Day to day, North Dakota and South Dakota cost almost exactly the same. The 2026 cost of living indexes sit at roughly 92.5 for North Dakota and 92.6 for South Dakota, both about 7 to 8 percent below the national average. The real gap is in tax structure, not grocery aisles: South Dakota charges no income tax but taxes your food and taxes your property at a higher effective rate, while North Dakota charges a very low income tax and hands homeowners a credit of up to $1,600 a year against their property tax bill. For most working households who own their home, North Dakota comes out slightly ahead. For high earners with large investment income, South Dakota usually wins.
The headline numbers
Which state is actually cheaper to live in, North Dakota or South Dakota?
I get this question constantly from people relocating into the Bakken, usually someone weighing a job in Williston or Watford City against one in Sioux Falls. They expect a big spread. There isn't one at the checkout counter. Here is the side by side, using 2026 figures from the Tax Foundation, its South Dakota profile, the MERIC cost of living series, and Zillow's home value index.
| Measure (2026) | North Dakota | South Dakota |
|---|---|---|
| Cost of living index (100 = US avg) | 92.5 | 92.6 |
| State individual income tax | 1.95% to 2.5%, first bracket taxed at 0% | None |
| State sales tax | 5.00% (6.89% avg combined) | 4.20% (6.11% avg combined) |
| Sales tax on groceries | Exempt | Taxed at the general rate |
| Effective property tax rate | 0.92% | 1.00% |
| Statewide homeowner credit | Up to $1,600 per year | No equivalent |
| Typical home value | $290,642 | $319,894 |
| Median household income | $68,131 | $63,920 |
My read: the cost of living index is the number everybody quotes and the least useful number on this list. A tenth of a point is statistical noise. What separates these two states is where the money gets taken out of your pocket, and that changes the answer depending on whether you rent or own, and whether your income is a paycheck or a portfolio.
What this means for you
Do not pick a state off a cost of living index. Two states can score identically and still leave a $2,000 a year difference in your bank account once taxes, housing and property bills are layered in.
The income tax question
Does South Dakota's no income tax actually leave you with more money?
Less than people assume, because North Dakota's income tax is close to nothing. After a major 2023 reform, most North Dakotans pay either 1.95% or 2.5%, and the first bracket of income is taxed at 0%. North Dakota's top marginal rate ties Arizona for the lowest in the country among states that tax wage income at all.
Run it on a household earning $70,000. One 2026 tax guide estimates the savings from crossing into South Dakota at roughly $1,365 a year. That is real money. It is also less than the property tax credit North Dakota hands the same household back, which is the part almost nobody accounts for.
Where the no income tax advantage does get large is at the top. South Dakota does not tax capital gains, dividends or other investment income, because it does not tax income at all. If your money comes from a portfolio, a business sale, or royalties structured as income, that exemption compounds fast.
What this means for you
If you earn a wage, the income tax difference between these two states is a rounding error on a relocation decision. If you earn from investments or you are selling a business, it is not, and you should be talking to a CPA before you pick a mailing address.
Property tax
What do property taxes really cost in North Dakota versus South Dakota?
This is where North Dakota quietly wins for homeowners, and it is the single most overlooked fact in this comparison. North Dakota's effective property tax rate on owner occupied housing is 0.92%. South Dakota's is 1.00%. On its own, an eight hundredths of a percent difference is not a headline. Then North Dakota stacks the Primary Residence Credit on top of it: up to $1,600 per household per year, with no age limit and no income limit, applied straight against your property tax statement.
Work a $300,000 house through both states as an illustration. In North Dakota, 0.92% is about $2,760, and the credit knocks it down toward $1,160. In South Dakota, 1.00% is about $3,000, with no comparable statewide credit to apply. Same house, roughly $1,800 a year apart. Your actual bill depends on your county and local mill levies, so treat that as directional rather than a quote.
The credit is not a temporary gimmick either. Lawmakers tripled it from $500 to $1,600 through House Bill 1176 in 2025 and paired it with a 3% annual cap on local levy increases without voter approval. The state has since reported that the expanded credit wiped out property taxes entirely for roughly 50,000 households.
My read: after more than 1,400 closings in this market, I have watched more buyers get surprised by a property tax bill than by a purchase price. The purchase price is a one time negotiation. The tax bill shows up every single year, and North Dakota just structurally lowered it for anyone who owns and occupies. You do have to apply, though, and the window is January 1 through April 1. Miss it and you wait a year.
What this means for you
If you own your home, North Dakota's property tax structure is worth more to you than South Dakota's zero income tax, at most normal wage income levels. If you rent, that advantage does not reach you directly and the math tightens considerably.
Everyday spending
Why does the same grocery cart cost more in South Dakota?
South Dakota is one of only a handful of states left that taxes groceries at its general sales tax rate. Milk and bread get taxed the same as a television. North Dakota exempts most food for home consumption entirely. Put numbers on it. Federal spending data puts North Dakota grocery costs around $318 per person per month, so a family of four is spending in the neighborhood of $15,000 a year on food at home. Tax that at South Dakota's 4.2% state rate and you are looking at roughly $600 a year in tax on food alone that a North Dakota family simply does not pay.
South Dakota's headline sales tax rate is lower, 4.20% versus North Dakota's 5.00%, and its average combined rate is lower too, 6.11% versus 6.89%. But a lower rate applied to a much broader base is not automatically cheaper for a household that eats.
What this means for you
Compare tax bases, not tax rates. South Dakota's advertised sales tax rate is lower and its actual bite on a family grocery budget is higher.
Housing and property
What does property actually cost in each state right now?
Statewide, North Dakota is cheaper. Zillow puts the typical North Dakota home value at $290,642, up 5.5% over the past year, against roughly $319,894 in South Dakota. Both sit well under the national typical value of about $371,774.
City level is where I would push back on anyone treating this as a simple state versus state question. Williston is not a cheap market: a typical home value around $324,000, recent median sale prices well north of that, and listings that can go pending in a bit over a week. Sioux Falls sits near $314,000, Rapid City nearer $366,000, and Watford City posts the highest median in North Dakota. The Bakken prices like an energy economy, not like a Plains average.
The other half of this question rarely gets asked, because nobody comparing these states looks at anything but houses. If you are buying a shop, a commercial building, industrial acreage or raw land, the levy cap and assessment rules matter more to your hold economics than any residential index, and the $1,600 credit will not apply to a dollar of it.
My read: I would not move states over a cost of living index. I would move over the job, the industry and the property that fits what you actually want to own. Both Dakotas are affordable. Only one of them has the Bakken.
The honest counterpoint
When is South Dakota genuinely the cheaper choice?
Three situations, and I will not pretend otherwise. First, high earners. Above a certain income the zero income tax outruns any property credit. Second, investment and retirement income. South Dakota taxes none of it, and its tax system ranks second in the country on the Tax Foundation's 2026 competitiveness index. Third, renters. If you are not on a deed, North Dakota's homeowner credit does nothing for you, and South Dakota's no income tax is straight cash in hand.
The two states also pay their bills differently. North Dakota collects $9,834 in state and local tax per capita against South Dakota's $5,298, but the majority of that comes from oil and gas production taxes rather than from residents. That is what funds the property tax credit, and it ties North Dakota's tax picture to a commodity cycle in a way South Dakota's is not.
What this means for you
Renters and portfolio earners lean South Dakota. Wage earners who own their home lean North Dakota. That single distinction settles most of these conversations before anyone opens a spreadsheet.
Common questions
Questions people actually ask about moving between the Dakotas
Is North Dakota or South Dakota cheaper overall in 2026?
They are essentially tied on cost of living, at roughly 92.5 and 92.6 against a national average of 100. North Dakota is cheaper for homeowners once the Primary Residence Credit and grocery exemption are counted. South Dakota is cheaper for renters and for anyone with substantial investment income.
How much is North Dakota's property tax credit worth?
Up to $1,600 per household per year, applied directly against your property tax statement. There are no age or income restrictions and only one credit per household. You must apply through the Office of State Tax Commissioner between January 1 and April 1 each year, and late applications are not accepted.
Does North Dakota have an income tax?
Yes, but it is one of the lowest in the nation. Rates run from 0% on the first bracket up to 2.5% at the top, tied with Arizona for the lowest top marginal rate among states that tax wages. Social Security benefits are not taxed.
Does South Dakota tax groceries?
Yes. South Dakota is one of the few remaining states that taxes food for home consumption at its general sales tax rate. North Dakota exempts most groceries from sales tax entirely, which can be worth several hundred dollars a year to a family.
Which state has lower property taxes?
North Dakota, on both measures. Its effective rate on owner occupied housing is 0.92% versus South Dakota's 1.00%, and North Dakota adds the $1,600 primary residence credit on top. North Dakota also capped annual local levy increases at 3% without voter approval.
Are homes cheaper in North Dakota than South Dakota?
Statewide, yes. The typical North Dakota home value is about $290,600 against roughly $319,900 in South Dakota. City level is a different story: Williston and Watford City price above the state average because of Bakken energy demand, and Rapid City prices above both.
Does any of this apply to commercial property or land?
The property tax rates and the levy cap apply broadly, but the $1,600 credit is for owner occupied primary residences only. If you are buying commercial, industrial or agricultural property, your carrying costs need to be underwritten separately. That is worth a conversation before you write an offer.
If you are choosing between these two states on cost alone, you are splitting hairs. Both are affordable, both are stable, both sit a long way under the national average. What actually changes your number is whether you own or rent, and whether your income is a paycheck or a portfolio.
Our team has closed over $440 million in Western North Dakota real estate since 2019, and the pattern holds at every price point: the people who run the property tax math before they buy are the ones still happy about the decision three years later.
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