Active-duty pay
Fully Exempt
Active-duty pay exempt for ND residents serving outside ND.
State Guide · ND
North Dakota — Military Tax Treatment
North Dakota's active duty exemption is station-dependent. Members stationed outside ND avoid ND income tax on military pay. Guard members drilling in ND pay ND income tax on drill pay (they are in the state). Retirement is fully exempt for everyone.
Tax treatment at a glance
Guard & Reserve drill pay
Taxed
North Dakota's active duty exemption requires serving OUTSIDE North Dakota. Guard members who live and drill in ND are in-state — the exemption does not apply. Routine drill pay is taxable ND income.
Military retirement pay
Fully Exempt
Military retirement pay fully exempt as of 2019.
The numbers · verified for tax year 2025
Top marginal rate
2.5%
Retirement-pay exemption
Full
Military retirement pay — along with active-duty and Guard/Reserve pay — is 100% exempt from North Dakota income tax; the exclusion has been full and uncapped since the 2019 law change.
Standard deduction
North Dakota computes tax off federal taxable income, so it effectively uses the federal standard deduction ($15,000 single / $30,000 MFJ for 2025). Its 2023 reform tops out at just 2.5%.
VA disability compensation
Always tax-free
Federally tax-free under 38 USC § 5301. No state taxes VA disability compensation as income — North Dakota included.
Survivor Benefit Plan (SBP)
Follows retirement
North Dakota exempts military retirement — SBP annuities are generally exempt.
Federal rules that override state law
SCRA — Servicemembers Civil Relief Act
Active-duty servicemembers pay state income tax only to their state of legal domicile — not the state where they are stationed. If you are from Texas and stationed in North Dakota, North Dakota cannot tax your military pay. This applies during all active duty periods and during Guard/Reserve mobilizations on federal (Title 10) orders.
MSRRA — Military Spouses Residency Relief Act
Military spouses can maintain their home-state domicile even when living in a different state due to their servicemember's orders. A spouse who is a Texas resident following their servicemember to North Dakota can keep Texas as their tax domicile and avoid North Dakota state income tax on their wages.
Guard & Reserve — the SCRA gap
SCRA pay protections apply during federal (Title 10) activation orders. During routine drill weekends and state-only activations, Guard and Reserve members are state residents serving in their home state — SCRA does not protect their drill pay from state income tax. Whether North Dakota exempts that pay is the state-specific question answered above.
Filing watch-outs
- 01ND residents on active duty stationed outside ND: exemption is available — document your duty station
- 02Guard members: drill pay is taxable ND income
Veteran-specific tax benefits
Disabled veteran property tax credit.
Official authority
https://www.nd.gov/tax ↗State tax law changes annually. Verify current rules with the North Dakota Department of Revenue before making any tax decision.
North Dakota military tax — common questions
Does North Dakota tax military retirement pay in 2026?
North Dakota fully exempts military retirement pay. Military retirement pay fully exempt as of 2019.
Does North Dakota tax active-duty military pay?
North Dakota fully exempts active-duty military pay for state residents. Active-duty pay exempt for ND residents serving outside ND. Under the SCRA, North Dakota can only tax the military pay of service members who are legally domiciled in North Dakota — not those merely stationed there.
Does North Dakota tax National Guard and Reserve drill pay?
North Dakota taxes Guard and Reserve drill pay. North Dakota's active duty exemption requires serving OUTSIDE North Dakota. Guard members who live and drill in ND are in-state — the exemption does not apply. Routine drill pay is taxable ND income.
Is VA disability compensation taxed in North Dakota?
No. VA disability compensation is federally tax-free under 38 U.S.C. § 5301, and no state — including North Dakota — taxes it as income.
If I'm stationed in North Dakota but claim another state, can North Dakota tax my military pay?
No. Under the Servicemembers Civil Relief Act (SCRA), active-duty pay is taxable only by your state of legal domicile, not the state where you are stationed. If your domicile is elsewhere, North Dakota cannot tax your active-duty military pay. Military spouses get the same protection under the MSRRA.
Related tools
Other state guides