North Dakota retired pay

Is military retirement taxed in North Dakota?

Not taxed

Line 14 Exclusion Since 2019.

No. Since tax year 2019, N.D.C.C. § 57-38-30.3(2)(r) has subtracted retired military personnel benefits, including those paid to the surviving spouse of a deceased retired member of the armed forces, a reserve component or the National Guard. Enter the taxable amount from Form 1040, line 5b on Form ND-1, line 14 and attach Form 1099-R.

The law: N.D.C.C. § 57-38-30.3(2)(r)
Current rule since: tax year 2019 (House Bill 1053, 2019 session, effective for taxable years beginning after December 31, 2018; signed April 8, 2019)
Where you claim it: Form ND-1, line 14 (Military retirement benefit exclusion), with a copy of Form 1099-R; Form ND-EZ has no subtraction lines, so a retiree claiming it must file Form ND-1

Read on North Dakota’s own sources October 10, 2026

What North Dakota’s rule is worth on your retired pay

Enter your annual taxable retired pay (box 2a of your DFAS or Coast Guard 1099-R). The rate starts at North Dakota’s 1.95% rate on 2025 taxable income around $75,000 (single); the top 2.5% starts over $244,825 for tax year 2025; change it to your own bracket if you know it.

One rate applied to the whole amount, not North Dakota’s full return: brackets, other income, deductions and credits change the real figure. Use it to compare, then check the state’s own form instructions.

How it works in North Dakota

North Dakota starts from federal taxable income, so the pension is already inside the number before any state subtraction. Enter on Form ND-1, line 14 the taxable military retirement benefits reported on Form 1040 or 1040-SR, line 5b, and attach a copy of Form 1099-R.

The 2025 booklet covers retired members of the U.S. armed forces or its reserve components, the Army National Guard and the Air National Guard, and it defines the armed forces as the Army, Navy, Air Force, Marine Corps and Coast Guard. The booklet and the Tax Commissioner's military guideline also accept retirement benefits from federal civil service as a dual status military technician under Title 32 or Title 10.

Example with assumed figures: a single retiree with a $36,000 pension and enough other income to sit in the 1.95% bracket, which for 2025 runs from $48,475 to $244,825 of taxable income, keeps $702 a year. The 2.5% top rate starts above $244,825 single and $298,075 joint.

Lines 5 through 16 of Form ND-1 are the subtractions, and the booklet sends anyone with one of them to Form ND-1 rather than Form ND-EZ. Drill pay and active-duty pay go on line 11, not line 14; a full-year nonresident on active duty uses line 10 instead.

To fix a return that missed line 14, file Form ND-1 for that year with the Amended return: General circle filled in, complete it through the net tax liability line, enter on the total payments line the net tax liability from the original return (or only the part actually paid), and attach a statement explaining the change.

Survivor Benefit Plan annuities

Exempt for a surviving spouse of a deceased retired member: the statute and the 2025 booklet both name that spouse. Neither mentions a child beneficiary or the survivor of a member who died before retiring (read October 10, 2026).

Active-duty pay in North Dakota

Not taxed. Form ND-1, line 11 subtracts all military pay of members on active and reserve duty and of the National Guard, including pay for training, education, mobilization and bonuses; from tax year 2026 that pay is also exempt from North Dakota withholding under Senate Bill 2047 (2025).

Missed it in an earlier year?

Generally three years after you file the original return, as the 2025 booklet states; N.D.C.C. § 57-38-40 sets other periods. There is no separate amended form: file Form ND-1 with the Amended return: General circle filled in and a statement explaining the change.

What trips North Dakota retirees up

The exclusion can be worth nothing. North Dakota taxes the first $48,475 of single taxable income and the first $80,975 of joint taxable income at 0% for 2025, and the starting point is federal taxable income after the standard deduction. A married couple whose taxable income stays at or under $80,975 with the pension included owes no North Dakota income tax either way.
The dual status technician rule rests on the Tax Commissioner's booklet and guideline. The codified text of subdivision r, in the chapter 57-38 file dated December 2025, names only retired military personnel benefits of the armed forces, reserve components and National Guard, so a technician should keep the guideline with the return.
NOAA Corps and Public Health Service retirees are not on the booklet's list, which names five armed forces and the Guard. The booklet mentions those corps only on line 10, the nonresident active-duty adjustment, not for retirement. The list also leaves out the Space Force, although the statute's wording, armed forces of the United States, does not exclude it.

Federal side: DFAS reports retired pay on Form 1099-R, and the IRS taxes it as a pension. VA disability compensation is not taxable income under federal law (IRS Publication 525). The SCRA’s tax-home rule (50 U.S.C. § 4001) protects servicemembers on orders, not retirees, so where a retiree lives decides which state taxes the pension. Compare every state on the 51-state ledger. North Dakota’s other servicemember protections are on the North Dakota SCRA page.

Frequently asked questions

Does North Dakota tax military retirement?

No. N.D.C.C. § 57-38-30.3(2)(r), added by House Bill 1053 for taxable years beginning after December 31, 2018, subtracts retired military personnel benefits to the extent they are in federal taxable income. Enter the taxable amount from Form 1040, line 5b on Form ND-1, line 14 and attach Form 1099-R, per the 2025 booklet. The exclusion covers the armed forces, reserve components, and the Army and Air National Guard, with no age, income or years-of-service test (read October 10, 2026).

Is SBP taxed in North Dakota?

Not for a surviving spouse of a retiree. The statute reduces taxable income by retired military personnel benefits, including those paid to the surviving spouse of a deceased retired member of the armed forces, a reserve component or the National Guard, and the 2025 booklet lets that spouse use Form ND-1, line 14. Neither the statute nor the booklet mentions a child receiving an SBP annuity or the survivor of a member who died before retiring (read October 10, 2026), so ask the Office of State Tax Commissioner in those cases.

Is National Guard pay taxed in North Dakota?

No. Form ND-1, line 11 subtracts military pay received as a member of the U.S. armed forces on active and reserve duty and as a member of the National Guard, to the extent it is in federal taxable income. The 2025 booklet counts pay for training, education, mobilization and bonuses, plus state pay when called to state active duty, and asks for a copy of the W-2. Senate Bill 2047 (2025) also stops North Dakota withholding on that pay from tax year 2026.

Do I need Form ND-1 to claim the military retirement exclusion?

Yes. The 2025 booklet says to use Form ND-1, not Form ND-EZ, if you have any North Dakota subtraction adjustment, and it lists the subtractions as Form ND-1, lines 5 through 16. The military retirement benefit exclusion is line 14, so any retiree claiming it files the longer form. Attach Form 1099-R. If an earlier year was filed on ND-EZ without the exclusion, an amended Form ND-1 generally has to be filed within three years after the original return.

Sources, read October 10, 2026

Know someone this saves money? Pass it on

Heads up: SCRA Saver publishes general information, not legal or financial advice. Laws change and every situation differs. Confirm details with your installation legal assistance office (free for service members) or a licensed professional.