North Dakota sales tax on invoices (2026 guide)

North Dakota charges a 5% state sales tax on most taxable retail sales. Many cities and counties add their own local sales, use and gross receipts taxes, so the total rate depends on where the sale happens — and some local taxes have a maximum tax per sale.

For freelancers and service businesses, North Dakota is relatively simple: sales tax applies to tangible goods and certain services, and many common services — including repair labor — aren't taxed. This guide covers the rates, what's taxable, permits and what your North Dakota invoices should show.

North Dakota sales tax rates

Local taxes are imposed by cities and counties but administered by the Office of State Tax Commissioner, and you report them on the same return as the state tax. As of October 1, 2026, city taxes mostly range from 1% to 3%; the highest is Drayton's 3.5%, in effect since July 1, 2026. Some cities also sit inside a county with its own county tax, so check both.

New or changed local taxes take effect on the first day of a calendar quarter, and the Tax Commissioner posts updates at least 60 days ahead in its Local Taxes by Location guideline.

Local tax caps

Many local taxes have a maximum tax per sale. Retailers can either collect the full local tax or collect only up to the maximum — but must be consistent. If you collect the full amount, a customer who paid local tax above the cap can apply to the Tax Commissioner for a refund of the excess.

Is what you sell taxable in North Dakota?

Sales tax applies to retail sales of tangible personal property, admissions to recreational activities, rentals of lodging for less than 30 days, and certain other services. The Tax Commissioner's guidelines point out that many services are not taxable — for example, bookkeeping, accounting, payroll and computer services.

Repairs have a specific rule:

• Repair service on tangible property is not taxable, and separately stated repair labor is not subject to sales tax.
• Parts and materials used in the repair are taxable when you itemize them.
• If you bill parts and labor as a lump sum, you pay tax on what the parts cost you and can't charge tax to the customer.
• You must use the same billing method consistently.

Freight, delivery, shipping and handling charges are part of the selling price: they're taxable when the item is taxable and exempt when it's exempt.

Getting a North Dakota sales tax permit

Any business with a physical presence in North Dakota that makes taxable retail sales must hold a North Dakota sales, use and gross receipts tax permit and collect state and local tax. You apply through North Dakota Taxpayer Access Point (TAP). Depending on how often you make sales, you'll file monthly, quarterly or annually — and you must file every period, even when no tax is due.

Remote sellers without a North Dakota location only need to collect if their taxable sales into the state exceed $100,000 in the current or previous calendar year. There's no transaction-count test.

What a North Dakota sales tax invoice should show

• your business name and address,
• the customer's name and address,
• a unique invoice number and the invoice date,
• a description and price for each item or service,
• parts and labor on separate lines if you do repairs,
• sales tax as a separate line, with the combined rate you applied, and
• the total due.

In Invoice Native, tick Tax on the goods and parts lines, and leave repair labor and non-taxable services unticked.

Resale and exemption certificates

When a business buys from you to resell, you don't collect tax if you obtain either a Streamlined Sales Tax Agreement Certificate of Exemption or a Multistate Tax Commission Uniform Sales and Use Tax Certificate. Don't send certificates to the Tax Commissioner — keep them in your files, and get updated ones at least every two years. A buyer who gives a false certificate is liable for the tax and penalties.

Two other North Dakota rules are worth knowing:

• Nonprofits aren't automatically exempt. Sales to nonprofit organizations for their own use are generally taxable, though some purchases qualify for exemption.
• Contractors who give you a completed contractor's certificate pay the tax on materials directly to the state, so you don't collect it.

See how to invoice a tax-exempt customer.

A worked example

Suppose you repair farm-shop equipment in a city with a 2% local tax and no county tax (a hypothetical location for this example), so the combined rate is 5% + 2% = 7%. You invoice:

• $300 for replacement parts (taxable), and
• $200 for repair labor, listed separately (not taxable).

Tax applies only to the parts: $300 × 7% = $21.00. The invoice total is $300 + $200 + $21 = $521.00. If you'd billed a $500 lump sum instead, you couldn't charge tax — you'd owe tax yourself on the cost of the parts.

Selling to customers in other states

Delivering goods to a customer in another state is a sale in interstate commerce, so North Dakota sales tax doesn't apply — keep proof of delivery, such as bills of lading. But that state's rules may apply instead. Since the Supreme Court's 2018 decision in South Dakota v. Wayfair, states can require out-of-state sellers to register and collect their sales tax once sales into the state pass a threshold the state sets. Check the thresholds of each state you sell into and use its rate on those invoices. Our sales tax calculator has each state's rate.

Common mistakes on North Dakota invoices

• Charging tax on separately stated repair labor. It isn't taxable.
• Charging tax on a lump-sum repair bill. You pay tax on the parts instead.
• Using your own city's rate without checking the local tax where the sale takes place.
• Ignoring local tax caps or applying them inconsistently.
• Letting resale certificates go stale — refresh them every two years.

Quick checklist for North Dakota invoices

• ✅ Sales tax permit through TAP before your first taxable sale
• ✅ 5% state rate plus the correct city and county tax
• ✅ Parts and labor itemized on repair invoices
• ✅ Sales tax shown as its own line
• ✅ Exemption certificates on file and updated every two years