official 2026 unemployment tax schedule, the 2026 taxable wage base is $46,600, with positive-rated experienced employers ranging from 0.07% to 1.1% and negative-rated experienced employers ranging from 6.07% to 9.67%. Note that some third-party payroll guides cite a considerably lower wage base (such as $40,700) and a different rate structure for 2026 those figures do not match the state own official release and should not be relied upon; always confirm current numbers directly against Job Service North Dakota published rate schedule.
Instead of memorizing a specific rate, employers should focus on reviewing their annual rate notice from Job Service North Dakota, tracking the current wage base, and filing returns on time.
Understanding Taxable Wages
North Dakota UI tax applies to taxable wages up to the annual wage base. Taxable wages generally include:
- Hourly wages
- Salaries
- Bonuses, commissions, and severance pay
- Overtime, vacation, and holiday pay
- Non-cash payments such as gifts and merchandise, reported at actual value
- Tips and gratuities
- Certain taxable fringe benefits
Once an employee's wages for the year cross the $46,600 UI wage base, no further UI tax is owed on that employee's wages for the remainder of the year employers report any "excess wages" only in the quarter they occur, without accumulating them across the year. North Dakota income tax withholding, by contrast, applies to all taxable wages under the graduated bracket structure, with no separate wage base cap.
North Dakota Payroll Tax Filing Deadlines
Meeting payroll tax deadlines is just as important as calculating taxes correctly. Late filings or payments can lead to penalties and interest charges.
Unemployment Insurance (Quarterly Contribution and Wage Report)
| Reporting Quarter | Filing Deadline |
|---|---|
| January – March | April 30 |
| April – June | July 31 |
| July – September | October 31 |
| October – December | January 31 |
Job Service North Dakota mails the appropriate contribution and wage report form to registered employers around the tenth day of the last month of each quarter but failure to receive that mailed form does not relieve an employer of the responsibility to file on time.
State Income Tax Withholding
North Dakota income tax withholding is filed monthly or quarterly, with the schedule assigned by the Office of State Tax Commissioner based on the employer's total withholding liability.
If a deadline falls on a weekend or state holiday, the due date generally moves to the next business day.
How to Register for North Dakota Payroll Taxes
Before paying employees, businesses typically need to register separately with Job Service North Dakota (for unemployment insurance) and the Office of State Tax Commissioner (for withholding tax). Any employer already liable under the Federal Unemployment Tax Act (FUTA) becomes immediately liable under North Dakota Unemployment Compensation Law as soon as they hire a worker in the state.
During registration, you'll generally need information such as:
- Legal business name
- Federal Employer Identification Number (EIN)
- Business entity type
- Business address
- Owner or responsible party information
- Date employees first performed services in North Dakota
- Estimated payroll information
Once registered, you'll receive an employer account number from Job Service North Dakota this number should be included on all future correspondence with the agency plus a separate withholding account number from the Office of State Tax Commissioner.
How to File North Dakota Payroll Taxes
Filing payroll taxes in North Dakota involves two parallel but separate processes one for unemployment insurance, one for income tax withholding. A typical filing process includes:
Step 1: Calculate Employee Wages
Determine each employee's gross wages, including regular pay, overtime, bonuses, commissions, and other taxable compensation.
Step 2: Calculate Payroll Taxes
Determine your employer UI contribution based on your current Job Service North Dakota rate notice, and calculate employee income tax withholding using current graduated withholding tables.
Step 3: Withhold Employee Income Tax
Deduct North Dakota state income tax from employee paychecks before issuing payment.
Step 4: Pay Employer UI Contributions
Remit UI payments to Job Service North Dakota according to your assigned deposit schedule.
Step 5: File Payroll Tax Returns
Submit your quarterly Contribution and Wage Report to Job Service North Dakota, and file withholding returns with the Office of State Tax Commissioner according to your assigned frequency.
Step 6: Maintain Payroll Records
Keep detailed payroll records, wage reports, and payment confirmations in case of future audits or compliance reviews from either agency.
Following a consistent payroll process helps reduce mistakes and makes year-end reporting significantly easier.
Frequently Asked Questions
Who is required to pay North Dakota payroll taxes?
Most businesses that hire employees in North Dakota become liable for unemployment insurance immediately upon hiring their first worker, since FUTA liability triggers North Dakota UI liability automatically. Liable employers must register with Job Service North Dakota and the Office of State Tax Commissioner and comply with applicable payroll tax requirements.
What payroll taxes are employers responsible for in North Dakota?
North Dakota employers are generally responsible for two state payroll taxes: Unemployment Insurance (UI), paid entirely by the employer, and state Personal Income Tax withholding, deducted from employee wages at graduated rates. North Dakota has no state disability insurance program and no local income tax.
How often do employers file North Dakota payroll tax returns?
Unemployment insurance wage reports are filed quarterly with Job Service North Dakota. Income tax withholding returns are filed with the Office of State Tax Commissioner monthly or quarterly, depending on the amount withheld.
How do I register for North Dakota payroll taxes?
Employers register separately with Job Service North Dakota (for unemployment insurance) and the Office of State Tax Commissioner (for withholding tax), as soon as they hire their first North Dakota employee.
What happens if payroll taxes are filed late?
Late filings or payments with either agency may result in penalties, interest charges, or other compliance issues. Not receiving a mailed quarterly report form does not excuse late filing. Filing accurately and on time with both Job Service North Dakota and the Office of State Tax Commissioner helps reduce the risk of unnecessary costs.
Does North Dakota payroll tax apply to remote employees?
If an employee performs work that is subject to North Dakota payroll tax rules, employers may have North Dakota payroll tax obligations even if the company is based elsewhere. Since many employees work remotely across state lines, it's worth reviewing where services are actually performed to determine which state's rules apply.
Are North Dakota payroll tax rates the same every year?
Not always. North Dakota UI wage base is recalculated every year as 70% of the statewide average annual wage, so it typically changes annually rather than staying fixed. Individual UI rates also depend on whether an employer is on the Positive Balance or Negative Balance schedule, which the state reviews and can adjust each year. The state's graduated income tax rates have been relatively low and stable, but employers should review current Job Service North Dakota and Office of State Tax Commissioner guidance each year before processing payroll.
Can payroll software calculate North Dakota payroll taxes automatically?
Many payroll platforms automatically calculate North Dakota UI contributions and graduated state income tax withholding, generate the required quarterly reports for both Job Service North Dakota and the Office of State Tax Commissioner, and help employers meet filing deadlines. While automation can significantly reduce manual work, employers are still responsible for ensuring payroll information is accurate and up to date.
Disclaimer
This article is for general informational purposes only and doesn't constitute legal, tax, or accounting advice. Payroll tax rates and rules change frequently consult a qualified CPA or tax professional for guidance specific to your business.
