Credits and breaks for North Dakota families: the 0% bracket does the work the credits don’t

A family looking for the state version of the child tax credit or the earned income credit will not find one on the North Dakota return. The state has never enacted them, and because Form ND-1 starts from federal taxable income rather than federal tax, the federal credits do not carry over either. What the state offers instead is structural. The federal standard deduction, $32,200 for a joint return in 2026, has already come off before North Dakota looks at the number, and so have the new federal deductions for tips and overtime. Then the first $82,800 of what remains is taxed at 0%, $66,400 for a head of household. A married couple with two children pays no North Dakota income tax until their income passes about $115,000; a single parent, about $90,000. For most families in the state that is the whole story: the credits are missing because there is no tax left for them to reduce.

The handful of breaks that do exist matter to families above those lines, where the 1.95% rate begins, and to families with a particular situation: a 529 account, a two-earner marriage, an adoption, an elderly parent at home. This article takes them in order of how many people they reach.

What the federal return already did

Form ND-1 line 1b is Form 1040 line 15, federal taxable income. Everything the federal return deducts below adjusted gross income is therefore built into the state return with no entry: the standard deduction or itemized deductions, the qualified business income deduction for a family business, and the deductions Congress added in 2025 for qualified tips, qualified overtime and car-loan interest. A nurse with $9,000 of overtime premium pay deducts it federally and the deduction cuts North Dakota taxable income by the same $9,000. A parent who itemizes and deducts $40,000 of state and local taxes under the new SALT cap gets the same $40,000 off here. The 2025 ND-1 booklet lists these among the federal changes that flow into the state return, and there is no add-back for any of them.

Above-the-line adjustments flow through as well, because they reduce AGI and therefore taxable income: the student loan interest deduction, the HSA deduction, IRA contributions, the educator expense deduction. Pre-tax payroll items never appear in income to begin with, so a dependent care flexible spending account or a health plan premium taken from the paycheck is as good in North Dakota as it is federally.

What does not flow through is anything that works as a credit. The federal child tax credit, the additional child tax credit, the earned income credit, the child and dependent care credit, the American Opportunity and Lifetime Learning credits and the premium tax credit all reduce federal tax, not federal taxable income. North Dakota never sees them, and has no state equivalent for any of them.

The 0% bracket, by filing status

The last column is wages with nothing else: no 401(k) deferrals, no itemizing, no tips or overtime deduction. Each of those pushes the line higher. Above the line the rate is 1.95% on the next $222,050 joint or $211,200 head of household, then 2.5%.

The head-of-household bracket is worth noticing. At $66,400 it is more than four-fifths of the joint bracket, so a single parent is not far behind a married couple in what the state leaves untaxed. Federal head-of-household status is determined on the federal return and the state simply uses it; North Dakota has no separate test. The rules for who qualifies are in Head of household.

College SAVE: the one deduction most families miss

Contributions to College SAVE, the state’s own 529 plan, are deductible on Form ND-1 line 12, up to $5,000 a year on a single or head-of-household return and $10,000 on a joint return. The deduction is per return, not per child or per account, so a couple putting $4,000 into each of three children’s accounts deducts $10,000, not $12,000. Rollovers from another state’s plan do not count; the money has to be a new contribution. Grandparents who are North Dakota residents and contribute to a grandchild’s College SAVE account take the deduction on their own return.

The deduction is worth 1.95% of the contribution to a family above the 0% line, $195 on a full $10,000, and nothing to a family below it. For families still inside the 0% bracket the reason to use College SAVE is federal: earnings grow untaxed and come out untaxed for tuition, and for K-12 tuition and the other uses federal law allows. Withdrawals follow the federal treatment on the North Dakota return as well. The federal side is in Education beyond the credits.

The marriage penalty credit

The joint 0% bracket, $82,800, is less than twice the single bracket, $49,575. Two single earners could shelter $99,150 between them; married, the same two shelter $82,800. The marriage penalty credit on Form ND-1 line 22 gives some of the difference back. It is available to a couple filing jointly when both spouses have qualified income (wages, self-employment income after the SE tax deduction, and taxable pension, IRA and annuity income), the joint North Dakota taxable income exceeds a threshold, and the lower earner’s qualified income exceeds a second threshold. For 2025 the thresholds were $81,036 of joint taxable income and $47,550 of qualified income for the lower earner, and the worksheet in the booklet produced a credit of up to $312; the statute sets the maximum at $300 indexed for inflation. The 2026 thresholds and maximum will be in the 2026 ND-1 booklet, to come.

In practice the credit reaches two-earner couples where both spouses earn roughly $50,000 or more, which is also the point where a joint return clears the 0% bracket. A couple with one $120,000 earner and one $30,000 earner gets nothing, because the lower earner is under the threshold; a couple earning $70,000 each may get the full credit. The worksheet is short and the credit is nonrefundable. Preparers working from a federal return that has no such concept routinely skip it.

Adoption, family care and the rest of Schedule ND-1TC

Adoption credit. A family that claims the federal adoption credit also claims a North Dakota credit of 10% of the federal amount on Schedule ND-1AC, carried to Schedule ND-1TC line 23. It is limited to half of the North Dakota tax before credits, and unused credit carries forward three years. For a family in the 1.95% bracket with a $17,000 federal credit, the state credit is $1,700, but it will only be used against tax, so a family in the 0% bracket gets nothing from it. Because the federal credit is partly refundable from 2025 on and the state credit is not, the two behave differently.

Family member care credit. A taxpayer who pays for the care of a qualifying elderly or disabled family member claims a credit on Schedule ND-1FC, carried to ND-1TC line 1. The schedule sets the income limits, the definition of a qualifying family member and the expenses that count. It is the state’s one credit aimed at the sandwich generation, and it is nonrefundable.

Long-term care insurance. Premiums for a partnership-qualified long-term care policy earn a credit equal to the premium, up to $250, or $500 if both spouses are insured, on ND-1TC line 14.

Gifts. Contributions to a qualified endowment fund, a nonprofit private school, or a maternity home, child-placing agency or pregnancy help center earn credits on their own schedules (ND-1QEC, ND-1PSC and MCP). These are for donors rather than families as such, and the private school credit is for gifts to the school, not for tuition. A gift used for the endowment or planned gift credit has to be added back on ND-1 line 2 if it was also deducted federally.

Stillborn child. Schedule ND-1SA carries a subtraction for parents of a stillborn child, among its other statutory adjustments. The amount is on the schedule.

The employer child care contribution credit, 50% of the first $1,000 an employer contributes toward each employee’s child care, is new for 2025 and belongs to the employer, not the parent. A parent whose employer uses it sees the benefit in the paycheck, not on Form ND-1.

Education after high school

North Dakota has no tuition credit or deduction of its own. The federal American Opportunity and Lifetime Learning credits reduce federal tax and so do nothing here; the federal student loan interest deduction reduces AGI and so flows through. The College SAVE deduction covers contributions, not tuition paid directly. A family paying tuition out of pocket can route the money through a College SAVE account first and take the line 12 deduction on the way, as long as the deposit and the withdrawal are both proper under the plan’s rules.

Property tax: the $1,600 that is not on the return

The largest state benefit a North Dakota family is likely to receive has nothing to do with the income tax. The Primary Residence Credit takes up to $1,600 off the property tax on an owner-occupied home, with no age test and no income test, one per household. Homes held in a trust qualify, and so do townhomes, condominiums, duplexes and mobile homes. The application is online only, at tax.nd.gov/prc, between January 1 and April 1 of the tax year, and it has to be renewed every year. The credit approved in the 2026 window shows up as a deduction on the property tax statement mailed in December 2026; the window for the 2027 statement opens January 1, 2027. The Office of State Tax Commissioner administers it and answers questions at 701-328-7988. A family that misses the window misses the year.

The same 2025 law that raised the credit also capped most local property tax budget increases at 3% a year unless voters opt out. The Homestead credit and Renter’s Refund, which have age and income tests, are described in North Dakota for retirees; a disabled parent under 65 can qualify for them.