North Dakota Sales Tax on Materials Calculator
Calculate the North Dakota state and local sales tax owed on construction materials purchased by contractors. North Dakota contractors are considered the end consumer of materials incorporated into real property and must pay sales tax at the time of purchase.
Formula
Taxable Base = Total Materials Cost − Exempt Materials
State Sales Tax = Taxable Base × State Rate
Local Sales Tax = Taxable Base × Local Rate
Total Sales Tax Due = State Sales Tax + Local Sales Tax
Total Cost = Total Materials Cost + Total Sales Tax Due
Example: $50,000 in materials, 5% state rate, 2% local rate, no exemptions:
Taxable Base = $50,000 − $0 = $50,000
State Tax = $50,000 × 0.05 = $2,500
Local Tax = $50,000 × 0.02 = $1,000
Total Tax = $2,500 + $1,000 = $3,500
Total Cost = $50,000 + $3,500 = $53,500
Assumptions & References
- North Dakota imposes a 5% state sales tax on the gross receipts from retail sales, including materials purchased by contractors (N.D.C.C. § 57-39.2-02).
- Contractors in North Dakota are treated as the end consumer of materials incorporated into real property. They pay sales tax at purchase and do not collect sales tax from their customers on the materials portion of a lump-sum contract.
- Local (city and county) sales taxes are imposed in addition to the state rate. Rates vary by jurisdiction; common city rates range from 0.5% to 3.5%. Verify the rate for the specific project location with the ND Office of State Tax Commissioner or the local municipality.
- Certain materials may be exempt from sales tax when sold to qualifying exempt entities (e.g., federal government, certain nonprofits) and a valid exemption certificate is provided. The contractor must obtain the certificate before purchase.
- Materials purchased for repair and maintenance of real property are also subject to sales tax under the same rules.
- This calculator does not account for use tax obligations on materials purchased from out-of-state vendors without sales tax charged. Use tax equals the sales tax rate and is reported on the contractor's sales and use tax return.
- Reference: North Dakota Office of State Tax Commissioner — Sales & Use Tax Guide for Contractors; N.D.C.C. Chapter 57-39.2; N.D. Admin. Code § 81-04.1-01.
- Tax rates and rules are subject to change. Always verify current rates with the North Dakota Office of State Tax Commissioner.