Sales Generally Exempt from Taxation
Organizations and/or persons generally exempt from sales tax:
- All sales made to the US government, state of North Dakota, local government/political subdivision or Tribal government agency are exempt from taxation.
- All sales made within a reservation to federally recognized tribal members living within that reservation are also exempt.
- Gross receipts from sales made to nonprofit health associations and nonprofit medical research institutes which are exempt from federal income tax under section 501(c)(3) of the US Internal Revenue Code are also exempt.
- Gross receipts from sales to a senior citizen organization providing informational, health, welfare, counseling and/or referral services for senior citizens (certain qualifications apply, verified by Department of Health and Human Services and the Department of Transportation
- Gross receipts from sales made to an eligible facility or emergency medical services provider licensed by the Department of Health and Human Services under Chapter 23-27 for the use or benefit of its patient or occupant.
- Gross receipts from sales of more than fifty dollars made to a person from an adjoining state which does not impose or levy a retail sales tax. (Provisions apply) Gross receipts from the sales of Bibles, hymnals, textbooks, and prayerbooks sold to nonprofit religious organizations.
- Gross receipts from sales made to a nonprofit medical research institute that is a member of the association of independent research institutes, which is not a private foundation, and is recognized by the Internal Revenue Service as having exempt stats under 23 U.S.C. 501(c)(3).
Gross receipts of the following goods and services are generally exempt from taxation:
- Ag/Energy (as specified below):
- Byproducts of agricultural products used in the generation of steam or electricity
- Carbon Dioxide used for enhanced recovery of oil or natural gas or secure geologic storage
- Coal exempt from the coal severance tax and initial sale of beneficiated coal
- Equipment required to enable the sale of diesel containing at least two percent biodiesel or green diesel fuel as defined under section 57-43.2-01 at a facility licensed under section 57-43.2-05 (certain requirements apply)
- Farm machinery and irrigation equipment and repair parts which are used exclusively for agricultural purposes
- Hydrogen to power internal combustion engines or fuel cell and equipment used directly and exclusively in production and/or storage of hydrogen within a ND hydrogen generation facility
- Liquefied natural gas used for agricultural, industrial, or railroad purposes as defined in section 57-43.2-01
- Natural gas or other fuels used for heating purposes
- Potash or byproducts taxable under chapter 57-65
- Adjuvants, agrichemical tank cleaners and foam markers, commercial fertilizers, fungicides, seed treatments, inoculants and fumigants, herbicides, and insecticides
- Chemicals used to preserve agricultural crops being stored; and seeds, roots, bulbs, and small plants to commercial users or consumers for planting or transplanting for commercial vegetable gardens or agricultural purposes.
- Feed which is fed to poultry, livestock, breeding stock, and wool-bearing stock for the purpose of producing eggs, milk, meat, fibers, or other products for human consumption. Feed purchased for the purpose of being fed to draft or fur-bearing animals.
- Feed includes salt, grains, hay, tankage, oyster shells, mineral supplements, limestone, molasses, beet pulp, meat and bone scraps, meal, drugs to be used as part of a feed ration, medicants, disinfectants, wormers, tonics, and like items.
- Basic Food and consumer essentials (as specified below):
- Children’s diapers
- Food and food ingredients- excluding:
- Alcoholic beverages.
- Candy or chewing gum.
- Dietary supplements.
- Prepared food.
- Soft drinks containing fifty percent or less fruit juice.
- Tobacco
- Food and food container supplies required for meal delivery programs of nonprofit organizations catering to persons confirmed to their homes by illness or incapacity, including senior citizens
- Food supplies for public, private, or parochial schools or non-profit organizations sponsoring a school lunch program.
- Food purchased by a student under a boarding contract with a college, university, fraternity, or sorority.
- Currency
- Money, including all legal tender coins and currency
- Commemorative memorial coins as outlined in section 37-18-15
- Precious metal bullion (certain requirements apply)
- Newsprint and ink used in the publication of a newspaper.
- Electricity
- Entertainment (as specified below):
- Coin-operated amusement or entertainment machines
- Electronically delivered movies, books, or music
- Gambling
- Electronic gaming devices licensed by the attorney general under chapter 53-06.1
- Lottery tickets as described within chapter 53-12.1
- Leasing or renting a motion picture film to motion picture exhibitors in which sales tax is imported on the admission to the exhibition of the film
- Tickets and/or admission to the following:
- Activities and events organized and operated by nonprofit social and recreation clubs organized under section 501(c)(7) of the Internal Revenue Code [26 U.S.C. 501(c)(7)] and operated solely by non-salaried officers and staff. (This includes paid membership to these organizations.)
- Athletic, musical, drama or scholastic events hosted or sponsored by higher education institutions if the primary performers or participants consist of students of an institution of higher education
- Events from an annual church supper or bazaar held at a publicly owned facility.
- Educational, religious or charitable events (certain exclusions apply).
- Non-profit Music or dramatic arts organizations exempt from federal income tax organized for the purpose of live public performances of musical or theatrical works on a regular basis
- Public School events if receipts are expended in accordance with section 15.1-07-10 or 15.1-07-11
- State, County, District and/or local fairs
- Educational institutions (as specified below):
- Textbooks, yearbooks, and school supplies purchased by private nonprofit schools or institutions of higher learning
- Textbooks for students enrolled in public or private school
- Fire department purchases made for the purpose of providing fire protection services who have filed a certificate of existence under section 18-04-02 which has been approved
- Health and/or medical (as specified below):
- Doctor prescribed medications, mobility-enhancing equipment, oxygen, insulin (includes insulin testing and injection supplies), and prosthetic devices
- Durable medical equipment or supplies for ostomy care or bladder dysfunction
- Services provided by hospitals, nursing homes and basic care facilities
- Mobile Housing title transfers resulting from the sale, gift or exchange of property where ND sales tax has been previously imposed
- Certain tangible personal property, including:
- Leasing or renting of tangible personal property upon which a North Dakota sales tax has been paid or is payable and the retailer has separately indicated on an invoice, contract, lease agreement, or other supporting sale document that the retailer paid sales or use tax on the retailer’s purchase of the tangible personal property.
- Leasing or renting of manufactured homes, modular living units, or sectional homes for residential housing for periods of thirty or more consecutive days.
- Gross receipts from the leasing or renting of a hotel or motel room or other accommodations occupied by the same person or persons for residential housing for periods of thirty or more consecutive days.
- Flight Simulators, includes mechanical or electronic equipment used in association with the simulator
- Tangible personal property sold to a commerce authority if it is placed within the geographic boundaries of its corresponding political subdivision and is necessary to the infrastructure needs
- Tangible personal property sold to a charity organization to be awarded as a prize in a raffle (winner will be subject to sales and use tax upon receipt of property)
- Transportation products and services (as specified below)
- Motor vehicles subject motor vehicle excise tax.
- Motor vehicle rentals of more than thirty consecutive days.
- Aircraft taxable under provisions of chapter 57-40.5
- Air carrier transfer property subject to ad valorem property taxation
- Sales, furnishing or service of passenger transportation or freight transportation services provided by a common carrier
- Recreational travel trailers less than 8’w x 32’l designed to be used as temporary vacation dwellings when made to residents of other states which impose excise taxes upon registration of such recreational travel trailers
Sales Tax Exemptions- Application Required
Certain industries in North Dakota may qualify for a sales tax exemption.
Construction materials used to construct an agricultural commodity processing facility are exempt from sales and use taxes.
Application Process: Include items listed in the Sales Tax Exemption Application & Approval Requirements.
Century Code Reference: N.D.C.C. § 57-39.2-04.4
The Animal Agriculture Facility Infrastructure Fund is available to support counties with qualifying animal agriculture facilities. Each year, the Tax Commissioner will certify an amount for each county based on the state portion of sales, use, or gross receipts tax paid on tangible personal property used to construct, expand, upgrade, or replace an eligible facility in the previous calendar year.
To qualify, facility owners, operators, or contractors must submit documentation by March 31 showing a minimum taxable purchase value of $300,000. Funds certified by the Tax Commissioner will be disbursed annually by the State Treasurer and must be used for infrastructure near the facility or other county needs. Total annual disbursements are capped at $500,000. If certified amounts exceed this cap, funds will be prorated among the eligible counties.
Application Process: Include items listed in the Animal Agriculture Facility Infrastructure Requirements.
Century Code Reference: N.D.C.C. § 57-39.2-26.5
This is a sales tax exemption for purchasing tangible personal property incorporated into a system to compress, gather, collect, store, transport or inject carbon dioxide for use in enhanced recovery of oil or natural gas or in secure geological storage in North Dakota.
Eligibility: It must be a new project or an expansion of an existing project.
Application Process: Include items listed in the Sales Tax Exemption Application & Approval Requirements and include the Property Tax Clearance Record form with the application letter.
Century Code Reference: N.D.C.C. § 57-39.2-04.14
This is a sales and use tax exemption for purchasing tangible personal property used to construct or expand a facility in North Dakota to extract or process byproducts associated with coal gasification.
Application Process: Include items listed in the Sales Tax Exemption Application & Approval Requirements.
Century Code Reference: N.D.C.C. § 57-39.2-04.11
This is a sales and use tax exemption and refund for machinery or equipment used to produce coal from a new mine in North Dakota.
Eligibility: The exemption for each new mine is limited to the first $5 million of sales and use tax paid. The exemption extends to replacement machinery or equipment if the capitalized investment in the new mine exceeds $20 million.
Application Process: Include items listed in the Sales Tax Exemption Application & Approval Requirements and include State and Local Clearance Record Form with the application letter.
Century Code Reference: N.D.C.C. § 57-39.2-04.8
For primary sector businesses other than manufacturers and recyclers, a sales and use tax exemption is allowed for purchases of computer and telecommunications equipment.
Eligibility: Equipment must be an integral part of a new primary sector business or create an economic expansion of an existing business, and the primary sector business must be certified by the North Dakota Department of Commerce Division of Economic Development and Finance. The exemption does not extend to the purchase of replacement equipment.
Application Process: Must receive a Primary Sector Certification and include items listed in the Sales Tax Exemption Application & Approval Requirements.
Century Code Reference: N.D.C.C. § 57-39.2-04.3
This is a sales tax exemption for enterprise information technology equipment and computer software purchased for use in a newly constructed or substantially refurbished qualified data center.
Eligibility: A data center in North Dakota must:
- Be completed or substantially refurbished after December 31, 2020,
- Consist of 15,000 sq. ft. or more with 50% or more, of area being used for data processing,
- Be located on a single or contiguous parcel of land, and
- Have sophisticated fire suppression and prevention systems and enhanced security features.
Application Process: Include items listed in the Sales Tax Exemption Application & Approval Requirements, and must include with the application letter:
- Property Tax Clearance Record Form
- Diagram of building(s) position on the land parcel.
- Detailed diagram of building square footage and use of building space.
- Date of data center completion.
Century Code Reference: N.D.C.C. § 57-39.2-04.17
Coal Powered Electrical Generating
This is a sales and use tax exemption for purchasing building materials, qualified production equipment, environmental upgrade equipment, and other tangible personal property used in the construction or expansion of coal-powered electrical generating facilities.
Eligibility: Facility must convert beneficiated coal or coal from its natural form into electrical power and have at least one single electrical generation unit with a capacity of 50,000 kilowatts or more.
Application Process: Include items listed in the Sales Tax Exemption Application & Approval Requirements.
Other Electrical Generating
This is a sales and use tax exemption for purchasing building materials, qualified production equipment, environmental upgrade equipment, and other tangible personal property used in the construction or expansion of an electrical generating facility other than a coal or wind-powered facility.
Eligibility: Facility must produce electricity for resale or for consumption in a business activity and have at least one single electrical generation unit with a capacity of 100 kilowatts or more.
Application Process: Include items listed in the Sales Tax Exemption Application & Approval Requirements.
Century Code Reference: N.D.C.C. §§ 57-39.2-04.2 and 57-40.2-04.2
This is a sales tax exemption for purchasing tangible personal property used to construct a chemical or fertilizer processing facility and any integral component located at the facility site and necessary for the plant’s operation.
Eligibility: The plant must produce fertilizer, chemicals, or chemical derivatives from natural gas, natural gas liquids, or crude oil components for wholesale or retail sale. The taxpayer must receive an air quality permit or a notice that the air quality permit application is complete from the North Dakota Department of Environmental Quality by June 30, 2023.
Application Process: Include items listed in the Sales Tax Exemption Application & Approval Requirements and include the Property Tax Clearance Record form with the application letter.
Century Code Reference: N.D.C.C. § 57-39.2-04.15
A sales and use tax exemption may be available for the following:
- Purchasing building materials, equipment, and other tangible personal property used in the expansion or construction of a gas processing facility.
- Tangible personal property used to construct or expand a system to compress, process, collect, or gather gas recovered from an oil or gas well in North Dakota may qualify for an exemption.
- Purchases of machinery, equipment, and related facilities for environmental upgrades that exceed $100,000 and that reduce emissions, increase efficiency, or enhance reliability of equipment may also qualify for an exemption.
Application Process: Include items listed in the Sales Tax Exemption Application & Approval Requirements.
Century Code Reference: N.D.C.C. §§ 57-39.2-04.2 and 57-39.2-04.5
This is a sales and use tax exemption for purchasing tangible personal property used to construct or expand a processing facility in North Dakota that produces liquefied natural gas.
Application Process: Include items listed in the Sales Tax Exemption Application & Approval Requirements.
Century Code Reference: N.D.C.C. § 57-39.2-04.10
A new or expanding plant may exempt machinery or equipment from sales and use taxes if it is:
- Used primarily for manufacturing or agricultural processing, or
- Used solely for recycling
The expansion must increase production volume, employment, or the types of products that can be manufactured or processed.
Application Process: Include items listed in the Sales Tax Exemption Application & Approval Requirements and include the Property Tax Clearance Record form with the application letter.
Century Code Reference: N.D.C.C. § 57-39.2-04.3
This is a sales and use tax exemption for building materials, equipment, and other tangible personal property used to expand or construct an oil refinery in North Dakota.
Eligibility: The facility must have a nameplate capacity of processing at least 5,000 barrels of oil per day. In addition, purchases for environmental upgrades that exceed $100,000 and that reduce emissions, increase efficiency, or enhance reliability of equipment may also qualify for an exemption.
Application Process: Include items listed in the Sales Tax Exemption Application & Approval Requirements.
Century Code Reference: N.D.C.C. §§ 57-39.2-04.2 and 57-39.2-04.6
This is sales and use tax exemption for purchasing building materials, equipment, and other tangible personal property used to construct or expand a qualified straddle plant, a qualified fractionator plant, or qualified associated infrastructure in North Dakota.
Application Process: Include items listed in the Sales Tax Exemption Application & Approval Requirements.
Century Code Reference: N.D.C.C. § 57-39.2-04.16
Sales Tax Refunds and Credits- Claim Required
There are several sales tax refunds available to taxpayers:
Local Tax Refund – Local Sales Tax Paid Beyond the Maximum Tax - City and county ordinances may impose a local maximum tax that applies to single transactions. It is sometimes referred to as the local tax "cap" or "max tax." If the local tax paid on an invoice is greater than the local maximum tax, purchasers may apply to the Office of the State Tax Commissioner for a refund of the local sales tax collected beyond the maximum tax.
Sales Tax Refund - Exempt Online Purchases- Marketplace Facilitators, who facilitate sales for a seller through an electronic or physical marketplace, are required to collect and remit North Dakota state and local sales tax on taxable sales if they have a physical presence or if their taxable sales delivered to North Dakota exceed $100,000 in the current or prior calendar year.
Motor Fuel Tax Refunds - Taxpayers may qualify for different types of motor fuel tax refunds.
Canadian Refund - Canadian residents who are in North Dakota to make specific purchase(s) and remove those purchase(s) within 30 days for use exclusively outside the state may be eligible.