Federal & State Regulations | Employment taxes - North Dakota

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Summary of differences between federal and state regulations

Income tax withholding

An employer is required to withhold North Dakota income tax from the wages of an employee if federal income tax is required to be withheld from such wages. Wages paid by farmers and ranchers are exempt from North Dakota withholding requirements. North Dakota withholding is computed by using one of three methods allowed employers. Methods 1 and 3 are the preferred methods:

Method 1: Percentage of Wages (Primary Method) - This method is similar to the IRS's Percentage Method in Publication 15 (Circular E).
Method 2: Percent of Federal Withholding (Alternative Method) - This method is an alternative to Method 1, the primary method. It operates in the same way as the percent of federal withholding method that applied before the 2002 tax year. This method generally works for employees with wages under $18,000 if single, or $30,000 if married. Use of this method for employees with wages over the $18,000 or $30,000 level is permitted, but it will result in over withholding.
Method 3: Withholding Tables - This method is identical to Method 1, the primary method, except that no calculations are required. Instead, a table is used to look up the withholding amount.

Unemployment taxes

All states finance UC primarily through contributions from subject employers on the wages of their covered workers. In addition, three states (Alaska, New Jersey, and Pennsylvania) collect contributions from employees. These taxes are deposited by the state to its account in the UTF in the Federal Treasury, and are withdrawn as needed to pay benefits.

Many states have adopted a higher tax base than what is provided in FUTA. Hawaii's wage base is usually higher and changes periodically. In all states, an employer pays a tax on wages paid to each worker within a calendar year up to the amount specified in state law. In addition, most of the states provide an automatic adjustment of the wage base if federal law is amended to apply to a higher wage base than that specified under state law. As a result of the many variables in states taxable wage bases and rates, benefit formulas, and economic conditions, actual tax rates vary greatly among the states and among individual employers within a state.

Wages subject to unemployment tax in this state equal $18,500.

Minimum and maximum rates in this state are 0.49 and 10.09 %. Rates apply to experience rated employers only and do not include applicable surtaxes or penalties.