Does North Dakota follow the federal no-tax-on-tips and overtime deductions?
CONFORMS
North Dakota follows the federal deductions, so qualified tips and overtime are deductible for state income tax as well as federal, subject to the details and years in the state's own guidance below. You still claim the federal deduction on Schedule 1-A first.
Verified against the official state source below — last verified October 26, 2026
| Deduction | North Dakota position |
|---|---|
| Federal tips deduction (IRC §224) | Conforms |
| Federal overtime deduction (IRC §225) | Conforms |
What the state itself says
"Tip income – exclusion up to $25,000 2025-2028 … Overtime pay - exclusion up to $12,500 / $25,000 2025-2028"
- Official source
- North Dakota Office of State Tax Commissioner, "One Big Beautiful Bill Income Tax Collections update" (presentation to the Budget Section, June 24, 2026, on the official ND Legislative Branch site) ; deciding document: Tax Commissioner's official 2025 Individual Income Tax Instructions (Form ND-1 booklet, tax.nd.gov).
- Tax years covered
- 2025–2028.
North Dakota starts from federal taxable income with perpetual (rolling) conformity; the ND-1 instructions state the starting point "perpetually conforms to the computation of federal taxable income," that OBBBA changes affecting that computation "are by default included in the starting point for computing North Dakota taxable income for all years," and list "Tip income and overtime pay exclusions" among the changes affecting individuals. No separate enactment or decoupling. (The booklet's own tax.nd.gov PDF URL could not be obtained verbatim via search; the Commissioner's official OBBBA deck is cited alongside it.)
Your federal deduction is separate
Whatever your state does, the federal deductions run on their own rules: check your W-2 codes with the W-2 Code Checker, estimate with the Tips Calculator and Overtime Calculator, and see the glossary for any term. All state positions: the state-by-state index.
State position verified October 26, 2026 from the official source above. State guidance changes; confirm on the source before filing. This page is general information, not tax advice.