Self-Employment Tax in North Dakota (2026 Guide)

Fact-checked by the LegalGlass editorial team against primary sources · Published Aug 20, 2026 · Last updated Aug 20, 2026

North Dakota does not levy a self-employment tax of its own. Self-employment tax is a federal 15.3% charge - 12.4% Social Security plus 2.9% Medicare - that applies to net earnings of $400 or more, reported on Schedule SE. North Dakota then taxes the same profit through its individual income tax, which has a zero-rate first bracket and top rates of 1.95% and 2.50%.

What Self-Employment Tax Actually Is

Self-employment tax is the Social Security and Medicare contribution that people who work for themselves pay in place of the payroll taxes an employer would otherwise split with them. The IRS sets the rate at 15.3%: 12.4% for Social Security and 2.9% for Medicare. It is entirely federal. No part of it goes to Bismarck, and North Dakota has no state analogue.

You owe it if your net earnings from self-employment - excluding church employee income - were $400 or more for the year. That threshold is low by design: it is a filing trigger, not an allowance. Once you cross it, the tax applies to the full amount of net earnings subject to SE tax, not merely the excess over $400.

Sole proprietors, single-member LLC owners, general partners, and most multi-member LLC members are all in scope. The entity label does not change the outcome, because a default-classified LLC is transparent for federal income tax - see the North Dakota single-member LLC and what an LLC is.

How the 15.3% Is Calculated

The calculation runs on net earnings, not gross receipts. You start with business profit from Schedule C - revenue minus deductible expenses - and carry it to Schedule SE. Schedule SE reduces that figure before applying the rate, which is why the effective bite on Schedule C profit is meaningfully below a flat 15.3%.

Two ceilings and one floor matter. The 12.4% Social Security portion applies only up to an annual wage base that the IRS adjusts each year - $168,600 for 2024 - and wages you earn from a job use up that base first. The 2.9% Medicare portion has no ceiling. Above filing-status thresholds of $125,000 to $250,000, an additional 0.9% Medicare tax applies. Finally, you may deduct the employer-equivalent portion of SE tax in figuring adjusted gross income, which lowers income tax but not SE tax itself.

Work an example with the self-employment tax calculator, and read how self-employment tax works for the mechanics in full. Because no employer withholds for you, the IRS expects quarterly estimated payments on Form 1040-ES covering both SE tax and income tax.

North Dakota's Individual Income Tax on the Same Profit

North Dakota taxes business profit through the individual income tax, filed on Form ND-1. Since tax year 2023 the state has used a three-bracket structure with a substantial first bracket taxed at zero, so a meaningful slice of income is exempt before any state rate applies at all. The remaining brackets carry the state's low rates, with the middle band at 1.95% and the top at 2.50%. Bracket thresholds are adjusted annually for inflation, so confirm the current figures with the Office of State Tax Commissioner.

The practical effect for a North Dakota freelancer is that the federal 15.3% dwarfs the state bill. A profitable sole proprietor typically owes several times more in SE tax than in North Dakota income tax, and many low-earning filers land inside the zero bracket and owe no state tax on the profit at all. That does not remove the filing obligation - the return is still due on or before April 15.

Quarterly Estimated Payments, Federal and State

Federal estimated payments use Form 1040-ES and are due four times a year. Underpaying triggers an estimated tax penalty even if you settle up in April, which is the most common avoidable cost for newly self-employed people. A simple rule that works for many: set aside roughly a quarter to a third of each payment received, in a separate account, and pay from it quarterly.

North Dakota runs its own estimated payment system using Form ND-1ES for individuals whose state liability is large enough to require prepayment. Because the state rates are low and the first bracket is zero-rated, many self-employed North Dakotans have no state estimated obligation at all - but higher earners do. Check the Tax Commissioner's individual income tax pages for the current threshold.

How S-Corp Election Changes the Math

The one structural lever that reduces self-employment tax is the S-corporation election. An S corporation pays its owner-employee a reasonable salary subject to payroll taxes and can distribute remaining profit as a distribution not subject to SE tax. On a profit of a few hundred thousand dollars that difference is real money; on a profit of $40,000 it is usually swallowed by payroll service costs, a separate return, and the administrative burden.

"Reasonable" is the operative constraint - the IRS challenges S corporations that pay token salaries and route everything else through distributions. Read S-corp vs LLC for the trade-offs and the S-corp election in North Dakota for the filing mechanics, including the Form 2553 deadline. North Dakota recognises the federal election, so the state return follows the federal characterisation.

Deductions That Actually Move the Number

Because SE tax is charged on net earnings, every legitimate business deduction reduces both income tax and SE tax - a double benefit employees do not get. The deductions that most often go unclaimed by North Dakota sole proprietors are the home office deduction, business use of a vehicle including mileage between job sites, health insurance premiums for the self-employed, and retirement plan contributions to a SEP-IRA or solo 401(k).

Retirement contributions are worth singling out: they reduce taxable income but not net earnings subject to SE tax, whereas ordinary business expenses reduce both. Keeping a separate business bank account is the single practical habit that makes all of this defensible at audit - see how to get an EIN for the identifier most banks ask for, and business tax basics for the wider filing picture.

Does Forming an LLC Change Anything?

By itself, no. A single-member LLC is a disregarded entity for federal income tax by default, so the owner still files Schedule C and still pays the same 15.3%. Forming an LLC in North Dakota buys liability protection and a cleaner commercial identity, not a lower SE tax bill. The tax lever is the S election, and it sits on top of either structure.

What an entity does change is the compliance calendar: a registered agent, an annual report, and North Dakota LLC tax filing obligations. Weigh those against the protection. If you are still trading as an individual, see the North Dakota sole proprietorship, how to start a business in North Dakota, and the glossary for terminology.

Frequently Asked Questions

Does North Dakota have a self-employment tax?

No. Self-employment tax is federal only. North Dakota levies no separate self-employment tax, so the 15.3 percent you pay goes entirely to Social Security and Medicare. North Dakota does tax the same business profit through its individual income tax on Form ND-1, at rates far lower than the federal SE tax.

What is the self-employment tax rate in North Dakota?

The rate is the federal 15.3 percent: 12.4 percent for Social Security plus 2.9 percent for Medicare. It applies to net earnings from self-employment of $400 or more. The Social Security portion stops at an annual wage base the IRS adjusts each year, while the Medicare portion has no ceiling.

What are North Dakota's income tax rates?

North Dakota uses a three-bracket structure adopted for tax year 2023, with a substantial first bracket taxed at zero percent, a middle band at 1.95 percent, and a top rate of 2.50 percent. Bracket thresholds are adjusted annually for inflation, so confirm current figures with the Office of State Tax Commissioner.

Do I have to make quarterly estimated payments in North Dakota?

Federally, yes, if you expect to owe tax on self-employment income; you use Form 1040-ES. At the state level, North Dakota requires estimated payments on Form ND-1ES once your expected state liability is large enough. Because state rates are low and the first bracket is zero-rated, many self-employed filers owe no state estimates.

When is the North Dakota individual income tax return due?

The North Dakota individual income tax return is due on or before April 15, matching the federal deadline. The state begins processing returns the same day federal processing opens, and the Office of State Tax Commissioner estimates about 30 days for refund processing on filed returns.

Can I lower my self-employment tax in North Dakota?

The main structural option is electing S-corporation treatment, which lets you take part of the profit as a distribution not subject to SE tax after paying yourself a reasonable salary. Otherwise, every legitimate business deduction reduces net earnings, which lowers both self-employment tax and income tax.

Related

• How self-employment tax works
• Self-employment tax calculator
• How to form an LLC in North Dakota
• North Dakota LLC cost
• S-corp election in North Dakota
• North Dakota LLC tax filing
• How to start a business in North Dakota
• Business tax basics

Sources

1. IRS - Self-Employment Tax (Social Security and Medicare Taxes) (15.3% rate; 12.4% + 2.9%; $400 threshold; $168,600 wage base for 2024; 0.9% additional Medicare tax; deduction for employer-equivalent portion).
2. IRS - About Schedule SE (Form 1040).
3. IRS - Estimated Taxes (Form 1040-ES).
4. IRS - About Schedule C (Form 1040).
5. North Dakota Office of State Tax Commissioner - Individual Income Tax.
6. North Dakota Office of State Tax Commissioner - Individual Income Tax History (three-bracket system with a zero-rate first bracket; 1.95% and 2.50% rates; annual inflation adjustment).
7. North Dakota Office of State Tax Commissioner - Individual filing information (April 15 due date; refund processing).
8. North Dakota Office of State Tax Commissioner - Income Tax.
9. IRS - Limited Liability Company (LLC) (default classification).

LegalGlass provides general information for educational purposes and is not legal advice, is not a law firm, and is not a substitute for advice from a licensed attorney or tax professional. Laws, fees, and thresholds change; verify current amounts with the IRS and the North Dakota Office of State Tax Commissioner before acting.