North Dakota Veteran Tax Benefits 2025: Property Tax, Income Tax & Exemptions

Bottom Line Up Front

North Dakota offers excellent tax benefits for veterans, with military retirement pay 100% exempt from state income tax (saving $800-$2,000+ annually) and a disability-based property tax credit that matches your VA rating percentage. A 100% disabled veteran gets a full 100% property tax credit on the first $120,000 of home value—worth $1,200-$2,200 annually depending on county.

North Dakota ranks in the top 15 states nationally for veteran tax benefits. The combination of no tax on military retirement, low state income tax rates (0-2.5%), moderate property taxes (0.99% average effective rate), and a 5% sales tax creates significant savings. A 100% disabled veteran with $40,000 military retirement saves approximately $2,500-$3,500 annually compared to higher-tax neighboring states.

The property tax credit structure is fair: veterans with 50% or higher service-connected disability get a credit equal to their rating percentage (50% rating = 50% credit, 75% rating = 75% credit, 100% rating = 100% credit). The credit applies to the first $120,000 of true and full valuation of your homestead. Unlike many states that cap benefits at specific dollar amounts, North Dakota's percentage-based system scales with your disability.

Downsides? Property taxes are moderate but not the lowest nationally (average $2,746 annually on median home). The 5% sales tax isn't as favorable as states with no sales tax. If you're under 50% disabled, you won't qualify for the property tax credit. North Dakota also has brutal winters (average January temperatures 5-17°F), which may impact quality of life for some veterans.

Overall verdict: North Dakota is excellent for military retirees and disabled veterans (50%+), ranking among the best Midwest states. The no-tax on military retirement is the biggest benefit. If you're under 50% disabled, benefits are solid but not exceptional—you'll still benefit from the retirement pay exemption and low income tax rates.

Property Tax Benefits

Exemptions by Disability Rating

100% Disabled Veterans:

• Credit: 100% of property tax on first $120,000 true and full value
• Requirements: 100% service-connected disability from VA; honorable discharge
• Annual savings: $1,200-$2,200+ depending on county
• Also qualifies: Veterans with extra-schedular TDIU rating bringing total to 100%

If you're rated 100% service-connected by the VA, you get a 100% property tax credit on the first $120,000 of your home's true and full valuation. In North Dakota, assessed value is 50% of market value, so this effectively covers up to a $240,000 market value home.

Example: A $250,000 home in Cass County (Fargo):

• True and full value: $250,000
• Assessed value (50%): $125,000
• Effective tax rate: 1.87%
• Annual tax on $125,000 assessed: $2,338
• 100% credit applies to first $120,000 true value = $60,000 assessed
• Tax on $60,000 at 1.87%: $1,122
• Annual savings with 100% credit: $1,122

75% Disabled Veterans:

• Credit: 75% of property tax on first $120,000 true and full value
• Annual savings: $900-$1,650 depending on county

50-99% Disabled Veterans:

• Credit: Percentage matching your rating on first $120,000 true and full value
• 50% rating = 50% credit
• 60% rating = 60% credit
• 70% rating = 70% credit
• Annual savings: $600-$2,000+ depending on rating and county

Paraplegic Veterans / Specially Adapted Housing:

• Credit: 100% property tax exemption on first $120,000 true and full value
• Requirements: Paraplegic veteran OR received specially adapted housing from VA
• No disability rating minimum required for specially adapted housing recipients

Under 50% Disabled Veterans / General Veterans:

• No property tax credit available
• Must pay full property tax

North Dakota's disability-based system is fair and scales with your impairment level. Unlike states with one-size-fits-all credits, your benefit matches your VA rating percentage.

How to Apply

1. Contact your local county auditor (Cass County for Fargo, Burleigh County for Bismarck, etc.)

2. Gather required documents:

   • DD Form 214 (Member Copy 4) showing honorable discharge
   • VA award letter certifying service-connected disability percentage
   • Proof of North Dakota residency
   • Property deed or tax statement

3. File affidavit with county auditor

   • Deadline: March 31 of the assessment year for which credit is requested
   • Processing: 30-60 days
   • Effective: Current tax year if filed by deadline

Important: File by March 31 or you'll wait until the following year. Missing the deadline costs you 12 months of savings ($1,000+ for highly disabled veterans).

Property Tax by County

North Dakota has a 0.99% average effective property tax rate (26th lowest nationally), with an average annual bill of $2,746 on the median home value of $280,600.

County	Major City	Median Home Value	Effective Tax Rate	Annual Tax (Non-Exempt)	100% Disabled Savings
Cass	Fargo	$390,000	1.87%	$3,649	$1,122+
Burleigh	Bismarck	$341,000	0.88%	$1,501	$528+
Grand Forks	Grand Forks	$280,000	1.35%	$1,890	$810+
Ward	Minot	$365,000	1.07%	$1,953	$643+
Stark	Dickinson	$310,000	1.15%	$1,783	$690+
Morton	Mandan	$320,000	1.05%	$1,680	$630+

Example Calculation (Cass County - Fargo):

• $390,000 home, true and full value = $390,000
• Assessed value (50% of true and full) = $195,000
• Property tax at 1.87% on $195,000 = $3,649
• 100% credit applies to first $120,000 true value ($60,000 assessed)
• Tax on $60,000 at 1.87% = $1,122
• Savings with 100% disabled credit: $1,122
• Remaining tax: $2,527

Over 20 years, a 100% disabled veteran in Fargo saves $22,440 compared to a non-disabled homeowner.

Surviving Spouse Benefits

Unremarried Surviving Spouse:

• Eligible for: 100% property tax credit (same as deceased veteran had)
• Requirements: Veteran qualified for credit; spouse has not remarried; receives VA Dependency and Indemnity Compensation (DIC)
• Duration: As long as spouse remains unremarried

If your spouse was a qualifying disabled veteran, you retain the full 100% credit after their death, as long as you don't remarry and you're receiving DIC from the VA. This is one of the better surviving spouse benefits nationally—many states terminate credits upon the veteran's death.

Income Tax Treatment

Military Retirement Pay

• State tax: $0—100% exempt from North Dakota income tax
• Federal tax: Still taxed federally
• Annual savings: $800-$2,000+ compared to states that tax military retirement

North Dakota fully exempts military retirement pay from state income tax for all branches (Army, Navy, Air Force, Marines, Coast Guard, Space Force) and components (active duty retirees, Reserve, National Guard). This applies to retired pay, retainer pay, and equivalent payments.

Example savings:

• E-8 retiree with $35,000 pension:

  • In Minnesota (top rate 5.35%): $1,873 state tax
  • In North Dakota: $0
  • Annual savings: $1,873

• O-5 retiree with $55,000 pension:

  • In Montana (top rate 5.9%): $3,245 state tax
  • In North Dakota: $0
  • Annual savings: $3,245

• E-7 retiree with $30,000 pension:

  • In South Dakota: $0 (no income tax)
  • In North Dakota: $0
  • No difference (both states exempt)

How to claim: When filing your North Dakota state tax return, subtract the full amount of military retirement benefits reported on your federal Form 1099-R. Attach a copy of your 1099-R from Defense Finance and Accounting Service (DFAS) to your state return.

For tax years 2019 and after: Military retirement benefit payments received by retired U.S. Armed Forces, Reserve, and National Guard members, or their surviving spouses, may be subtracted from North Dakota taxable income. The deduction equals the taxable amount of benefits reported on your federal return.

North Dakota Income Tax Rates (2025)

North Dakota has three tax brackets with rates from 0% to 2.5% (among the lowest state income tax rates in America):

Single Filers:

• $0 – $55,975: 0% (no state income tax)
• $55,975 – $252,325: 1.95%
• Over $252,325: 2.5%

Married Filing Jointly:

• $0 – $55,488: 0% (no state income tax)
• $55,488 – $164,038: 1.95%
• Over $164,038: 2.5%

Standard deduction: $15,000 (single), $30,000 (married filing jointly)

What this means for veterans:

• If your total income (excluding military retirement) is under $55,975 (single) or $55,488 (joint), you pay zero North Dakota state income tax
• Even at higher incomes, the maximum rate is only 2.5%—far lower than Minnesota (5.35%), Montana (5.9%), or most other states

Example: A married couple, both veterans, with $50,000 military retirement (exempt) + $40,000 civilian income:

• Taxable income: $40,000 (retirement is exempt)
• After $30,000 standard deduction: $10,000 taxable
• Tax owed: $0 (under $55,488 threshold)

This is one of North Dakota's best features for military retirees—you can have substantial income and still pay zero or minimal state income tax.

VA Disability Compensation

• Tax status: 100% exempt federally and in all states
• North Dakota: Not taxed

All VA disability compensation is federally tax-exempt and not subject to any state income taxes. North Dakota honors this exemption.

Survivor Benefits (SBP)

• North Dakota taxation: Taxed at regular income tax rates (0-2.5%)
• Federal: Taxed federally
• Note: Military retirement pay is exempt for surviving spouses, but SBP payments from DFAS are treated as regular pension income

Surviving spouses receiving Survivor Benefit Plan payments do pay North Dakota income tax on SBP, though the low rates (0-2.5%) minimize the impact. However, if the surviving spouse receives military retirement pay directly (not SBP), that retirement pay is fully exempt.

Other Military Income

• Drill pay (Guard/Reserve): Subject to North Dakota income tax at regular rates (0-2.5%)
• Combat pay: Federally exempt; not taxed by North Dakota
• Active duty pay: Taxed by North Dakota if you're a resident; exempt under SCRA if you maintain out-of-state residency

SCRA Protection: If you're active duty stationed in North Dakota but your home of record is another state, you're protected under the Servicemembers Civil Relief Act—you only pay income tax to your home state, not North Dakota.

Vehicle & Registration Benefits

Disabled American Veteran (DAV) License Plates:

• Eligibility: 100% service-connected disabled veterans
• Cost: Free registration and license fees (waived annually)
• Vehicle excise tax: Exempt on up to two vehicles
• Parking: Plates allow parking in handicap parking spaces (no additional placard required)
• Annual savings: $100-$200 per vehicle (registration + excise tax)

North Dakota's DAV plates provide three major benefits:

1. No annual license fees
2. No vehicle excise tax (5% sales tax on vehicle purchases)
3. Handicap parking privileges

How to apply: Apply at North Dakota Department of Transportation. Provide:

• DD Form 214
• VA letter certifying 100% service-connected disability
• Vehicle title and registration

Excise Tax Exemption Example:

• Buying a $40,000 truck: 5% excise tax = $2,000
• With DAV plates: $0
• Savings: $2,000 per vehicle (up to two vehicles)

Surviving Spouse: An unremarried surviving spouse may retain one DAV plate for their own use.

Weight Restriction: Vehicles with gross weight of 26,000 lbs or more are excluded from DAV plates.

Driver's License Fee: No specific driver's license fee exemption for disabled veterans in North Dakota, though DAV plate holders don't pay vehicle registration fees.

Sales Tax

• General sales tax: 5% (state rate)
• Local sales tax: Up to 3.5% (varies by city/county)
• Combined rate: 5-8.5% depending on location
• Veteran exemption: None (except vehicle excise tax for DAV plate holders)

North Dakota has a 5% state sales tax, which is moderate compared to other states (national median is ~6%). Unlike states like Montana, Oregon, or New Hampshire with no sales tax, North Dakota veterans pay the standard rate on most purchases.

Major city combined rates:

• Fargo: 7.5% (5% state + 2.5% local)
• Bismarck: 7% (5% state + 2% local)
• Grand Forks: 7.5%
• Minot: 7.5%

Vehicle Excise Tax Exemption: The one major sales tax benefit is for 100% disabled veterans with DAV plates—they're exempt from the 5% vehicle excise tax on up to two vehicles. This saves $2,000 on a $40,000 vehicle purchase.

No general sales tax exemption exists for groceries, clothing, household goods, or other purchases. Veterans pay the standard 5-8.5% combined rate.

Overall Tax Analysis

Annual Tax Savings by Rating

100% Disabled Veteran (Fargo, $390,000 home, $40,000 military retirement, married):

• Property tax saved: $1,122
• Military retirement exemption saved (vs. Minnesota): $2,140
• Vehicle excise tax saved (one-time on $40,000 vehicle): $2,000 amortized = $200/year
• Sales tax paid: -$800 (estimated on $16,000 annual purchases)
• Total annual savings vs. Minnesota: $2,662
• Total annual savings vs. non-exempt ND resident: $1,322

75% Disabled, Military Retiree ($35,000 retirement):

• Property tax saved: $841
• Military retirement exemption saved: $1,873
• Total annual savings: $2,714

50% Disabled, Military Retiree ($30,000 retirement):

• Property tax saved: $561
• Military retirement exemption saved: $1,605
• Total annual savings: $2,166

Military Retiree, No Disability ($40,000 retirement):

• Property tax saved: $0
• Military retirement exemption saved: $2,140
• Total annual savings: $2,140

The biggest benefit in North Dakota is the military retirement pay exemption. Everyone with military retirement saves $800-$2,000+ annually. Disabled veterans (50%+) get an additional boost from the property tax credit, with savings scaling based on disability percentage.

20-Year Savings Projection

100% Disabled Veteran:

• Annual savings (vs. MN): $2,662
• 20-year total: $53,240
• Net present value (3% discount rate): $39,700

75% Disabled:

• Annual savings: $2,714
• 20-year total: $54,280
• NPV: $40,470

50% Disabled:

• Annual savings: $2,166
• 20-year total: $43,320
• NPV: $32,280

Military Retiree (No Disability):

• Annual savings: $2,140
• 20-year total: $42,800
• NPV: $31,900

Over 20 years, even a non-disabled military retiree saves over $40,000 compared to states that tax military retirement. Disabled veterans save $50,000-$55,000, with 100% disabled saving the most due to full property tax credit.

Comparison to Neighboring States

State	Military Retirement Tax	100% Disabled Property Exemption	Sales Tax	Annual Savings (100% Disabled, $40K Retirement, $390K Home)
North Dakota	Exempt	100% credit on $120K value ($1,122 saved)	5%	Baseline
South Dakota	Exempt (no income tax)	$0 exemption (no property tax credit)	4.5%	-$1,122 (worse property tax)
Minnesota	Taxed	$0 exemption (minimal property credit)	6.875%	-$2,662 (worse overall)
Montana	Partially exempt (up to $5,450)	$0 exemption	0%	-$375 (slightly worse)
Wyoming	Exempt (no income tax)	$0 exemption	4%	-$622 (slightly worse property)

Verdict: North Dakota ranks #2 among neighboring states for 100% disabled veterans (South Dakota's no income tax is better, but lack of property tax credit hurts). North Dakota is #1 for 50-99% disabled veterans due to the scalable property tax credit. For non-disabled military retirees, South Dakota or Wyoming edge ahead due to no state income tax.

State vs National Comparison

• Military retirement exemption: Top tier—full exemption saves $800-$2,000+ annually
• Property tax credit: Above average—percentage-based credit matching disability rating is fairer than fixed-dollar exemptions
• Income tax rates: Excellent—0-2.5% ranks among lowest in America
• Sales tax: Moderate—5% is neither great nor terrible
• Overall ranking: Top 15 nationally for disabled veterans and military retirees

Studies consistently rank North Dakota in the top 15-20 states for military retirees and disabled veterans. The military retirement exemption and low income tax rates are the biggest draws. Property tax credit is solid but not as generous as states like Texas, Oklahoma, or Florida with higher exemption caps.

Who Benefits Most

Best for:

• Military retirees with $30,000+ pensions (save $1,500-$2,000+ annually on state income tax)
• 50-100% disabled veterans (get property tax credit matching rating percentage)
• 100% disabled veterans (full property tax credit + free vehicle registration)
• Veterans moving from high-tax states (Minnesota, Montana, California, Illinois)
• Veterans seeking affordable cost of living (median home $280,600)

Less beneficial for:

• Veterans under 50% disabled (no property tax credit)
• Veterans without military retirement income (limited tax benefits)
• Veterans sensitive to cold weather (brutal winters, average January temps 5-17°F)

Better options:

• If you're not disabled and want lower overall taxes, consider South Dakota or Wyoming (no state income tax, lower sales tax)
• If you want better property tax exemptions for high-value homes, consider Texas or Oklahoma (higher exemption caps)
• If you want warmer weather with similar tax benefits, consider Mississippi or Alabama

Additional Financial Benefits

Estate Tax / Inheritance Tax

• North Dakota estate tax: None
• North Dakota inheritance tax: None
• Veteran exemptions: N/A (no estate/inheritance taxes)

North Dakota has no estate or inheritance taxes, which benefits veterans with substantial assets and simplifies estate planning.

Hunting and Fishing Licenses

50% or Greater Disabled Veterans:

• Fishing license: $5 ($1 certificate fee) or free (sources vary—contact ND Game & Fish)
• Annual savings: ~$30 compared to standard resident fishing license

100% Disabled Veterans:

• Combined general game, habitat stamp, small game, and fur-bearer license: $3 ($1 certificate fee)
• Annual savings: ~$75 compared to standard licenses

State Park Entrance Permit:

• 50% or greater disabled veterans: Free lifetime permit
• Annual savings: $35

Former POWs: Also eligible for free lifetime state park entrance permit

Active Duty / National Guard: North Dakota resident service members on leave may hunt small game, fish, or trap during open season without a license (must carry proof of residency and leave paperwork).

Long-Term Care: North Dakota Veterans Home

• Location: Lisbon, ND (52 skilled nursing beds, 98 basic care beds)
• Eligibility: Honorably discharged veterans and their spouses
• Services: 24-hour nursing care, memory care unit (13 beds), basic care households
• Cost: Based on income and VA benefits eligibility
• Website: ndvh.nd.gov
• Phone: Contact facility for admissions info

Since 1893, the North Dakota Veterans Home has provided quality care for veterans. It's one of the best long-term care options for aging veterans in the state.

How to Maximize Benefits

Action Plan:

1. Establish North Dakota residency immediately. Get a driver's license, register to vote, file declaration of domicile. The sooner you're a resident, the sooner tax benefits begin.

2. Apply for property tax credit by March 31. File with your county auditor within months of moving. Missing the deadline costs you a full year of savings ($500-$1,200+).

3. Update DFAS withholding for military retirement. Stop North Dakota state income tax withholding from retirement pay—it's fully exempt. Adjust at mypay.dfas.mil.

4. Apply for DAV license plates if you're 100% disabled. Free registration, free vehicle excise tax (up to 2 vehicles), and handicap parking. Worth $2,000+ on vehicle purchase.

5. Claim hunting/fishing license discounts. If you're 50%+ disabled, get fishing license for $5 and hunting licenses for $3. Save $100+ annually.

6. Get free state park permit. 50%+ disabled veterans receive free lifetime state park entrance permits. Save $35/year.

7. File North Dakota tax return to claim military retirement exemption. Even if your federal income is substantial, subtract military retirement pay on your state return. Attach 1099-R from DFAS.

Common Mistakes:

• Not filing property tax credit by March 31: You'll pay full property tax for the year. In Fargo, that's $1,122 lost for a 100% disabled veteran.

• Assuming property tax credit applies automatically: It doesn't. You must file an affidavit with your county auditor proving eligibility.

• Paying state income tax on military retirement: North Dakota fully exempts it. Update DFAS withholding and claim the exemption on your state return.

• Not applying for DAV plates: 100% disabled veterans miss out on $2,000+ vehicle excise tax savings, plus free annual registration.

• Filing in the wrong county: Property tax is handled at the county level. File with the auditor in the county where your home is located (Cass County for Fargo, Burleigh for Bismarck, etc.).

• Not verifying surviving spouse eligibility: If your spouse is receiving DIC from the VA after your death, they retain the full property tax credit. Make sure they file to continue the benefit.

Resources

Apply Here:

• Property tax credit: Contact your county auditor

  • Cass County (Fargo): (701) 241-5600 | casscountynd.gov
  • Burleigh County (Bismarck): (701) 222-6718 | burleigh.gov
  • Grand Forks County: (701) 780-8229 | grandforksgov.com
  • Ward County (Minot): (701) 857-6460 | co.ward.nd.us
  • Find your county: nd.gov/counties

• DAV license plates / vehicle excise tax exemption: ND Department of Transportation | (701) 328-2725 | dot.nd.gov

• Property tax credit information: ND Office of State Tax Commissioner | tax.nd.gov | Property Tax: Credit for Disabled Veterans guideline

Contact Information:

• ND Department of Veterans Affairs: (701) 333-4321 | veterans.nd.gov | ndva@nd.gov
• Tax questions: ND Office of State Tax Commissioner | (701) 328-1247
• Hunting/fishing licenses: ND Game & Fish | (701) 328-6300 | gf.nd.gov

Frequently Asked Questions

Q: Do I pay state income tax on my military retirement in North Dakota?

A: No. North Dakota fully exempts military retirement pay from state income tax for all service branches and components (active duty retirees, Reserve, Guard). You'll still pay federal tax, but zero state tax.

Q: What's the property tax credit amount for a 70% disabled veteran?

A: You get a 70% credit on property taxes for the first $120,000 of true and full valuation of your homestead. If your annual property tax on that portion is $900, you save $630 (70% of $900).

Q: Can I get the property tax credit if I'm 90% disabled but not 100%?

A: Yes. Any service-connected disability rating of 50% or higher qualifies. Your credit percentage equals your VA rating percentage.

Q: Does the property tax credit apply to second homes or rental properties?

A: No. Only your primary residence (homestead) qualifies.

Q: I'm TDIU (rated 70% but 100% unemployable). Do I qualify for 100% credit?

A: Yes. Veterans with extra-schedular ratings for individual unemployability bringing the total disability rating to 100% qualify for the 100% credit.

Q: I'm 100% P&T. Do I need to reapply every year?

A: No. Once approved, the credit typically continues automatically. However, notify your county auditor if you move to a new property or county—you'll need to reapply there.

Q: Can my surviving spouse keep the property tax credit if I die?

A: Yes. The unremarried surviving spouse of a deceased qualifying veteran can receive the 100% credit if they're receiving VA Dependency and Indemnity Compensation (DIC).

Q: Does North Dakota tax Social Security benefits?

A: No. North Dakota does not tax Social Security retirement benefits.

Q: I'm active duty stationed in North Dakota but my home of record is Texas. Do I pay ND taxes?

A: No. Under the Servicemembers Civil Relief Act (SCRA), you only pay income tax to your home state (Texas has no income tax). You're not subject to North Dakota income tax.

Q: What if I move from one North Dakota county to another?

A: You need to reapply for the property tax credit with your new county's auditor. The credit doesn't automatically transfer between counties.

Q: Are there local income taxes in North Dakota?

A: No. There are no local or municipal income taxes in North Dakota.

Q: Do I get a property tax credit if I'm a Purple Heart recipient but under 50% disabled?

A: No. Purple Heart alone doesn't grant the credit—you must have a service-connected disability rating of 50% or higher from the VA.

Q: How much do I save on sales tax living in North Dakota?

A: North Dakota has a 5% state sales tax (7-7.5% with local taxes). There's no general sales tax exemption for veterans. However, 100% disabled veterans with DAV plates are exempt from the 5% vehicle excise tax on up to two vehicles.

Q: Can I get both the property tax credit and free vehicle registration?

A: Yes, if you're 100% service-connected disabled. You qualify for both the 100% property tax credit and DAV plates with free registration and vehicle excise tax exemption.

Q: What if I have a 100% VA rating but it's not permanent and total (P&T)?

A: As long as your VA rating is 100% service-connected, you qualify for the 100% property tax credit. The credit applies to all 100% ratings, including TDIU.

Q: Do I pay property tax on vehicles in North Dakota?

A: North Dakota doesn't have an annual personal property tax on vehicles. However, you pay a one-time vehicle excise tax (5%) when purchasing. 100% disabled veterans with DAV plates are exempt from this excise tax.

Q: Can I claim both North Dakota veterans benefits and federal benefits?

A: Yes. North Dakota state benefits (property tax credit, military retirement exemption, vehicle excise tax exemption) are in addition to federal VA benefits (disability compensation, healthcare, education). Claiming state benefits doesn't affect federal benefits.

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Last updated: 2025. Tax laws change frequently. Verify current rates and eligibility with ND Office of State Tax Commissioner and your county auditor.