Income Tax Withholding

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Businesses may have to submit North Dakota income tax withholding if they are: 

  • An employer paying wages to an employee if the employee performs services in North Dakota and the wages are subject to federal income tax withholding.
  • A North Dakota-based employer paying wages to a North Dakota resident employee who works in another state, except when the employer is required to withhold the other state's income tax from the wages earned in that state.

Certain wages are not subject to North Dakota income tax withholding, such as wages paid by a farmer or rancher, or wages exempt from federal income tax withholding.


Calculating Income Tax Withholding

North Dakota relies on the federal Form W-4 (Employee’s Withholding Allowance Certificate) to calculate the amount to withhold.

For more information regarding income tax withholding, see:

If you need to update the individual responsible for filing the sales and use and withholding returns, please see Declaration of Managers, Members, Governor's, Partners, and Corporate Officers.


Register for ND TAP Access

Employers must register for an Income Tax Withholding account with the Office of State Tax Commissioner online through the North Dakota Taxpayer Access Point  (ND TAP). Learn how to create an account at Instructions to Sign-Up for ND TAP, or use the below to register now:

Sign Up for an Income Tax Withholding Account (ND TAP)

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Filing Requirements

Income Tax Withholding Returns

Employers must electronically file Form 306 – Income Tax Withholding Return and remit the amount of North Dakota income tax withheld if one of the following applies:

  • The amount required to be withheld from wages paid during the previous calendar year is $1,000 or more.
  • The employer contracts with a third-party payroll service provider to file and remit North Dakota income tax withheld on the employer’s behalf, and the third-party payroll service provider electronically files and remits the employer’s withholding taxes for federal tax purposes.

Electronically filing returns can be done one of the following ways:

  • ND TAP
  • ACH Credit - for more information, see the "Make a Payment" dropdown below.

If you are not required to file electronically, complete Form 306 – Income Tax Withholding Return.

Form 306 – Income Tax Withholding Return must be filed even if an employer did not pay any wages during the period covered by the return.


Requirements for Information Returns

If the number of returns to be filed with North Dakota is 10 or more for tax year 2021, the following must be submitted electronically through ND TAP or  an accounting software:

  Information Returns

  W-2

  1099

  1042-S

  W-2G


Form 307 – North Dakota Transmittal of Wage and Tax Statement needs to be submitted by anyone who has an open withholding account with the Office of State Tax Commissioner and does not file electronically, even if you did not have employees for the filing period. Form 307 – North Dakota Transmittal of Wage and Tax Statement, Form W-2, and any Forms 1099 that have North Dakota state income tax withheld are due on or before January 31 of the following year. Other Forms 1099, 1042-S, or W-2G must be filed on or before the due date for filing these forms with the IRS.

  • If you file W-2 information electronically, the North Dakota Transmittal of Wage and Tax Statement should not be submitted. 
  • Submit all paper copies of W-2’s and any paper copies of 1099’s that have North Dakota state income tax withheld on them, along with the North Dakota Transmittal of Wage and Tax Statement.

 

Make a Payment – ACH Debit and ACH Credit

There are two different ways taxpayers can pay for the returns they file.

  1. ACH Debit (Free Electronic Payment): The employer files the income tax withholding return by using ND TAP. Then, the employer authorizes the State of North Dakota to electronically transfer the payment from the employer’s bank account to the State’s bank account. With this method, the Office of State Tax commissioner pays all associated bank fees. 
  2. ACH Credit: The employer instructs its bank to make an ACH Credit payment to the Office of State Tax Commissioner with information to identify the payment as an income tax withholding return. The ACH Credit acts as the return (nothing else needs to be filed or sent to our office).
    • Register by completing ACH Credit Authorization (Form 301-EF).
    • Information for initiating an ACH Credit Payment is available on pages 9 and 14 of the ACH Credit PDF.

Making a non-logged payment in ND TAP does not file your Form 306 – Income Tax Withholding Return.

Make a Payment in ND TAP

New Changes for E-Filing in 2022

Recent law changes enacted during the 2021 Legislative Session affect the requirements to file returns or pay tax electronically. 

  • Requires electronic filing and payments if the total amount of withholding in the previous year was $1,000 or more. To electronically file returns, taxpayers can use:
  • Requires electronic filing of all information returns (Forms W-2, 1099, and 1042S) and the annual returns (Form 307 and Form RWT-941).
  • Raises the threshold for annual filing status from $500 to $1,000. If you are eligible:
    • Our office will automatically change your filing status to annual and notify you by letter on or before February 28, 2022.
    • If you wish to continue filing your returns and remitting the tax due on a quarterly basis, you may continue to file your returns on a quarterly filing frequency.

For more information or instructions regarding requirements to electronically file returns or make payments, see the Guideline - Income Tax Withholding Guideline. If you have questions, please contact us:

Corrections

W-2 corrections must be made using Federal Form W-2C. Instructions are available from the Social Security Administration. Paper forms can be obtained by calling the IRS at 1-800-829-3676. A paper copy of Form W-2C must be submitted with the Form 307 – North Dakota Transmittal of Wage and Tax Statement to the Office of State Tax Commissioner. 


Corrections to Federal Form 1099 should be made using Form 1099 with the box marked corrected. Paper forms can be obtained by calling the IRS at 1-800-829-3676. All corrections to 1099-MISC and 1099-MISC forms must be reported to our office. This includes corrections to a recipient’s name and/or federal identification number.


For Form 1099 corrections in which no North Dakota income tax was withheld, mail a copy of the corrected 1099 to the Office of State Tax Commissioner.

Supplemental Wages

Wages that are treated as supplemental wages for federal income tax withholding purposes, as described in the IRS's Publication 15 (Circular E), Employer's Tax Guide, are treated as supplemental wages for North Dakota income tax withholding purposes. They include, but are not limited to, bonuses, commissions, overtime pay, payments for accumulated sick leave, severance pay, awards, prizes, back pay, and taxable fringe benefits.

Calculating the amount of North Dakota income tax to withhold from supplemental wages is like the method used for federal income tax withholding purposes, which depends on whether the supplemental wages are separately paid or separately identified from regular wages.

  • Supplemental wages not separately paid or identified from regular wages:
    • If you include supplemental wages with regular wages in a single payment but do not separately identify each amount, calculate the amount to withhold from the payment in the usual manner using one of the two regular withholding methods.
  • Supplementary wages separately paid or identified from regular wages:
    • If you pay supplemental wages separately from a regular wage payment, or you combine the supplemental wages and regular wages into one payment and separately identify each amount, calculate the amount of North Dakota income tax to withhold from the supplemental wages under one of the following options:
      1. Multiply the supplemental wages by 1.84% (.0184).
      2. Calculate the amount to withhold from the supplemental wages in the following steps:
        • If supplemental wages are to be paid at the same time as a regular wage payment, add the supplemental wages to the regular wages. Or, if supplemental wages are to be paid separately from a regular wage payment, add the supplemental wages to the amount of regular wages paid (or to be paid) for the most recent payroll period.
        • Calculate the withholding amount on the combined amount of supplemental and regular wages in the usual manner using one of the two regular withholding methods.
        • Subtract the amount of income tax withheld (or to be withheld) from the regular wage payment from the withholding amount calculated on the combined amount.

For more information, including examples of how to calculate withholding on supplemental wages, see the Income Tax Withholding Rates & Instructions.

Bulk Filers

Bulk filers can use ND TAP to file multiple returns at one time. More instructions are included in the Guideline - Income Tax Withholding.

Visit ND TAP

Reciprocity

Income tax reciprocity agreements between North Dakota and Minnesota and Montana provide that wages paid to residents of Minnesota and Montana for services performed in North Dakota are exempt from North Dakota income tax withholding. To be exempt, the employee needs to complete and give to their employer the Reciprocity Exemption from Withholding for Qualifying Minnesota and Montana Residents Working in North Dakota form (Form NDW-R). The form needs to be given to their employer by February 28, or within 30 days after the employee begins work or changes their permanent address. 

The form must then be mailed on or before March 31 to the Office of State Tax Commissioner. The employee must complete a new form and give it the employer each year to continue the exemption.