Updated October 16, 2026. Quick answer: North Dakota starts from federal taxable income and prints no exclusion for IRA distributions: the booklet says the starting point “perpetually conforms to the computation of federal taxable income”, and the retirement exclusions it lists are for military retirement benefits, licensed peace officers and U.S. Railroad Retirement Board benefits.
North Dakota at a glance
| Item | What the documents say |
|---|---|
| How the state taxes retirement-account income | Taxed as income, starting from federal taxable income; no general retirement or IRA exclusion in the documents read |
| Do the state’s documents address beneficiaries? | Not addressed for IRAs; death wording covers a decedent’s final return and the military exclusion for a surviving spouse |
| Retirement exclusion or credit | No IRA exclusion; exclusions for military retirement benefits and for a retired licensed peace officer with a minimum of 20 years of service or retired disabled |
| Rate in the documents read | 2025, single filers: 0.00% up to $48,475, 1.95% from $48,475 to $244,825 and 2.50% above $244,825 |
| State inheritance or estate tax | Not mentioned in the documents read |
| Changed for 2026? | From tax year 2026 qualifying military pay is no longer subject to North Dakota income tax withholding provisions; that is a withholding rule for military pay, not a change to IRA taxation |
What the North Dakota documents say
The 2025 booklet says the starting point for North Dakota taxable income “perpetually conforms to the computation of federal taxable income”. Federal changes to income and deductions are therefore included in the starting point by default.
Three retirement-related subtractions are printed: one for the taxable part of U.S. Railroad Retirement Board benefits, plus the two described next. “Certain retirement benefits of a licensed peace officer are excludable” from taxable income for a retired licensed peace officer with a minimum of 20 years of service or one retired disabled. The military retirement benefit exclusion reaches a retired service member or a surviving spouse of a deceased retired service member.
For a decedent the booklet covers the final return: if a final federal return is required, “a final North Dakota income tax return also must be filed”, by a court-appointed personal representative. That concerns the owner’s last return, not a beneficiary’s later withdrawals.
The rates page for the 2025 tax year prints 0.00% up to $48,475, 1.95% from $48,475 to $244,825 and 2.50% above that for single filers, with higher break points for married filing jointly.
The federal 10-year rule and your North Dakota tax year
IRS Publication 590-B says a beneficiary may be required to take the entire account balance by the “end of the 10th year following the year of the owner’s death”, with exceptions for certain beneficiaries. Because the balance generally has to come out within that window, the timing of each withdrawal decides which tax year it lands in. See the 10-year rule and annual RMDs, lump sum versus spreading withdrawals and inherited IRA rules.
Withholding and other state taxes
Whether a state withholds from a withdrawal is a separate rule: see state withholding on retirement withdrawals. For North Dakota’s own death taxes, see North Dakota inheritance tax.
What the documents do not say
- The documents read do not mention inherited accounts or beneficiaries of retirement accounts.
- The documents read do not say whether a beneficiary of an inherited IRA is treated differently from the account owner.
- They say nothing about a deduction or credit for estate tax or income in respect of a decedent.
Common mistakes
- Assuming North Dakota’s rule for your own retirement income also covers an account you inherited: read whether its documents address beneficiaries, and confirm the point with a North Dakota preparer.
Related: state tax on inherited IRA withdrawals, state by state, whether North Dakota taxes 401(k) and IRA withdrawals, North Dakota retirement taxes, North Dakota inheritance tax, inherited IRA rules, spouse versus non-spouse beneficiary rules, and state withholding on retirement withdrawals.
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Answer againSources
- 2025 Individual Income Tax Booklet: https://www.tax.nd.gov/sites/www/files/documents/forms/individual/2025-iit/2025-individual-income-tax-booklet.pdf
- Individual Income Tax (tax rates, 2025 tax year): https://www.tax.nd.gov/individual-income-tax
- IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs): https://www.irs.gov/pub/irs-pdf/p590b.pdf
Sources: the primary documents linked above, read on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.