North Dakota State Tax Credits

More ways to save your hard-earned money from the tax man!

North Dakota has some great State Tax Credit for you.

Thank you so much for checking our resource out here for your state and congratulations for taking a proactive step to paying less in taxes. For your state, we have identified the tax credits that are currently being offered to help you pay less in state taxes.

We hope this resource is helpful to you, and if there is something you feel we have missed, please let us know!

It would be completely arrogant of us to think that we know all things and if we missed something we want to know so we can vet that and help you and our other friends in the entrepreneurial community pay less in taxes! And if you found this helpful, you should check out our DIY resources inside of our Tax Savings Communities (found at www.MakeTaxesFair.com/Our-Communities).

We're also ready to help you if you want to skip the line of the DIY process and get help directly from us. To learn more about how we help our clients check out www.MakeTaxesFair.com/Get-My-Roadmap
North Dakota

North Dakota Nonprofit Private School Contribution Tax Credit

Overview:
This North Dakota income tax credit incentivizes charitable giving to nonprofit private schools by offering a credit equal to 50% of the contribution, up to $2,500 per educational category (K–8, 9–12, college). It supports educational institutions while providing tax relief for individuals and businesses.

Who It’s For:
North Dakota taxpayers—including individuals, C corporations, passthrough entities, estates, and trusts—who make donations to eligible nonprofit private schools within the state.

Four Key Highlights:

  1. 50% Credit for Qualified Donations

    • Equal to half of the donation amount.

    • Capped at $2,500 per school category (K–8, 9–12, and college).

  2. Applies Across Multiple Entity Types

    • Individuals, C corps, partnerships, S corps, estates, and trusts are eligible.

    • Passthrough entities distribute credit based on ownership share.

  3. One-Time Use—No Carryforward

    • Unused credits cannot roll over to future years.

    • Estates and trusts can retain or pass through their share of the credit.

  4. Flexible Timing with Prior-Year Election

    • Contributions made by the tax return deadline (with extensions) may be applied to the previous tax year.

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North Dakota Workforce Recruitment Tax Credit

Overview:
The Workforce Recruitment Tax Credit rewards North Dakota employers who use extraordinary methods to fill hard-to-recruit positions by offering a 5% income tax credit on the first 12 months of wages paid to newly hired employees. The credit promotes aggressive talent acquisition strategies to meet workforce demands.

Who It’s For:
North Dakota businesses—including passthrough entities—recruiting for difficult-to-fill roles that pay at least 125% of the state’s average wage and require extensive recruiting efforts.

Four Key Highlights:

  1. 5% Credit on First-Year Wages

    • Based on wages paid during the employee’s first 12 months.

    • Credit is claimed the year after employment completion.

  2. Extraordinary Recruitment Required

    • Must use all of the following for 6+ months:
      a) Paid recruiter,
      b) Trade journal advertising,
      c) Fee-based job board listing,
      d) Incentives like signing bonuses or relocation aid.

  3. Employee Perk: Deductible Incentives

    • If employer claims the credit, the employee can deduct signing bonuses and similar fringe benefits from federal taxable income.

  4. Carryforward Flexibility

    • Unused credits may be carried forward for up to 4 years.

    • Credit is distributed among owners in passthrough entities.

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North Dakota Internship Employment Tax Credit

Overview:
The North Dakota Internship Employment Tax Credit offers a 10% income tax credit to employers who hire student interns through qualified, for-credit academic programs. Designed to support student development and workforce readiness, this incentive helps businesses reduce tax liability while cultivating future talent.

Who It’s For:
North Dakota businesses—both corporations and passthrough entities—providing supervised, credit-eligible internships to college or vocational students in fields related to their studies.

Four Key Highlights:

  1. 10% Credit on Intern Wages

    • Applies to compensation paid to interns enrolled in qualifying academic programs.

    • Internships must be related to the student’s major and supervised by the employer.

  2. Cap of 5 Interns at a Time

    • Employers may claim the credit for up to five interns employed simultaneously.

  3. Lifetime Credit Limit of $3,000

    • The total credit an employer can claim across all years is capped at $3,000.

  4. Available to Passthrough Entities

    • The credit is distributable to owners based on ownership percentages in partnerships, S Corps, and LLCs.

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North Dakota Seed Capital Investment Tax Credit

Overview:
The Seed Capital Investment Tax Credit incentivizes individual and passthrough entity investors to support early-stage, high-growth businesses in North Dakota. By offering a 45% income tax credit on qualified equity investments, the program helps fuel innovation and entrepreneurship across the state.

Who It’s For:
North Dakota taxpayers—including individuals and passthrough entity owners—who invest in certified primary sector businesses without holding a controlling interest or deriving most of their income from the business.

Four Key Highlights:

  1. Earn a 45% Tax Credit on Investments

    • Applies to equity investments in qualified North Dakota-based primary sector businesses.

    • Only the first $500,000 per business counts toward the credit.

  2. Max $112,500 Credit Per Taxpayer Annually

    • Helps reduce income tax liability significantly for eligible investors.

    • Ideal for angel investors and venture participants.

  3. 4-Year Carryforward for Unused Credits

    • Unused portions of the credit can be applied in future tax years—up to four years.

  4. Passthrough Entity & Angel Fund Friendly

    • Credits may be passed through to partners or members based on ownership interest.

    • Businesses must report investments within 30 days to maintain eligibility.

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North Dakota Angel Investor Investment Tax Credit

Overview:
The North Dakota Angel Investor Investment Tax Credit rewards individuals who invest through certified angel funds that support early-stage, R&D-focused businesses. Investors can earn a 25–35% income tax credit for qualifying investments, helping drive innovation and business growth across the state.

Who It’s For:
Individual investors—directly or through passthrough entities—who invest in certified North Dakota angel funds supporting qualified startups and growth-stage businesses engaged in research or product development.

Four Key Highlights:

  1. Earn a 25–35% Income Tax Credit

    • 35% credit for in-state qualified business investments.

    • 25% credit for qualified out-of-state business investments with ND operations.

  2. Generous Credit Limits for Individuals

    • Claim up to $45,000 annually and $500,000 over your lifetime.

    • Credits apply only to individuals (not entities).

  3. 5-Year Credit Carryforward Option

    • Any unused credit can be carried forward for up to 5 years, ensuring tax flexibility.

  4. Strict Certification & Reporting Requirements

    • Angel funds and qualified businesses must be certified by the ND Department of Commerce.

    • Investments must be reported within 30 days; late reports incur a $1,000/month penalty.

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North Dakota Charitable Contribution Endowment Fund Tax Credit

Overview:
North Dakota offers a 40% income tax credit for individuals and businesses that donate to qualified endowment funds supporting local nonprofits. This incentive encourages long-term charitable giving to strengthen community organizations across the state.

Who It’s For:
North Dakota taxpayers—including individuals and passthrough entity owners—who want to make impactful, lasting contributions to eligible charitable endowment funds.

Four Key Highlights:

  1. 40% Credit on Qualified Contributions

    • Claim a credit worth 40% of your donation (cash, securities, mutual funds, etc.)

    • Maximum credit: $10,000 per taxpayer annually.

  2. Support Permanent Endowments

    • Donations must go to permanent, irrevocable funds that distribute only earnings or appreciation.

    • Funds must be held by qualified nonprofits serving North Dakota or nearby underserved areas.

  3. Carry Forward Unused Credits for 3 Years

    • If your credit exceeds your liability, carry the remainder forward up to 3 years.

  4. Required Income Adjustment

    • If you deducted the contribution federally, increase your ND taxable income by that amount.

    • Applies to both direct taxpayers and passthrough entity owners.

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North Dakota Research Expense Credit

Overview:
North Dakota offers an income tax credit to incentivize businesses conducting qualified research activities within the state. Companies can claim up to 25% of their excess qualified research expenses (QRE), with options for simplified calculation methods and long-term credit carryforward.

Who It’s For:
North Dakota businesses—including corporations and passthrough entities—incurring eligible research and development (R&D) expenses. Small R&D companies may also transfer unused credits.

Four Key Highlights:

  1. Two Flexible Credit Options

    • Regular Method: 25% credit on the first $100,000 of excess QRE; 8% on amounts above.

    • Simplified Method: 17.5% on the first $100,000; 5.6% thereafter—based on a 3-year QRE average.

  2. Generous Carryback & Carryforward

    • Carry unused credits back 3 years or forward up to 15 years to reduce tax liability.

  3. Transferable Credits for Qualified R&D Startups

    • Certified small businesses (under $750,000 in revenue) can transfer up to $100,000 in unused credits to another taxpayer.

  4. Passthrough Entity Compatibility

    • Partnerships, S-corps, and LLCs may pass the credit through to members or shareholders based on ownership share.

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