Updated October 5, 2026. Quick answer: Yes. North Dakota taxes trust income, with the top 2025 rate at 2.50%, and the Century Code imposes the tax on “every resident and nonresident individual, estate, and trust.” The tax is figured on North Dakota taxable income.
How North Dakota treats trust income
| Item | What the documents say |
|---|---|
| Treatment | North Dakota taxes the income of estates and trusts under N.D.C.C. 57-38-30.3, and the statute reaches both resident and nonresident trusts. The source says: “every resident and nonresident individual, estate, and trust.” The statute imposes the tax on income earned or received in the taxable year. |
| Who counts as a resident trust | The 2025 instructions do not list a trustee, settlor or beneficiary test, and instead tie residency to the trust’s connection with the state. In the source’s words, “considered a resident if it has a relationship” to North Dakota that is sufficient to create nexus for income tax purposes, and they refer readers to N.D. Admin. Code 81-03-02.1-04. |
| Rate on trust income | The statute prints a separate graduated schedule for estates and trusts, with a 0.00% bracket, a 1.95% bracket and a 2.50% top bracket. In the source’s words, “the schedule in subdivision e must be used” for purposes of this subsection, and the Tax Commissioner is directed to adjust the bracket amounts for inflation while leaving each rate unchanged. |
| Distribution deduction | The documents read do not state a distribution deduction for North Dakota in those words, and the Form 38 instructions send filers to amounts reported on federal Form 1041. In the source’s words, “Enter the amounts from the 2025 Federal Form 1041” page 1, lines 1 through 8, on the corresponding lines in Column A. |
| Nonresident trusts | A nonresident estate or trust is taxed only on the part of its gross income from North Dakota sources, and interest, dividends and intangible income are generally not treated as North Dakota source. In the source’s words, “Only the portion of the nonresident estate” or trust’s gross income from North Dakota sources is reportable to North Dakota. |
| Return to file | A fiduciary files North Dakota Form 38 when a federal Form 1041 is required, and a nonresident estate or trust files only if it had North Dakota source gross income in 2025. In the source’s words, “must file a 2025 Form 38, Fiduciary Income Tax Return, if” the fiduciary is required to file a 2025 Form 1041. |
| Nonresident beneficiary withholding | The instructions describe tax withheld from the year-end share of North Dakota income of a nonresident beneficiary, and a composite filing option for eligible nonresident beneficiaries. In the source’s words, “tax at the rate of 2.50% from the year-end” distributive share of North Dakota income of a nonresident beneficiary. |
A $10,000 example
The tax on $10,000 of taxable income a trust keeps depends on the bracket it lands in. Taxed wholly at the lowest printed rate, 0.00%, the tax is computed as $10,000 x 0.00% = $0; taxed wholly at the highest, 2.50%, it is computed as $10,000 x 2.50% = $250. The state’s own schedule decides which applies. Federal tax on the trust’s income still applies.
Income the trust passes out to a beneficiary is handled as the distribution deduction row above describes.
What changes in 2026
The latest documents read print no 2026 change to how trust income is taxed.
Federal rules
The state’s treatment sits on top of the federal one. The federal brackets a trust faces are laid out in trust tax brackets versus individual brackets, and capital gains that a trust keeps are covered in capital gains stay in the trust. The IRS explains the federal return in the About Form 1041 page.
Related: how North Dakota taxes retirement income, whether North Dakota taxes pensions, what a living trust costs in North Dakota, federal trust tax brackets, and trust income tax by state.
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Answer againSources
- 2025 Fiduciary Income Tax Booklet, Form 38 and Schedule K-1 (North Dakota Office of State Tax Commissioner): https://www.tax.nd.gov/sites/www/files/documents/forms/business/fiduciary/2025-fiduciary/28707-fiduciary-income-tax-booklet-2025.pdf
- North Dakota Century Code Chapter 57-38, Income Tax (North Dakota Legislative Branch): https://ndlegis.gov/cencode/t57c38.pdf
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.