North Dakota Military Retirement Taxes 2026: Complete Tax Guide
NO state income tax on ANY income - like Texas and Florida
🎯 Quick Summary: North Dakota Military Retirement (2026)
- ✓ State income tax: ZERO - NO state income tax on ANY income
- ✓ Cost of living: 8% BELOW national average
- ✓ Property tax exemption: $120,000 for 100% disabled veterans
- ✓ Major bases: Minot AFB (bombers/ICBMs), Grand Forks AFB (recon)
- ✓ Median home prices: $250K-$280K (very affordable)
- ✓ Overall ranking: Top 5 most tax-friendly state for military retirees
Why North Dakota Is Outstanding for Military Retirement
North Dakota ranks among the most tax-friendly states in America for military retirees. With NO state income tax on ANY income (military retirement, wages, Social Security, investment income, business income), North Dakota allows you to keep 100% of your earnings at the state level.
Beyond exceptional tax benefits, North Dakota offers remarkably affordable living with cost of living 8% below the national average, two major Air Force bases (Minot and Grand Forks) providing excellent military community and base access, strong veteran support services, outdoor recreation including hunting and fishing, tight-knit communities, and the ND National Guard State Tuition Waiver (one of the best Guard education benefits in the nation).
2026 North Dakota Military Retirement Tax Breakdown
State Income Tax on Military Retirement Pay
🎉 NO State Income Tax - Period!
North Dakota has NO state income tax on ANY income. This means your military retirement pay, civilian wages, Social Security benefits, investment income, business income, and all other income are completely exempt from state taxation. You only pay federal income tax. North Dakota is one of only 9 states with no state income tax, joining Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming.
VA Disability Compensation
✓ Completely Tax-Free
VA disability payments are tax-exempt at both the federal and North Dakota state levels. Since North Dakota has no income tax, this is automatically tax-free. Whether you receive 10%, 100%, or any rating in between, you keep every dollar.
North Dakota State Taxation (2026)
| Income Type | Tax Rate | Notes |
|---|---|---|
| Military retirement pay | 0% (No State Tax) | No state income tax |
| VA disability | 0% (No State Tax) | All ratings exempt |
| Other income (wages, business) | 0% (No State Tax) | No state income tax |
| Social Security benefits | 0% (No State Tax) | No state income tax |
| Investment/retirement income | 0% (No State Tax) | 401k, IRA, pensions exempt |
Real Example: How Much You'll Save in North Dakota (2026)
Let's compare a military retiree in North Dakota vs. Minnesota (neighboring state with income tax) to see the tax savings:
Example Scenario: E-8 Retired After 22 Years
- • Military retirement pay: $3,200/month ($38,400/year)
- • VA disability (60%): $1,361/month ($16,332/year)
- • Civilian job: $50,000/year
- • Total annual income: $104,732
North Dakota (NO State Tax)
Military pension: $0 tax (no state income tax)
VA disability: $0 tax (no state income tax)
Civilian income: $0 tax (no state income tax)
State tax: $0
Minnesota (Progressive Tax)
Military pension taxable after subtraction
All civilian income taxed at 5.35-9.85%
Total taxable income = ~$88,000
State tax: ~$5,400
Annual North Dakota Savings: $5,400
Over 20 years of retirement: $108,000 saved
Cost of Living in North Dakota for Military Retirees (2026)
North Dakota's cost of living is approximately 8% below the national average, making it very affordable, especially when combined with no state income tax:
| Category | vs National Average | Notes |
|---|---|---|
| Overall | 8% below | Very affordable |
| Housing | 15% below | Median home: $250K-$280K |
| Healthcare | At average | VA clinic in Fargo |
| Groceries | 3% below | Good availability |
| Utilities | 10% above | Heating costs in winter |
| Transportation | 5% below | Low traffic, affordable gas |
Military Presence in North Dakota
North Dakota has two major Air Force installations providing excellent base access, commissary and exchange privileges, and a strong veteran community:
✈️ Minot Air Force Base
- 5th Bomb Wing - B-52 Stratofortress bombers
- 91st Missile Wing - 150 Minuteman III ICBM silos
- Known as "Only a little bit above the best"
- Critical nuclear deterrence mission
- Full base facilities, commissary, exchange
✈️ Grand Forks Air Force Base
- 319th Reconnaissance Wing - RQ-4 Global Hawk
- High-altitude unmanned surveillance aircraft
- Intelligence, surveillance, and reconnaissance (ISR)
- Full base facilities near University of North Dakota
Veteran Healthcare Facilities
North Dakota has VA healthcare facilities and clinics serving veterans:
Note: Nearest full VA Medical Center is in Fargo. Some veterans may also use VA facilities in Sioux Falls, SD or Minneapolis, MN for specialized care.
North Dakota Military Education Benefits (Tier 1: Excellent Programs)
North Dakota offers one of the best National Guard education benefits in the nation, making it an excellent state for Guard members and their families:
🎓 ND National Guard State Tuition Waiver - 100% Tuition at ALL ND Public Schools (TIER 1)
One of the absolute BEST Guard programs in the nation! The North Dakota National Guard State Tuition Waiver provides 100% tuition coverage at ALL North Dakota public colleges and universities.
- Benefit: 100% tuition at ALL ND public schools (University of North Dakota, North Dakota State University, all community colleges)
- Eligibility: Active ND National Guard members in good standing
- No additional service commitment required
- Covers undergraduate and graduate programs
- Can be combined with Federal Tuition Assistance ($4,500/year)
- Can use BOTH the State Tuition Waiver AND GI Bill benefits simultaneously for full coverage plus housing allowance
This is a Tier 1 benefit because it covers 100% tuition with no additional service requirement and can stack with Federal TA and GI Bill benefits for maximum value.
👨👩👧👦 ND National Guard Dependent State Tuition Waiver
North Dakota extends the State Tuition Waiver to dependents of National Guard members, making it one of the most family-friendly Guard programs.
- Benefit: 100% tuition at ND public schools for Guard member's spouse and dependent children
- Eligibility: Dependent of active ND National Guard member who has served 1+ year
- Age limit: Dependents must be under 24 years old
- Covers: All ND public colleges and universities
- Incredible family benefit few states offer
🎖️ North Dakota Veterans Education Benefits
North Dakota provides free tuition at state colleges for dependents of disabled veterans.
- Benefit: Free tuition at ND public colleges and universities
- Eligibility: Dependent of veteran who is totally disabled (100% service-connected) or who died from service-connected disability
- Age limit: Dependents under 25 years old
- Covers: Tuition at University of North Dakota, NDSU, and all state colleges
🟡 Yellow Ribbon Program Schools in North Dakota
North Dakota schools participating in the Yellow Ribbon Program help cover tuition beyond the GI Bill's annual cap.
Participating Universities
- University of North Dakota (Grand Forks)
- North Dakota State University (Fargo)
- University of Mary (Bismarck)
- Minot State University
- Valley City State University
Note: Yellow Ribbon amounts and eligibility vary by school and program. Check with each institution's veterans office.
🏠 In-State Tuition for All Veterans
All honorably discharged veterans qualify for in-state tuition at North Dakota public colleges and universities, regardless of residency status.
- Applies to: All North Dakota public institutions
- Eligibility: Veterans using GI Bill benefits or who served on active duty for at least 90 days
- Also covers: Spouses and dependents using transferred GI Bill benefits
- No waiting period required
📋 How to Apply for ND Military Education Benefits
ND National Guard State Tuition Waiver:
- Contact your ND National Guard Education Services Officer
- Complete application through your unit
- Phone: ND National Guard Education Office at (701) 333-2000
- Apply early each semester
ND Veterans Education Benefits:
- North Dakota Department of Veterans Affairs
- Phone: (701) 328-8950
- Website: www.nd.gov/veterans
GI Bill & Yellow Ribbon:
- Apply for GI Bill through VA.gov
- Contact school's veterans office for Yellow Ribbon enrollment
Best Cities in North Dakota for Military Retirees (2026)
| City | Nearby Base | Median Home Price | Why It's Great |
|---|---|---|---|
| Fargo | 1h to Grand Forks AFB | $280,000 | Largest city, NDSU, VA Medical Center, most amenities |
| Bismarck | 2h to Minot AFB | $275,000 | State capital, government jobs, VA clinic, University of Mary |
| Grand Forks | Grand Forks AFB (15 min) | $250,000 | Right next to AFB, University of North Dakota, VA clinic, tight military community |
| Minot | Minot AFB (15 min) | $255,000 | Right next to AFB, strong military community, VA clinic, Minot State University |
Pros and Cons of Retiring in North Dakota
✅ Pros
- • NO state income tax on ANY income (like Texas, Florida)
- • Cost of living 8% below national average
- • Very affordable housing ($250K-$280K median)
- • ND National Guard State Tuition Waiver - 100% tuition (Tier 1 benefit)
- • Dependent tuition waiver for Guard families
- • Two major Air Force bases (Minot, Grand Forks)
- • $120,000 property tax exemption for 100% disabled vets
- • Strong veteran community
- • Excellent outdoor recreation (hunting, fishing)
- • Safe, low crime rates
- • Tight-knit communities
- • Good job opportunities (energy sector)
⚠️ Cons
- • VERY cold winters (average Jan temp: 8°F)
- • Higher heating costs (utilities 10% above average)
- • Rural/isolated - long distances between cities
- • Limited VA healthcare (main facility in Fargo)
- • Harsh weather year-round (wind, snow, cold)
- • Limited entertainment/cultural amenities
- • Small population (fewer services)
- • Long winters (Nov-April)
- • Car absolutely required
- • Limited airline connections
Frequently Asked Questions
Does North Dakota tax military retirement pay?
No. North Dakota has NO state income tax on ANY income, including military retirement pay. Like Texas, Florida, and other no-income-tax states, North Dakota doesn't tax military pensions, wages, Social Security, or any other income. You only pay federal income tax, keeping more of your retirement pay.
What is North Dakota's cost of living compared to the national average?
North Dakota's cost of living is approximately 8% below the national average. Housing is particularly affordable with median home prices between $250,000-$280,000. While utilities are about 10% higher due to cold winters requiring significant heating, the housing savings and zero state income tax make North Dakota very affordable overall.
What are the major military bases in North Dakota?
North Dakota has two major Air Force bases: Minot Air Force Base (home to the 5th Bomb Wing operating B-52 Stratofortress bombers and the 91st Missile Wing managing 150 Minuteman III ICBM silos across North Dakota) and Grand Forks Air Force Base (home to the 319th Reconnaissance Wing operating RQ-4 Global Hawk high-altitude unmanned surveillance aircraft). Both bases have full facilities including commissary and exchange.
What property tax benefits do veterans get in North Dakota?
North Dakota offers a $120,000 property tax exemption for veterans with 100% service-connected disability ratings from the VA. This exemption significantly reduces or eliminates property taxes on primary residences valued up to $120,000, providing substantial annual savings. Contact your county tax assessor for application details.
Does North Dakota offer education benefits for National Guard?
Yes! North Dakota offers one of the best National Guard education benefits in the nation. The ND National Guard State Tuition Waiver provides 100% tuition coverage at ALL North Dakota public colleges and universities, including University of North Dakota, North Dakota State University, and all community colleges. This benefit can be combined with Federal Tuition Assistance ($4,500/year) and GI Bill benefits for maximum coverage. It's a Tier 1 benefit with no additional service commitment beyond your Guard enlistment. Even better, North Dakota also offers a dependent tuition waiver for spouses and children of Guard members.
How cold does it really get in North Dakota?
North Dakota has very cold winters. Average January temperatures are around 8°F (-13°C), with temperatures regularly dropping below zero. Wind chill can make it feel even colder. Winter typically lasts from November through April. However, summers are pleasant (70s-80s°F), and modern homes are well-insulated for winter conditions. Heating costs are higher, but the affordable housing and zero state income tax help offset this expense.
Where is the nearest VA Medical Center?
The main VA Medical Center in North Dakota is the Fargo VA Healthcare System. There are also VA clinics in Bismarck, Minot, Grand Forks, Dickinson, and Williston. For specialized care not available in North Dakota, some veterans may use VA facilities in Sioux Falls, SD or Minneapolis, MN. All bases have military medical facilities for retirees eligible for TRICARE.
Is North Dakota a good state for military retirement?
Yes, if you can handle the cold winters. North Dakota offers NO state income tax (keeping 100% of your military pension at the state level), very affordable cost of living (8% below average), low housing costs ($250K-$280K median), two major Air Force bases, strong veteran communities, excellent Guard education benefits (Tier 1), and $120,000 property tax exemption for disabled veterans. The main drawback is the harsh winter climate. But for those who don't mind cold weather or enjoy winter activities, North Dakota offers outstanding financial benefits for military retirees.
Calculate Your North Dakota Retirement Income
Use our free calculator to see exactly how much you'll keep after taxes when retiring in North Dakota. Factor in your military pension, VA disability, and any civilian income to plan your retirement with confidence.
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Use the Free Calculator →🌾 Bottom Line for North Dakota Military Retirement
North Dakota offers exceptional financial advantages for military retirees with NO state income tax on ANY income, very affordable cost of living (8% below average), low housing costs, two major Air Force bases, excellent Guard education benefits (Tier 1), and strong veteran support. The main challenge is the harsh winter climate with very cold temperatures and long winters. But for those who can handle the cold or enjoy winter activities, North Dakota provides some of the best financial benefits for military retirees in the entire nation. Use our calculator above to see your exact financial picture in the Peace Garden State.
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