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600 E. Boulevard Ave.
  Bismarck, ND 58505-0599
  701.328.7088 phone
  701.328.3700 fax
  877.328.7088 toll-free

Income Tax Withholding

An employer is required to withhold North Dakota income tax from wages paid to an employee if the employee performs services within North Dakota and the wages are subject to federal income tax withholding. A North Dakota-based employer must withhold North Dakota income tax from wages paid to a North Dakota resident employee who works in another state, except where the employer is required to withhold the other state's income tax from the wages earned in that state. Certain wages are not subject to North Dakota income tax withholding, such as wages paid by a farmer or rancher or wages exempt from federal income tax withholding. For more information on the requirements and exceptions, see the Income Tax Withholding Guideline.

An employer may choose one of the following two methods for calculating the amount to withhold:

  • Method One: Percentage of Wages—This method is generally recommended for use by all employers, particularly those with a computerized payroll system. This method is similar to the Percentage Method in the IRS's Publication 15 (Circular E), Employer's Tax Guide.
  • Method Two: Withholding Tables—This method may be useful to employers having both a manual payroll system and a small number of employees with wages below certain thresholds. This method is similar to the Wage Bracket Method in the IRS's Publication 15 (Circular E), Employer's Tax Guide.
  • Note: A third method, Percentage of Federal Withholding, has been discontinued due to obsolescence. Any employer using this method may continue using it through the 2013 calendar year; however, starting with wages paid in the 2014 calendar year, all employers must use one of the two methods described above.

For instructions on how to use either of the two withholding methods and the applicable withholding tables, go to Income Tax Withholding Instructions and Tables.

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