North Dakota · LLC tax election
North Dakota LLC: S corp or C corp?
North Dakota keeps the first $25,000 of corporate profit at about 1.4%, which changes the usual S versus C comparison.
See North Dakota at a glanceShort answer
In North Dakota an S corporation pays no income tax at the entity level, and owners are taxed on the profit. A C corporation pays 1.41% on the first $25,000 of North Dakota taxable income, 3.55% on the next $25,000 and 4.31% above $50,000.
Last checked .North Dakota at a glance
| Question | North Dakota |
|---|---|
| S election recognized? | Yes, North Dakota follows the federal election1 |
| Separate state form and deadline | No separate state form2 |
| Tax the S corp itself pays | None at the entity level3 |
| C corp rate and minimum | 1.41% to 4.31%, graduated4 |
| Entity tax on a default LLC | None for a default LLC5 |
| Personal income tax | Yes, on wages and pass-through income6 |
What is different about North Dakota?
Most states charge a C corporation one flat rate. North Dakota uses three. The first $25,000 of taxable income is taxed at 1.41%, the next $25,000 at 3.55%, and everything above $50,000 at 4.31%. For a tiny, low-profit company that is a gentle start, and it is why a C corporation is not the automatic loser here. The S corporation route is just as simple. The state follows the federal election and does not tax an S corporation's income at the entity level, so the profit lands on the owners' personal returns. A corporation that elects the water's edge method pays a 3.5% surtax, which seldom matters for a small company working in one state.
Does North Dakota recognize a federal S corp election?
North Dakota follows the federal S election: a corporation taxed as an S corporation federally is taxed the same way for North Dakota income tax. The state says S corporations, partnerships and LLCs do not pay income tax at the entity level, and the profit or loss passes through to the owners. The state pages reviewed show no separate election form. Owners report their share on their personal returns, so the question for you is how much self-employment tax a salary and distribution split would save.
Does my LLC need a separate North Dakota election or form?
North Dakota has no separate S election: a corporation that elects S status federally is taxed the same way for North Dakota income tax purposes.2
What does North Dakota tax an S corp or LLC at the entity level?
- North Dakota does not tax an S corporation's income at the entity level; the profit passes through to the owners.3
- A North Dakota LLC taxed like a partnership or S corporation is treated the same way for state income tax, so it owes no separate entity-level income tax of its own.5
- A corporation that elects the water's edge method pays an additional 3.5% surtax on its North Dakota taxable income; this rarely matters for a small single-state company.7
Is a North Dakota LLC taxed as a C corp ever better?
A North Dakota C corporation files Form 40 and pays 1.41% on the first $25,000 of North Dakota taxable income, $352.50 plus 3.55% of the amount from $25,000 to $50,000, and $1,240 plus 4.31% of the amount over $50,000. A corporation that elects the water's edge method adds a 3.5% surtax. The corporation pays first, and owners are then taxed again on any dividends.
Run your North Dakota numbers
North Dakota's graduated corporate rate is lowest on small profits, so a C corporation costs less here than in flat-rate states at low income. S status begins to pay once profit is high enough that payroll tax savings on distributions beat the added payroll and filing work. Compare your own numbers rather than assuming S wins.
Result
How much would a North Dakota LLC owner save as an S corp?
| Taxed as | At $80,000 profit | At $150,000 profit |
|---|---|---|
| Default LLC | $11,304self-employment tax $11,304 + North Dakota LLC tax $0 | $21,194self-employment tax $21,194 + North Dakota LLC tax $0 |
| S corp | $9,344payroll tax $7,344 + North Dakota S corp tax $0 + $2,000 payroll and prep | $15,770payroll tax $13,770 + North Dakota S corp tax $0 + $2,000 payroll and prep |
| C corp | $16,539payroll tax $7,344 + North Dakota tax $601 + federal $6,594 + $2,000 payroll and prep | $29,690payroll tax $13,770 + North Dakota tax $1,671 + federal $12,249 + $2,000 payroll and prep |
Assumes a 60% salary9 and a single filer. Income tax is left out. C corp dividends are taxed again.
When is the Form 2553 deadline for a North Dakota LLC, and what if I miss it?
Late relief: federal steps, deadline guide.
What to do next
How to start one, or have us form it from $123.75.
Registered agent $74.25/yr, annual report.
LLC vs S corp guide, election deadline, Form 2553 filed for $165.
More on North Dakota: How to start a North Dakota LLC · How to start a North Dakota corporation · North Dakota LLC cost · North Dakota annual report · Annual report late fees by state
File the S-Corp Election for your North Dakota LLC
We file Form 2553 for a flat $165.
Get the S-Corp ElectionCommon questions
Does North Dakota tax S corporations?
Not at the entity level. The state says partnerships, S corporations and LLCs do not pay income tax at the entity level, and the entity's profit or loss is passed through to the owners, who report it on their personal returns.
What is the North Dakota corporate income tax rate?
It is graduated: 1.41% on the first $25,000 of North Dakota taxable income, 3.55% on income from $25,000 to $50,000, and 4.31% above $50,000. A corporation that elects the water's edge method pays an extra 3.5% surtax.
Does North Dakota follow the federal S election?
Yes. The Tax Commissioner's site says a corporation that elects to be taxed as a subchapter S corporation federally is taxed in the same manner for North Dakota income tax purposes.
Does a North Dakota LLC pay entity-level tax?
An LLC taxed like a partnership or S corporation federally is treated the same way for North Dakota income tax. The state's pass-through entities do not pay income tax at the entity level.
Sources 10 links, checked Nov 6, 2026
- North Dakota follows the federal S election, so an S corporation is taxed for state purposes the same way it is federally. tax.nd.gov, checked Nov 6, 2026
- North Dakota has no separate S election: a corporation that elects S status federally is taxed the same way for North Dakota income tax purposes. tax.nd.gov, checked Nov 6, 2026
- North Dakota does not tax an S corporation's income at the entity level; the profit passes through to the owners. tax.nd.gov, checked Nov 6, 2026
- North Dakota's corporate income tax is 1.41% on the first $25,000 of North Dakota taxable income, 3.55% on the next $25,000 and 4.31% above $50,000, per the state's current rate table. tax.nd.gov, checked Nov 6, 2026
- A North Dakota LLC taxed like a partnership or S corporation is treated the same way for state income tax, so it owes no separate entity-level income tax of its own. tax.nd.gov, checked Nov 6, 2026
- North Dakota taxes the owners of an S corporation on their share of profit; a nonresident member has North Dakota income tax withheld at 2.5% from the year-end distributive share. tax.nd.gov, checked Nov 6, 2026
- A corporation that elects the water's edge method pays an additional 3.5% surtax on its North Dakota taxable income; this rarely matters for a small single-state company. tax.nd.gov, checked Nov 6, 2026
- IRS: Form 1120 instructions, C corp rate irs.gov, checked Nov 6, 2026
- IRS: S corp reasonable compensation irs.gov, checked Nov 6, 2026
- IRS: Form 2553 instructions irs.gov, checked Nov 6, 2026
Last verified Nov 6, 2026.
This page explains the rules; it is not tax advice. Run your numbers with a CPA or enrolled agent before you elect.
Last verified Nov 6, 2026.