Updated October 5, 2026. Quick answer: Yes, in principle, but the first slice is taxed at 0.00%. North Dakota starts from federal taxable income, and the booklet says it “perpetually conforms to the computation of federal taxable income”. For 2025 a single filer pays 0.00% up to $48,475, 1.95% to $244,825 and 2.50% above.
More state retirement-income schedules, line by line: North Dakota ND-1 retirement lines.
How North Dakota treats annuity income
| Item | What the documents say |
|---|---|
| Treatment | Taxed through federal taxable income; no general pension or annuity exclusion |
| 2025 rates (single) | 0.00% up to $48,475, 1.95% from $48,475 to $244,825, 2.50% above $244,825 |
| Credit income | “Taxable portion of IRAs, pensions, annuities, and social security benefits” counts in the credit worksheet |
| Military | “Military Retirement Benefit Exclusion:” |
| Peace officers | “Certain retirement benefits of a licensed peace officer are excludable from” |
| Purchased annuities | The booklet does not address annuities bought outside a retirement plan separately |
A $24,000 example
A single filer whose whole federal taxable income is $24,000 of annuity payments sits under the $48,475 line, so the 0.00% rate applies and the North Dakota tax is $0.
Annuity income stacked on top of other income above $48,475 is taxed at 1.95% on the part in that bracket.
What changes in 2026
The latest documents read print no 2026 change to the way annuity income is taxed.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal side in Topic no. 410, Pensions and Annuities and Publication 575, Pension and Annuity Income.
Related: whether North Dakota taxes pensions, how North Dakota taxes retirement income, state tax on 401(k) and IRA withdrawals, how a surrendered annuity is taxed, and pension and annuity decisions.
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Answer againSources
- 2025 Individual Income Tax Booklet (North Dakota Office of State Tax Commissioner): https://www.tax.nd.gov/sites/www/files/documents/forms/individual/2025-iit/2025-individual-income-tax-booklet.pdf
- Individual Income Tax rates page (North Dakota Office of State Tax Commissioner): https://www.tax.nd.gov/individual-income-tax
Sources: the primary documents linked above, read on October 5, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.