North Dakota Tax Residency: Your Complete Guide to Becoming a Resident

Establishing tax residency in North Dakota can offer significant advantages for individuals looking to optimize their tax situation. Whether you're relocating for work, lifestyle changes, or strategic tax planning, understanding the specific residency requirements is essential to ensure compliance and maximize potential benefits. This comprehensive guide will walk you through everything you need to know about becoming a tax resident of North Dakota.

Understanding North Dakota Tax Residency

North Dakota tax residency status determines how the state will tax your income and which tax forms you'll need to file. Unlike some states with complex residency tests, North Dakota follows relatively straightforward guidelines that primarily focus on physical presence and intent to establish domicile.

What Makes Someone a North Dakota Tax Resident?

In North Dakota, you're generally considered a resident for tax purposes if you meet one of these two conditions:

You maintain a permanent home (domicile) in North Dakota and spend at least 210 days of the year in the state.

You maintain a permanent place of abode in North Dakota for the entire tax year and spend at least 210 days in the state.

This 210-day threshold is a key differentiator from many other states that typically use a 183-day test, making North Dakota tax residency slightly more demanding in terms of physical presence requirements.

Domicile vs. Statutory Residency in North Dakota

Understanding the distinction between domicile and statutory residency is crucial for proper tax planning.

Domicile Residency

Domicile refers to your permanent legal home—the place you intend to return to after temporary absences. Establishing domicile in North Dakota requires both physical presence and demonstrable intent to make the state your permanent home.

The North Dakota Office of State Tax Commissioner considers various factors when determining domicile, including:

Where you spend most of your time

Location of your principal residence

Where your family lives

Where you're registered to vote

Where your vehicles are registered

Where you maintain professional licenses

Location of your financial accounts

Where you maintain business interests

Statutory Residency

Even if your domicile is in another state, you may still be considered a statutory resident of North Dakota if you maintain a permanent place of abode in the state and spend at least 210 days there during the tax year. This is particularly important for individuals who split their time between multiple states.

Benefits of North Dakota Tax Residency

North Dakota offers several tax advantages that make it an attractive option for establishing residency:

Moderate Income Tax Rates

North Dakota has a progressive income tax system with rates ranging from 1.1% to 2.9%, making it one of the lower-taxed states in the nation. This can result in significant savings compared to high-tax states like California or New York.

No Estate or Inheritance Tax

North Dakota does not impose estate or inheritance taxes, which can be advantageous for wealth preservation and succession planning.

Property Tax Relief Programs

The state offers various property tax relief programs for homeowners, including the Homestead Credit for individuals 65 and older or disabled.

Steps to Establish North Dakota Tax Residency

If you're planning to establish tax residency in North Dakota, follow these essential steps:

1. Physical Presence Requirement

Track your days in North Dakota carefully to ensure you meet the 210-day threshold. Pebbles can help you accurately monitor your days spent in different jurisdictions, which is crucial for meeting residency requirements.

2. Establish Domicile

To demonstrate your intent to make North Dakota your permanent home:

Purchase or lease a residence in North Dakota

Obtain a North Dakota driver's license

Update your address for financial accounts, insurance policies, and other important documents

File a Declaration of Domicile (if relocating from another state)

Join local organizations or religious institutions

3. Sever Ties with Your Previous State

To avoid claims of dual residency and potential double taxation:

Sell or rent out your former residence

Terminate leases and club memberships

Close local bank accounts or convert them to non-resident accounts

Resign from local positions or boards

Update your estate planning documents

4. Document Your Move

Maintain thorough records of your relocation to North Dakota, including:

Moving expenses and receipts

Real estate transactions

Utility connection/disconnection notices

Employment records showing your change of address

Potential Tax Pitfalls to Avoid

Dual Residency Claims

One of the most significant risks in changing your tax residency is being claimed as a resident by both North Dakota and your previous state. This can result in double taxation and complex compliance issues.

To mitigate this risk, ensure you've taken definitive steps to terminate residency in your former state and can clearly document your intent to establish North Dakota as your permanent home.

Part-Year Residency Considerations

If you're moving to North Dakota mid-year, you'll likely need to file a part-year resident return. This requires allocating income earned during different portions of the year to the appropriate states.

North Dakota uses Form ND-1 for residents, part-year residents, and nonresidents alike, with specific schedules for part-year and nonresident taxpayers.

Remote Work Complications

If you work remotely for an employer based in another state while living in North Dakota, you may face complex tax situations. Some states impose income tax on nonresidents who work for employers based within their borders, potentially creating tax obligations in multiple jurisdictions.

Special Considerations for Different Taxpayer Categories

Military Personnel

Active-duty military members have special rules regarding tax residency. Under the Servicemembers Civil Relief Act (SCRA), military personnel can maintain their domicile in their home state even while stationed in North Dakota.

College Students

Students attending college in North Dakota generally don't automatically establish residency merely by attending school. Additional factors, like intent to remain in North Dakota after graduation, would typically be necessary to establish tax residency.

Retirees

North Dakota can be attractive for retirees due to its tax treatment of retirement income. Social Security benefits are taxed according to federal treatment, and there are no additional state-specific exemptions for retirement income.

Tracking Your North Dakota Residency Days

Meeting the 210-day physical presence requirement is crucial for establishing North Dakota tax residency. Traditional methods of tracking include:

Calendar notations

Travel receipts and boarding passes

Credit card statements showing location of purchases

Cell phone records with location data

However, modern technology offers more reliable solutions. Pebbles provides residency tracking that helps ensure compliance with North Dakota's 210-day requirement while minimizing the risk of audit issues.

Conclusion

Establishing North Dakota tax residency requires careful attention to both the physical presence requirement of 210 days and the various factors that demonstrate your intent to make the state your permanent home. By following the steps outlined in this guide and maintaining thorough documentation of your residency status, you can successfully navigate the process while minimizing tax complications.

For those managing multiple residences or traveling frequently, tracking your days in each jurisdiction is essential for proper tax planning and compliance. Pebbles can help streamline this process by automatically tracking your days in different locations, ensuring you meet North Dakota's specific residency requirements while providing documentation that can withstand scrutiny in case of an audit.

Author: Pebbles

Published: July 4, 2025