Schedule ND-1FA: Schedule ND-1FA - 3-year Averaging Method for Elected Farm Income (2025)
North Dakota · ND Tax Commissioner · Used for tax years 2025
North Dakota Schedule ND-1FA calculates 2025 tax using the 3-year averaging method for elected farm income. It uses elected farm income from federal Schedule J and North Dakota income and tax amounts for 2022, 2023, and 2024.
Who files this form
Schedule ND-1FA is optional. You are eligible to use it for tax year 2025 if you used Schedule J (Form 1040) to calculate your 2025 federal income tax.
You do not have to use Schedule ND-1FA just because you used federal Schedule J. Complete and attach it to Form ND-1 only if you choose to pay the tax calculated using this schedule.
What you'll need
- Your 2025 Form ND-1 and Schedule J (Form 1040).
- Copies of your 2022, 2023, and 2024 North Dakota income tax returns, including applicable Schedules ND-1FA and ND-1NR.
- Corrected amounts for any of those years if you filed an amended return or the Office of State Tax Commissioner changed your return.
- The 2025 Form ND-1 tax table and the 2022, 2023, and 2024 tax rate schedules included with Schedule ND-1FA.
If you are missing a base-year return, the back cover of the 2025 Form ND-1 instruction booklet explains how to obtain a copy.
How to file
Attach Schedule ND-1FA to your 2025 Form ND-1 only if you choose to pay the tax calculated using it.
- If you and your spouse, if filing jointly, were full-year residents, enter Schedule ND-1FA, line 23, on 2025 Form ND-1, line 20.
- If you are required to use Schedule ND-1NR, enter Schedule ND-1FA, line 23, on 2025 Schedule ND-1NR, line 22. Complete the rest of Schedule ND-1NR to calculate your actual tax liability.
Common mistakes
- Assuming averaging always lowers your tax. The tax calculated using Schedule ND-1FA may be higher than the tax calculated without it.
- Entering too much elected farm income on line 2. Do not enter more than the amount on line 1. If your elected farm income includes a net long-term capital gain, follow the line 2 instructions.
- Overlooking zero or negative base-year income. If line 5, 9, or 13 is zero or less, see the instructions for those lines.
- Treating line 23 as your final tax when Schedule ND-1NR is required. You must carry the amount to Schedule ND-1NR, line 22, and complete the rest of that schedule.
Questions people ask
What if I was not required to file a North Dakota return for a base year?
Complete the applicable North Dakota return for each base year for which you were not required to file and did not file. Complete it through the tax calculation line, then use its figures to complete the applicable lines of the 2025 Schedule ND-1FA.
Can I use negative taxable income for a base year?
Yes. For lines 5, 9, and 13, use a negative number if your North Dakota taxable income for that base year is mathematically less than zero.
What if my elected farm income includes a net long-term capital gain?
If you claimed an exclusion on 2025 Form ND-1, line 6, attributable to a net long-term capital gain included in your federal elected farm income, subtract that portion of the exclusion from your federal elected farm income when completing Schedule ND-1FA, line 2.
Which filing status do I use for the base-year tax calculations?
Use the tax rate schedule matching your filing status for each base year: 2022 for line 8, 2023 for line 12, and 2024 for line 16.