North Dakota Tax Preparer Requirements 2025-2026

North Dakota is one of the most straightforward states in which to build a tax preparation practice. No state license is required, no exam, no state-mandated continuing education, and no separate ND registration application. Obtain your federal PTIN, apply for IRS e-file acceptance, and you are legally authorized to prepare North Dakota individual income tax returns for compensation. What North Dakota does offer is a tax environment your clients will appreciate: among the lowest state income tax rates in the country (0% for most filers, 1.95% for the middle bracket, and a 2.50% top rate), complete exemptions for Social Security and all military pay, rolling federal conformity that passes every OBBBA benefit straight through to ND returns, and no local income taxes of any kind. For preparers who work the oil patch, agricultural clients, or military communities near Grand Forks and Minot, this guide covers every requirement and technical rule needed for TY2025 and TY2026.

Does North Dakota Require a State Tax Preparer License?

North Dakota does NOT require non-credentialed paid tax preparers to obtain a state license, register with any agency, pass a state exam, or complete state-mandated continuing education. The ND Office of State Tax Commissioner maintains a Tax Professional resource page (tax.nd.gov/tax-professional) but imposes no credentialing requirements on non-CPA, non-attorney preparers. The ND State Board of Accountancy governs CPAs and Licensed Public Accountants only; its authority does not extend to commercial tax preparation.

No statute in North Dakota Century Code Chapter 57-38 creates a preparer registration or licensing requirement for non-credentialed paid preparers. As of June 2026, no 2025 or 2026 session legislation has created such a program. (Preparers should confirm this remains the case at the start of each legislative session; the ND Legislative Assembly meets biennially.)

Federal PTIN: The One Mandatory Credential

All paid tax preparers in the United States must obtain and renew a Preparer Tax Identification Number (PTIN) from the IRS. This requirement applies equally in North Dakota.

• Fee (TY2025): $19.75 per year
• Renewal deadline: December 31 each year, for the upcoming filing season
• Where to apply or renew: irs.gov/ptin (online, approximately 15 minutes)
• Penalty for non-compliance: Civil penalty up to $500 per return; potential criminal penalties for willful violations

Your PTIN must appear on every federal and state tax return you prepare for compensation. It replaces your Social Security number as the preparer identifier on all returns.

EFIN: Required to E-File North Dakota Returns

Electronic Return Originators (EROs) who e-file North Dakota individual returns must hold IRS e-file acceptance. North Dakota does not issue a separate state EFIN and requires no separate ND application. Participation in the IRS Fed/State e-file program is automatic upon IRS acceptance.

EROs must retain e-file attachments (W-2s and supporting documents) for three years after the return due date. When the ND Tax Commissioner requests supporting documentation, the ERO must respond within five business days. North Dakota recognizes the federal PIN as the electronic signature for ND returns.

Annual Filing Season Program (Voluntary but Valuable)

The IRS Annual Filing Season Program (AFSP) is voluntary; North Dakota does not require it. However, completing the AFSP earns you limited representation rights before the IRS (examination, collection, and appeals in limited circumstances) and placement in the IRS Directory of Federal Tax Return Preparers, which clients can search. Requirements: 18 CE hours per year (including a 6-hour Annual Federal Tax Refresher course), plus an ethics component. For preparers who want to distinguish their practice without pursuing the EA designation, the AFSP Record of Completion is a cost-effective credential.

FTC Safeguards Rule (WISP): Required for Every Preparer

Every paid tax preparer, including solo practitioners, must maintain a Written Information Security Plan (WISP) under the Gramm-Leach-Bliley Act. Required elements include a designated responsible individual, multi-factor authentication (MFA) for all systems containing client data, a risk assessment, and an incident response plan. FTC penalties reach up to $46,517 per violation per day. The IRS provides a free WISP template at IRS Publication 5708.

North Dakota Individual Income Tax for TY2025

Income Tax Rates: Three Brackets, Among the Lowest in the Country

For Tax Year 2025, North Dakota uses a three-bracket structure enacted by HB 1158 during the 2023 legislative session. That bill replaced the previous five-bracket system and zeroed out the bottom bracket entirely, delivering approximately $358 million in individual income tax relief. The result is a system where most North Dakota filers owe zero state income tax.

Brackets are adjusted annually for inflation. Source: ND Office of State Tax Commissioner, individual income tax page and withholding rates booklet.

TY2026 Brackets: Same Rates, Upward Inflation Adjustment

The three rates (0%, 1.95%, 2.50%) carry forward to Tax Year 2026 unchanged. The ND Tax Commissioner released 2026 withholding guidance confirming the same rate structure, with bracket thresholds adjusted upward for inflation (the single zero-rate bracket is estimated at approximately $57,625 for withholding purposes). Official 2026 Form ND-1 return brackets are finalized by the ND Tax Commissioner and may differ slightly from withholding tables. Verify final 2026 ND-1 brackets against the Commissioner's published instructions before filing TY2026 returns.

Standard Deduction: Federal Amount via Rolling Conformity

North Dakota does not maintain a separate state standard deduction. Because ND uses rolling federal conformity, the federal standard deduction flows through directly to reduce ND taxable income for filers who do not itemize.

• TY2025 standard deduction (post-OBBBA): $15,000 (Single / MFS) or $30,000 (MFJ)
• Senior bonus deduction (age 65 and older): An additional $6,000 per qualifying individual, per OBBBA. This flows through to ND via rolling conformity.
• Personal exemptions: North Dakota has no personal exemptions and no dependent deduction. Preparers moving from other states should note this difference.

Key North Dakota Exemptions and Subtractions

Social Security: Fully Exempt, No Income Threshold

Effective Tax Year 2021, North Dakota fully exempts all Social Security benefits from state income tax. Prior law (TY2019-TY2020) limited the deduction to individuals with AGI at or below $50,000 single or $100,000 MFJ. The income threshold was eliminated entirely. All ND residents, regardless of total income, may deduct the full taxable portion of Social Security benefits included in their federal AGI. No separate form is required; the deduction is claimed on Schedule ND-1SA.

For preparers serving the significant retired population in ND, this is a straightforward but high-value point: every client collecting Social Security pays zero ND state tax on those benefits.

Military Pay: All Categories Fully Exempt

North Dakota has enacted full exemptions for every major category of military compensation:

• Military retirement pay (effective TY2019): Retired U.S. Armed Forces members, Reserve members, and National Guard members may deduct the full taxable amount of military retirement benefits reported on Form 1099-R. Surviving spouses qualify. Attach a copy of the DFAS 1099-R.
• Active-duty military pay (effective TY2023): All federal pay for training, education, mobilization, and bonuses, plus state pay for state active-duty emergencies, is fully deductible. Signed into law by Governor Burgum following the 2023 legislative session.
• Nonresident active-duty military: Nonresident service members with military wages as their only ND-source income have no ND filing obligation. No return is required.
• Military spouse earned income: If the spouse elects to use the service member's home state under the Veterans Benefits and Transition Act of 2018, North Dakota does not tax the spouse's ND-earned wages. The preparer must document the election. This directly affects clients stationed at Grand Forks AFB and Minot AFB.

The practical result: the vast majority of active-duty ND residents with no substantial non-military income will owe zero ND state tax.

Capital Gains: 40% Exclusion on Long-Term Gains

North Dakota provides a 40% exclusion on capital gains from assets held more than three years. Only 60% of qualifying long-term gains are included in ND taxable income. Short-term gains and gains from assets held three years or fewer are taxed as ordinary income at the applicable bracket rate (up to 2.50%).

The exclusion applies broadly: real estate, business interests, investments, and farmland. Example: on a $500,000 farmland gain, only $300,000 is ND taxable. At 2.50%, the ND tax is $7,500 rather than $12,500. For agricultural clients selling land to Bakken developers or retiring farm families, this exclusion is a significant planning point.

Note: The federal definition of "long-term" is more than 12 months. The ND exclusion uses a separate three-year holding period threshold. Verify the exact statutory cite (likely NDCC 57-38-30.3 or a related section) before relying on the three-year threshold for complex transactions, as some third-party sources cite the federal 12-month standard.

Federal Income Tax: Not Deductible on ND Return

North Dakota starts with federal taxable income (or federal AGI) as its computation base, then applies state-specific additions and subtractions. Federal income taxes paid are not among the allowable deductions. This is consistent with the conformity-state structure; preparers should not attempt to deduct federal taxes on the ND-1.

No State Earned Income Tax Credit

North Dakota has no state Earned Income Tax Credit. A temporary, nonrefundable credit of $350 (single) or $700 (MFJ) existed for TY2021 and TY2022 only, created by HB 1515. That credit expired after TY2022 and has not been renewed. Do not claim a state EITC on ND returns.

Renaissance Zone Tax Credits

North Dakota's Renaissance Zone Act (NDCC Chapter 40-63) provides income and property tax incentives for qualifying zone projects in designated city zones. The program is active in Fargo, Bismarck, Grand Forks, Minot, and other qualifying municipalities.

• Residential credit: $10,000 per year for up to 5 years (up to 8 years for certain projects per 2023 session amendment) for a single-family primary residence that qualifies as an approved Renaissance Zone project.
• Business and investment income exemption: Income from a qualifying zone project is exempt from ND income tax for the exemption period. The exemption applies to the portion of ND business or investment income attributable to zone project property.
• Renaissance Fund Organization: Taxpayers who invest in a fund financing zone projects may claim a credit.
• Filing requirement: Taxpayers must complete Schedule RZ and attach it to their ND-1, along with zone project approval letter information.

Additional Credits (Selected)

• Credit for income tax paid to another state (Schedule ND-1CR): Available for ND residents who also pay income tax in Minnesota, South Dakota, or other states. Significant for cross-border workers.
• Angel fund investor credit: Up to 45% of qualifying investment in a certified ND business. Annual cap $45,000; 5-year carryforward; lifetime limit $500,000. Relevant for Bakken-adjacent startups and ag-tech investors.
• Adoption credit: 10% of the allowable federal adoption tax credit, capped at 50% of ND tax liability, with a 3-year carryforward. Schedule ND-1TC.
• Employer child care contribution credit (new TY2025): 50% of first $1,000 per employee per year for contributions toward licensed ND facilities or facilities within 10 miles of ND. Claim on Schedule ND-1TC.
• Nonprofit private school contribution credits: 50% credit; 20% of tax liability cap; $2,500 per credit (primary, high school, and college variants). Schedule ND-1PSC.
• Biodiesel and green diesel credits: Relevant for agricultural and trucking clients.

OBBBA Federal Conformity: Every Provision Flows Through to ND

North Dakota is a rolling conformity state. It conforms automatically to changes in the Internal Revenue Code without requiring separate state legislation to adopt each provision. As of June 2026, no decoupling legislation has been enacted for any OBBBA provision. The following federal benefits all reduce ND taxable income automatically for TY2025 forward. This is a direct client benefit, in contrast to states such as South Carolina, Virginia, and others that decoupled from one or more OBBBA provisions.

Tip Income Deduction (IRC Section 222)

Qualified tip income received in tip-eligible industries is deductible from federal AGI, up to $25,000 per year. The deduction phases out for AGI above $150,000 (single) or $300,000 (MFJ). Effective TY2025 through TY2028. North Dakota conforms; no add-back is required. For ND clients in hospitality, food service, and gaming industries, this flows directly to lower ND taxable income.

Overtime Premium Deduction (IRC Section 225)

Qualified overtime compensation is deductible from federal AGI, up to $12,500 (single) or $25,000 (MFJ). Same AGI phase-out thresholds as the tip deduction. Effective TY2025 through TY2028. North Dakota conforms automatically. Oil patch workers, agricultural workers, and manufacturing employees who receive overtime pay benefit directly at the ND level.

100% Bonus Depreciation and Section 179

OBBBA reinstated 100% bonus depreciation for qualified property placed in service after January 19, 2025, and introduced 100% special depreciation for qualified production property. Section 179 expensing was increased to a $2.5 million maximum (phase-out beginning at $4 million). North Dakota conforms to both via rolling conformity. For agricultural clients purchasing farm equipment, Bakken operators acquiring drilling equipment, and any business making capital investments, these provisions allow full federal and ND deduction in the year of purchase.

Enhanced Standard Deduction and Senior Bonus

OBBBA increased the federal standard deduction to $15,000 (single) or $30,000 (MFJ) for TY2025. It also created a $6,000 senior bonus deduction for taxpayers age 65 and older. Because North Dakota uses the federal standard deduction as its own, these amounts flow through automatically for ND filers who do not itemize. Preparers should confirm that the senior $6,000 bonus applies at the ND level via the rolling conformity mechanism (or whether it requires a separate ND-1SA subtraction line) when preparing returns for older clients.

The bottom line for ND preparers: North Dakota clients keep every OBBBA benefit at the state level. You do not need to track ND-specific add-backs for tips, overtime, bonus depreciation, or the enhanced standard deduction. This simplifies multi-state return preparation compared to decoupling states.

North Dakota E-File Rules

There is no volume-based e-file mandate for paid preparers filing individual income tax returns in North Dakota. Unlike California, New York, New Jersey, and many other states, North Dakota does not require individual return preparers to e-file based on the number of returns they prepare each year. This is a meaningful operational difference.

However, e-filing is strongly preferred and the IRS federal mandate still applies: preparers who file 11 or more federal returns per year must e-file all returns unless an exception applies. That threshold covers virtually every professional preparer.

Entity-Level E-File Mandate

ND does have an entity-level mandate enacted by HB 1082 (2021 session, effective 2022): partnerships, S corporations, trusts, and fiduciaries with 10 or more owners or beneficiaries must file and pay electronically. Preparers who handle passthrough entity returns with ND-source income need to confirm the owner count and apply the mandate accordingly.

Information Return E-File Mandate

W-2s and 1099s must be filed electronically through ND TAP (tap.tax.nd.gov) or qualifying accounting software, regardless of quantity. The effective date for this requirement is 2022. The deadline for 1099 submission to ND is February 1 of the following year (confirm the exact date annually with the ND Tax Commissioner, as it aligns with the federal deadline and may shift when that date falls on a weekend).

Preparers handling oil royalty payments for Bakken-area clients will be familiar with Form RWT-1096 (royalty withholding transmittal). That reconciliation is also submitted through ND TAP. Preparers who withhold ND income tax from employees or handle royalty withholding must register through ND TAP before submitting.

Local Taxes: None

North Dakota has no city, county, or municipal income tax of any kind. No ND locality taxes wages, investment income, or business income. All income taxation is at the state level only. There are no local earned income taxes, no local payroll taxes, and no local occupational privilege taxes. Individual return preparation in North Dakota involves exactly one income tax jurisdiction: the state.

ND cities and counties may levy local sales and use taxes, lodging taxes, and restaurant taxes, but these are sales-side obligations and do not affect individual income tax filing. Source: ND Tax Commissioner local taxes page (tax.nd.gov/business/sales-and-use-tax/local-taxes-city-and-county-taxes).

Starting a Tax Preparation Business in North Dakota

LLC Formation

North Dakota LLCs are registered with the ND Secretary of State (sos.nd.gov). Online filing is available through the Secretary of State portal.

• Articles of Organization filing fee: $135
• Annual Report fee: $50 per year, due November 15
• First annual report due: In the calendar year following the year of registration
• Late fee: $50 (total $100 if the annual report is filed late)
• Franchise tax: None. North Dakota has no traditional franchise tax based on net worth or revenue. The $50 annual report fee is the only recurring state maintenance cost.

ND TAP Registration

Preparers who withhold ND income tax from employees, or who handle royalty withholding on behalf of clients, must register through ND TAP (tap.tax.nd.gov). A pure service LLC that does not withhold or remit sales tax does not require ND TAP registration solely for providing tax preparation services.

No State Business License Required for Tax Preparation

North Dakota does not require a statewide business license for service businesses, including tax preparation. If your LLC operates as a pure service firm (no product sales), no separate ND sales tax retail license is needed. The $135 formation fee, the annual $50 report, a federal EIN, and your PTIN cover the core compliance requirements for a newly formed ND tax preparation LLC.

High-Value Client Niches in North Dakota

Bakken Oil Patch (Williams, McKenzie, Mountrail Counties)

The Bakken formation is one of the most productive oil-producing regions in North America, and it generates a steady volume of complex ND returns. Preparers who understand the tax rules here serve clients nationwide, because many mineral rights owners are out-of-state residents who inherited or purchased ND mineral rights.

Royalty income for nonresidents: Oil companies and royalty aggregators are required to withhold ND income tax at 1.75% of gross royalty payments to nonresident mineral rights owners. Withheld amounts are reported on Form RWT-1096. The nonresident owner must file ND Form ND-1 with Schedule ND-1NR and receive credit for amounts withheld. Royalty payments appear in Box 2 of Form 1099-MISC. Many out-of-state owners (Texas, Oklahoma, Montana, and other state residents) do not realize they have ND filing obligations until their preparer identifies the withholding on the 1099-MISC.

Royalty vs. working interest: This is a critical distinction. Royalty interest income is passive ordinary income reported on Schedule E; no self-employment tax applies. Working interest income (active participation in a well) is reported on Schedule C (sole proprietor) or Schedule E (partnership interest) and may be subject to self-employment tax. Oil company K-1s frequently arrive late; factor this into your workflow for passthrough entity clients.

Postproduction cost deductions: Oil companies frequently deduct gathering, transportation, processing, and compression costs from royalty checks before calculating gross royalties. These deductions reduce both the reported gross royalty and any tax disputes. Preparers should be aware clients may not be receiving the full contractual royalty amount.

Composite returns: Nonresident investors in ND oil and gas partnerships may be included in a composite return or have passthrough entity withholding applied at the highest marginal rate. Obtain the composite return information or withholding credit before completing the individual ND-1NR.

Capital gains on mineral rights sales: Gains from the sale of ND mineral rights held more than three years qualify for the 40% exclusion. For farm families selling mineral rights to Bakken developers, this is a meaningful planning point at both the federal and ND level.

Agriculture (Wheat, Sunflower, Soybeans, Canola)

North Dakota is the national leader in production of wheat, sunflower seeds, canola, flaxseed, dry edible peas, and lentils. The farm client base is large and carries specific complexity at both the federal and ND level.

• Schedule F income: Farm income and expenses on Schedule F flow directly to ND taxable income via conformity. Apply ND-specific subtractions (capital gains exclusion on qualifying land or livestock sales) on top of the federal Schedule F figure.
• Farmland capital gains: Gains on farmland held more than three years qualify for the 40% ND exclusion. On a $500,000 gain, only $300,000 is ND taxable, resulting in a maximum $7,500 ND tax at 2.50% rather than $12,500. Retirement-planning conversations for aging farmers often center on this calculation.
• Section 179 and bonus depreciation: OBBBA 100% bonus depreciation and the $2.5 million Section 179 cap flow through via rolling conformity. Farm equipment purchases are fully deductible in year one, federally and for ND purposes. This is a major year-of-purchase planning point.
• USDA disaster payments: The USDA American Relief Act 2025 triggered large disaster payments for ND agricultural producers. These payments are ordinary income on Schedule F and are fully taxable in ND.
• Crop insurance timing election: The federal election to defer crop insurance proceeds to the following year flows from federal to ND via conformity.
• Estimated tax: Farm clients with irregular income need quarterly ND estimated payments on Form ND-1ES. ND does not require estimated payments if the prior year tax liability was less than $500.

Military Communities (Grand Forks AFB, Minot AFB)

North Dakota hosts two major air force installations: Grand Forks AFB (319th Reconnaissance Wing) and Minot AFB (5th Bomb Wing and 91st Missile Wing, one of the nation's largest strategic bases). Both generate substantial populations of active-duty service members, civilian employees, Guard and Reserve members, and retirees.

• Active-duty ND residents: Must file ND-1 if ND resident. All active-duty military compensation is deductible, so most active-duty ND residents owe zero ND state tax unless they have substantial non-military income such as a spouse's wages or investment income.
• Active-duty nonresidents stationed in ND: Do not need to file ND-1 if military wages are their only ND-source income.
• Military spouse earned income: If the spouse elects the service member's home state under the 2018 Veterans Benefits and Transition Act, ND does not tax the spouse's ND-earned wages. Document the election in the client file.
• Retired military residents: File ND-1, deduct full pension amount on Schedule ND-1SA. Attach Form 1099-R from DFAS.
• Guard and Reserve members: Same retirement and active-duty pay exemptions apply as for regular Armed Forces members.

North Dakota Tax Forms Reference

Frequently Asked Questions

Preparer Notes: Items to Verify Annually

Tax law changes every year. The following items in this guide carry a higher-than-normal verification priority before each filing season:

• Confirm no ND session legislation has created a non-CPA preparer registration requirement (ND Legislative Assembly meets biennially; next regular session 2027).
• Confirm TY2026 Form ND-1 return brackets against the ND Tax Commissioner's published instructions (withholding brackets differ slightly from return brackets).
• Confirm the capital gains exclusion holding period under current ND statute (NDCC 57-38-30.3 or related): the three-year threshold appears in historical sources, but verify against current statute before applying to complex transactions.
• Confirm no OBBBA decoupling legislation passed in any subsequent ND session; rolling conformity is the current status as of June 2026.
• Confirm the $6,000 OBBBA senior bonus deduction flows to ND via rolling conformity or requires a specific ND-1SA subtraction line for TY2025 returns.