Live in North Dakota, Work in Michigan: Which State Taxes Your Paycheck?
Answer
Michigan withholds and North Dakota credits. Without an agreement between them, both states are entitled to tax income earned in Michigan by a North Dakota resident. The mechanism that stops you paying twice is the credit on the North Dakota resident return, which is why the Michigan return has to be completed first.
Last verified
Without an agreement between North Dakota and Michigan, the overlap is handled after the fact rather than prevented. That is why the filing order matters: the Michigan figure is an input to the North Dakota return, so completing North Dakota first means doing it twice.
A North Dakota resident taxed by another state on the same income claims the credit for taxes paid to other states on Schedule ND-1CR. The credit is capped at the North Dakota tax on that income, so it removes the double tax but never refunds the excess when the other state charges more.
Michigan also has a layer below the state one, and it is the layer that survives every agreement: Two dozen Michigan cities levy their own income tax, Detroit among them, and the state reciprocal agreements do not cover city tax. A reciprocal-state resident working in Detroit still owes Detroit.
What you file
- 1Nonresident return · MichiganForm MI-1040 with Schedule NR
File the Michigan nonresident return FIRST — you need the Michigan tax figure before you can complete North Dakota.
- 2Resident return · North DakotaSchedule ND-1CR
File a North Dakota resident return reporting all income, then claim the credit for tax paid to Michigan. The credit is capped at what North Dakota would have charged on that same income, so if Michigan taxes it at a higher rate the difference is not refunded.
The two states, side by side
| North Dakota | Michigan | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — flat |
| Reciprocity partners | 2 (Form NDW-R) | 6 (Form MI-W4) |
| Convenience rule | No | No |
| Nonresident return | Form ND-1 with Schedule ND-1NR | Form MI-1040 with Schedule NR |
| Credit for other-state tax | Schedule ND-1CR | Form MI-1040 (credit for income tax imposed by another state) |
| Nonresident safe harbour | None published | None published |
| Local income tax | No | Yes |
| Revenue department | North Dakota Office of State Tax Commissioner | Michigan Department of Treasury |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Michigan and working in North Dakota gives:Both states — credit offsets the double tax.
Same two states, different situation
The withholding answer turns on how you are paid and where the work happens, not only on which two states are involved.
- Remote worker: North Dakota → MichiganHome state only
- 1099 contractor: North Dakota → MichiganHome state, plus the client state if you work there
- Moved mid-year: North Dakota → MichiganTwo part-year returns
Other North Dakota pairs
Questions people actually ask
I live in North Dakota and work in Michigan. Which state takes the tax out of my paycheck?
Michigan withholds and North Dakota credits. Without an agreement between them, both states are entitled to tax income earned in Michigan by a North Dakota resident. The mechanism that stops you paying twice is the credit on the North Dakota resident return, which is why the Michigan return has to be completed first.
Which state should my employer be withholding for?
Michigan. The wages are sourced to Michigan, so Michigan withholding is correct and there is no North Dakota withholding to set up.
Will I end up paying tax twice on the same income?
Not twice over, but you will pay the higher of the two rates. North Dakota gives residents a credit for tax paid to Michigan on the same income, claimed on Schedule ND-1CR. The credit is capped at the North Dakota tax on that income, so if Michigan taxes it more heavily the excess is not refunded by either state.
How current is this?
The North Dakota and Michigan rules on this page were last checked against North Dakota Office of State Tax Commissioner and Michigan Department of Treasury on 2026-08-07. We re-check the full grid every December after state legislative sessions close, and re-check the convenience-of-the-employer states quarterly because that is where the rules move fastest.
Sources
Every fact above comes from the revenue department that publishes the rule. We do not cite secondary summaries, and we do not restate a figure we could not find at source.
- North Dakota Office of State Tax Commissioner — individual income taxaccessed 2026-08-07
- Michigan Department of Treasury — individual income taxaccessed 2026-08-07