What North Dakota residents actually pay
North Dakota taxes ordinary income at a top marginal rate of 2.5%. RSU settlement value, NSO exercise spread, and ESPP discount income all count as ordinary wages for this purpose and flow through the state's normal brackets.
Federal AMT on the bargain element
Exercising ISOs and holding the shares creates AMT "preference income" equal to the spread between fair market value at exercise and your strike price. That's the bargain element. It doesn't show up on a W-2, and many people discover it only when their CPA calculates AMT in April.
Frequently asked
- Does North Dakota tax RSU income the same as wages?
- Yes. North Dakota treats RSU ordinary income as wages, taxable at the state's top marginal rate of 2.5%. Supplemental-wage federal withholding (22%, or 37% above $1M YTD) does not adjust for state withholding, so you often owe extra at filing.
- What happens if I exercise ISOs while living in North Dakota?
- North Dakota does not run a separate state AMT, so only federal AMT applies. You still need to model the bargain element carefully if you plan a cashless exercise-and-sell.
- I moved to North Dakota from another state. Who taxes my vesting RSUs?
- Most high-tax states (CA, NY, MA) source RSU ordinary income to workdays between grant and vest. If your grant pre-dates your North Dakota move, expect the old state to tax the portion of each tranche attributable to workdays earned there. North Dakota taxes the remainder.
- Can I reduce North Dakota taxes by timing my RSU sales?
- North Dakota taxes long-term capital gains at the same rate as ordinary income, so timing alone does not produce a state savings — only federal. Holding for 12 months still halves the federal rate on gains above basis.
Related
- RSU taxes — North Dakota
- Capital gains tax — North Dakota
- QSBS — North Dakota
- Moving to or from North Dakota with unvested equity: trailing nexus rules — North Dakota
- RSU vesting schedules — North Dakota
- ESPP taxation — North Dakota
- NSO exercises and state tax — North Dakota
- 401(k) and retirement accounts — North Dakota
- Leaving North Dakota: how to cleanly break residency before a liquidity event — North Dakota
- North Dakota equity-comp overview