In our 510,000-path Monte Carlo study of 30-year retirement outcomes, North Dakota retirees finished at 74.64% success rate (ranked #17 of 51 by success rate, #15 of 51 by lowest median lifetime state tax). Median 30-year state-tax cost: $31,500 — that is $31,500 more than a Wyoming retiree pays. Median terminal balance after 30 years: $942,362. State tax is part of the optimization here — the playbook below shows the federal-state-ACA stack.
The ND verdict
For a retiree planning withdrawals in 2026, North Dakota is broadly retirement-tax-friendly, with most distributions sheltered. A low top rate and social security fully exempt.
North Dakota has no dollar-capped retirement-income exclusion, so every converted dollar enters the state tax base. The marginal cost of a conversion here is the federal bracket plus the state rate plus, below 65, whatever premium tax credit crossing the 400% FPL cliff would cost you.
Worked example: $30k Roth conversion in North Dakota
Consider a married couple age 58 in North Dakota with $75,000 of taxable income, both on ACA Marketplace coverage. They want to convert $30,000 from a traditional IRA to a Roth. The North Dakota state tax on that conversion is approximately $750 — the full amount is taxed at 2.50%. Federal tax at the 22% bracket adds another $6,600. And because the conversion pushes their MAGI to $105,000 — over the 400% FPL cliff of $84,600 — they lose their full ACA premium tax credit, roughly $12,000. Total cost of the $30,000 conversion: about $19,350, or an effective 64.5% marginal rate. That state figure uses North Dakota's top bracket rate, so read it as a ceiling: a household whose income lands in a lower bracket pays less, and North Dakota's own deductions reduce it further. The federal-state-ACA stack matters in North Dakota.
Cost breakdown
| Component | Amount |
|---|---|
| Federal income tax (22% bracket) | $6,600 |
| North Dakota state income tax | $750 |
| ACA premium tax credit clawback | $12,000 |
| Total cost on $30,000 conversion | $19,350 (64.5% effective) |
Scenario B (friendly): $50k post-65 conversion in North Dakota
A married North Dakota couple age 67, both on Medicare, with $40K pension income converts $50,000 in a single year. State tax owed: $1,250 — the full amount is taxed at 2.50%. Federal tax at 22%: ~$11,000. No ACA clawback (on Medicare). Total: $12,250, or 24.5% effective. The post-65 conversion window is where a North Dakota ladder is cheapest.
What the Monte Carlo data says about North Dakota
QuantCalc Research ran a 30-year, 10,000-path Monte Carlo simulation for an identical representative retiree (age 60, $2M starting balance, 60/40 portfolio, $80K real annual spend) in each of the 51 U.S. jurisdictions. Here's how North Dakota compared to the best- and worst-case states:
| Metric | North Dakota | Wyoming (best) | California (worst) |
|---|---|---|---|
| 30-year success rate | 74.64% | 77.11% | 69.03% |
| Rank (of 51) | #17 | #1 | #51 |
| Median lifetime state tax (30y) | $31,500 | $0 | $154,980 |
| Median total tax (30y) | $249,900 | $218,400 | $373,380 |
| Median terminal balance | $942,362 | $999,751 | $695,612 |
| Δ success vs Wyoming | -2.47 pp | — | −8.08 pp |
Sources: QuantCalc 51-State Monte Carlo Study (2026-05-12) — 510,000 total paths, methodology fully documented and dataset released CC-BY-4.0. North Dakota's row in the dataset uses the same portfolio + spend + retirement age as every other state — the only variable is state tax treatment.
How North Dakota treats capital gains in retirement
North Dakota taxes long-term capital gains as ordinary income at the same top bracket rate (2.50%). That stacks on top of federal LTCG (0%/15%/20%) and the 3.8% NIIT for high earners. A 'free' federal 0% LTCG harvest still costs you up to 2.50% at the state level — meaningful in this jurisdiction, particularly during Roth-conversion years when your MAGI is already elevated.
Why the ACA cliff hits hard in North Dakota
The 400% federal-poverty-level cliff is federal, not state-specific — but its dollar impact depends on the benchmark Silver-plan premium in your county. North Dakota's Marketplace pricing and your household composition determine the size of the subsidy at risk. A two-person household near 400% FPL can easily have $10,000–$15,000 of annual premium tax credit on the line. Under the OBBBA 2026 restoration of the cliff, $1 of additional MAGI above 400% FPL eliminates the entire credit.
For 2026 the 400% FPL threshold is:
- Household of 1: $62,600
- Household of 2: $84,600
- Household of 3: $106,600
- Household of 4: $128,600
Optimal Roth conversion strategy for North Dakota
The ND-specific playbook depends on tier:
- Identify your cliff distance. Compute MAGI from all income sources (wages, capital gains, interest, dividends, traditional withdrawals). Find your headroom under 400% FPL. Use the live cliff widget above for a quick check.
- Stay under the cliff if you can. In North Dakota at 2.50%, the marginal cost of going over the cliff is federal tax + state tax + full PTC clawback. The break-even conversion size is smaller than in tax-free states.
- If you must go over, convert big. Once you've crossed the cliff, additional conversion dollars only cost federal + state tax (no incremental PTC loss). A "rip the bandage" conversion year can be efficient if you have many traditional dollars to move.
- Coordinate with capital gains and the 0% LTCG bracket. North Dakota taxes long-term capital gains as ordinary income at the same top bracket rate (2.50%). That stacks on top of federal LTCG (0%/15%/20%) and the 3.8% NIIT for high earners. A 'free' federal 0% LTCG harvest still costs you up to 2.50% at the state level — meaningful in this jurisdiction, particularly during Roth-conversion years when your MAGI is already elevated.
- Plan ahead for IRMAA. The IRMAA Medicare premium surcharge has a 2-year lookback. A North Dakota resident in their early 60s converting today will see IRMAA implications at 65. See RMD + IRMAA calculator for the lookback math.
State tax basics for North Dakota retirees
| Question | North Dakota |
|---|---|
| State income tax | 2.50% top marginal |
| Number of brackets | 3 |
| Social Security taxed | No |
| 401(k) / Traditional IRA taxed | Yes |
| Retirement-income exclusion (couple) | None |
| Roth conversion draws that exclusion | Not applicable |
| State estate / inheritance tax | No |
| Retirement-friendliness tier | friendly |
| Notable feature | a low top rate and Social Security fully exempt |
| 30-yr MC success rate (rank) | 74.64% (#17/51) |
| Median 30-yr state tax | $31,500 |
Model your full North Dakota retirement scenario
Free 10,000-path Monte Carlo with state-specific tax engine, ACA cliff, Roth conversion optimizer, IRMAA lookback — all in your browser, no signup.
Run a free simulation →Related calculators and reading
- All-states retirement tax comparison — see North Dakota alongside the other 50 jurisdictions.
- State Retirement Tax Data 2026 — the per-jurisdiction rate, exclusion and Social Security figures behind this page, as CSV and JSON.
- ACA Subsidy Cliff Optimizer — find the largest Roth conversion that keeps you under 400% FPL.
- Roth Conversion Optimizer — bracket-fill vs. fixed-amount strategy comparison.
- RMD + IRMAA Calculator — Medicare premium surcharge based on 2-year-old MAGI.
- Safe Withdrawal Rate Calculator — sequence-of-returns-aware withdrawal planning.
- Research: 51-State 30-year Monte Carlo (2026) — full ranking and dataset.
- Research: Monte Carlo ACA Cliff 2026 — 80,000-path study of the cliff cost.
FAQ
Does North Dakota tax Roth conversions?
North Dakota taxes Roth conversions as ordinary income at the state level. A $30,000 conversion by a couple aged 58 costs about $750 in state tax alone — the full amount is taxed at 2.50% — on top of federal tax and any ACA subsidy clawback. That state figure uses North Dakota's top bracket rate, so read it as a ceiling: a household whose income lands in a lower bracket pays less, and North Dakota's own deductions reduce it further.
What is North Dakota's 30-year Monte Carlo retirement success rate?
In QuantCalc's 510,000-path Monte Carlo study, a representative retiree in North Dakota (age 60, $2M balance, 60/40 portfolio, $80K real spend) finished 30 years at 74.64% success rate — ranked #17 of 51 jurisdictions. Median 30-year state tax: $31,500. Median terminal balance: $942,362.
What is the ACA cliff in North Dakota for 2026?
The ACA premium-tax-credit cliff is a federal threshold, not state-specific. For a household of two in 2026, it sits at 400% of the federal poverty level — $84,600. Crossing it by even $1 of MAGI eliminates the full subsidy under the OBBBA 2026 rules.
Is North Dakota a good state to retire for tax purposes?
North Dakota is broadly retirement-tax-friendly, with most distributions sheltered. A low top rate and social security fully exempt. In our Monte Carlo ranking it placed #17 of 51 jurisdictions.
Does North Dakota tax Social Security benefits?
No — North Dakota does not tax Social Security benefits at the state level, at any income level.
Does North Dakota tax 401(k) and IRA withdrawals?
Yes — North Dakota taxes 401(k) and traditional IRA withdrawals as ordinary income, at a top bracket rate of 2.50%.
Does North Dakota have a state estate or inheritance tax?
No — North Dakota does not impose a state-level estate or inheritance tax.
How does North Dakota tax capital gains?
North Dakota taxes long-term capital gains as ordinary income at the same top bracket rate (2.50%). That stacks on top of federal LTCG (0%/15%/20%) and the 3.8% NIIT for high earners. A 'free' federal 0% LTCG harvest still costs you up to 2.50% at the state level — meaningful in this jurisdiction, particularly during Roth-conversion years when your MAGI is already elevated.
Last updated 2026-08-23. State income tax figures reflect the 2026 schedule published by North Dakota's tax authority. ACA poverty-level figures from HHS 2026 Federal Register. Monte Carlo numbers from the QuantCalc 51-state research drop (2026-05-12, CC-BY-4.0). This page is educational. Not tax, legal, or financial advice — consult a qualified advisor.