North Dakota lesson 5 of 6
North Dakota LLC taxes, licenses and permits
North Dakota has no LLC franchise tax. Members of a pass-through LLC pay North Dakota's graduated individual income tax on their share of profit, and the state's rate structure is unusually favorable at the lower end.
How members are taxed
A North Dakota LLC taxed as a partnership or sole proprietorship for federal purposes passes income through to its members, who report their share on North Dakota's individual income tax return. North Dakota's graduated brackets start at a 0% bottom bracket and rise to a top rate of 2.5%, among the lowest top individual rates of any state that taxes income at all. Confirm the current year's bracket thresholds on the Office of State Tax Commissioner's site before filing.
An LLC that elects C corporation tax treatment instead owes North Dakota's graduated corporate income tax, ranging from 1.41% to 4.31% depending on North Dakota taxable income.
Sales tax, withholding and licensing
If you sell taxable goods, register with the Office of State Tax Commissioner for a sales and use tax permit before you start selling. The general state rate is 5%, with local option taxes added in some cities and counties. If you have employees, register for withholding tax at the same time.
North Dakota has no general statewide business license. Licensing requirements depend on your industry and, in some cases, your city or county.
Key takeaways
- North Dakota's individual income tax runs from a 0% bottom bracket to a 2.5% top rate.
- A C-Corp election instead pays North Dakota's graduated corporate income tax of 1.41% to 4.31%.
- There is no statewide business license, so check city, county and industry-specific requirements.
Frequently asked questions
Does North Dakota have a franchise tax on LLCs?
No. North Dakota does not levy a franchise tax on LLCs. Only an LLC that elects C corporation tax treatment pays the state's graduated corporate income tax.
What is North Dakota's top individual income tax rate?
2.5%, with a 0% bottom bracket, one of the more favorable graduated structures among states that tax individual income.
Official sources
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Last reviewed: September 2026 - reviewed by Gullia Filing Legal & Formation Team