Estate

The estate tax is a tax on the value of an estate transferred at death. North Dakota's estate tax is perpetually "federalized". North Dakota's definition of a deceased person's "taxable estate" is identical to the federal definition and North Dakota recognizes all federal exemptions and deductions. North Dakota's estate tax is equivalent to the credit for state death taxes allowed on the federal estate tax return (or a percentage of that credit equal to the percentage of property located in North Dakota). On the federal return, the credit for state death taxes is allowed as a credit against the federal tax liability. The estate pays the amount of this credit to the state. This method of determining state estate taxes ensures that estates pay no more in total estate taxes than the estate's federal tax liability. The tax is payable without interest for 15 months from the date of death.

However, for deaths occurring January 1, 2005 and thereafter, no Credit for State Death tax is paid to the State of North Dakota according to the Federal Congressional Budget Act Sunset Law under the provisions of the Economic Growth & Relief Act of 2001. This law expires after December 31, 2009. The North Dakota Estate Tax will be re-instated January 1, 2011 unless Congress takes further action.