North Dakota · Qualified Business Income (QBI/199A) Deduction
Qualified Business Income (QBI/199A) Deduction in North Dakota (2026)
Deduct up to 20% of qualified business income from pass-through entities. North Dakota has a progressive income tax with a top rate of 2.5%, so a North Dakota filer's combined marginal rate on the next dollar at $68,131 of income is about 23.95% (22% federal + 1.95% ND).
2026 savings example for North Dakota
Planning estimate for a single filer earning $68,131 (North Dakota median household income in LevyIO's state dataset) who removes $5,000 from taxable income. Federal tax uses the 2026 IRS brackets after the $16,100 standard deduction; ND tax uses the state brackets in LevyIO's dataset and assumes the state follows the federal treatment.
Estimated total savings
$832
Federal savings
$763
$6,159 → $5,396 · 22% bracket
ND state savings
$69
$69 → $0 · 1.95% marginal
Combined marginal rate
23.95%
≈ $240 saved per $1,000 deducted
Federal × North Dakota marginal rates (2026, single)
Gross-income ranges include the federal standard deduction. The ND column is the state marginal rate at the midpoint of each range. The last column is the tax saved per $1,000 deducted at that combined rate.
| Federal bracket | Gross income (single) | ND marginal | Combined | Per $1,000 |
|---|---|---|---|---|
| 10% | $16,100 - $28,500 | 0% | 10% | $100 |
| 12% | $28,500 - $66,500 | 0% | 12% | $120 |
| 22% | $66,500 - $121,800 | 1.95% | 23.95% | $240 |
| 24% | $121,800 - $217,875 | 1.95% | 25.95% | $260 |
| 32% | $217,875 - $272,325 | 1.95% | 33.95% | $340 |
| 35% | $272,325 - $656,700 | 2.5% | 37.5% | $375 |
| 37% | Over $656,700 | 2.5% | 39.5% | $395 |
Eligibility & forms
Pass-through business owners: sole proprietors, S-corps, partnerships
- Qualified business income
- Income below threshold or specified service test
- W-2 wage/property limits may apply
Federal forms: Form 8995, Form 8995-A
North Dakota filing notes
Do not model North Dakota as a simple flat-tax state. Many filers have part of their North Dakota taxable income in the 0% bracket, then 1.95%, with the 2.5% top rate applying only above the highest threshold. Homestead and other credits should be checked against current ND forms.
Common mistakes: Specified service business over threshold; Not understanding phase-out rules.
Frequently asked questions
How much can the Qualified Business Income (QBI/199A) Deduction save a North Dakota taxpayer in 2026?
In LevyIO's example, a single filer with $68,131 of income (the North Dakota median household income in our state dataset) who removes $5,000 from taxable income saves about $763 in 2026 federal tax (22% marginal bracket) plus about $69 in North Dakota tax (1.95% state marginal rate), roughly $832 combined. It is a planning estimate computed from the 2026 IRS brackets and LevyIO's ND bracket data, not a survey figure.
What is the North Dakota income tax rate for 2026?
North Dakota has a progressive income tax with a top rate of 2.5%. The ND standard deduction in LevyIO's dataset is $16,100 single / $32,200 married. Low three-step bracket structure: 0% starter bracket, 1.95% middle bracket, and 2.5% top rate. Uses federal taxable income as the starting point. Oil revenue keeps rates low.
Who qualifies for the Qualified Business Income (QBI/199A) Deduction in North Dakota?
Pass-through business owners: sole proprietors, S-corps, partnerships. The federal rules are the same in every state; the requirements are: Qualified business income; Income below threshold or specified service test; W-2 wage/property limits may apply. North Dakota filers should confirm on the ND return whether the state follows the federal treatment.
Which forms do I file to claim the Qualified Business Income (QBI/199A) Deduction?
Federal: Form 8995, Form 8995-A. North Dakota: check the North Dakota Office of State Tax Commissioner instructions for the matching state schedule. Common mistakes: Specified service business over threshold; Not understanding phase-out rules.
Qualified Business Income (QBI/199A) Deduction in other states
- Full Qualified Business Income (QBI/199A) Deduction guide (all states)
- Qualified Business Income (QBI/199A) Deduction in Montana
- Qualified Business Income (QBI/199A) Deduction in Arizona
- Qualified Business Income (QBI/199A) Deduction in California
- Qualified Business Income (QBI/199A) Deduction in Colorado
- Qualified Business Income (QBI/199A) Deduction in Georgia
More North Dakota deductions and credits
Sources
Reviewed 2026-09-17. Estimates are educational planning figures computed from the IRS 2026 inflation adjustments and LevyIO's state bracket dataset; they are not tax advice.