State Tax Guide
No State Income TaxSouth Dakota State Taxes: A Simple Guide
South Dakota has no state income tax on wages, but does have state and local sales taxes and local property taxes. This guide explains the basics for individuals in plain language.
📌 Important
This is a general overview. South Dakota tax laws and local programs can change. Always check official South Dakota guidance or consult a tax professional about your specific situation.
💰No state income tax
South Dakota does not impose a state income tax on most individual wages and salaries. This is a significant tax advantage for residents and makes South Dakota one of the most tax-friendly states in the nation.
✓ What this means:
- No state income tax is withheld from paychecks for most employees.
- Most individuals do not need to file a South Dakota personal income tax return.
- The main income tax filing for residents is the federal Form 1040.
- You keep more of your paycheck compared to states with income tax.
Note:
Some specialized business, excise, and industry-specific taxes still exist (such as bank franchise tax or certain professional taxes), but they are outside the scope of this individual-focused overview. Most wage earners won't encounter these.
🛍️Sales and use tax
South Dakota has a state sales tax, and many local governments (cities, counties, and special districts) add their own sales taxes on top. Combined rates vary across different locations throughout the state.
How it works:
- Most retail sales of goods are subject to South Dakota sales tax.
- Some services are also taxed, depending on state rules and classifications (check current SD Department of Revenue guidance).
- Use tax applies when you buy taxable items from out-of-state sellers (including online) without paying sales tax and bring them into South Dakota for use.
- Local jurisdictions may add their own sales taxes, creating different combined rates in different cities and counties.
💡 For businesses:
Businesses selling taxable goods or services typically must collect and remit state and local sales and use taxes to the South Dakota Department of Revenue.
🏡Property taxes
Property taxes in South Dakota are imposed by counties, cities, school districts, and other local entities, based on the assessed value of homes, land, and other real property. These taxes fund schools, roads, and local public services.
How it works:
- Homeowners receive annual property tax bills from their county treasurer or tax office.
- Property taxes are based on the assessed value of your property, determined by county assessors.
- Multiple entities may levy property taxes on the same property (county, school district, city, fire district, etc.).
- Rates vary by location and the local government's budget needs.
💡 Relief programs:
Certain relief or limitation programs may be available for some residents, especially seniors or disabled individuals (such as the Property Tax Reduction program for elderly and disabled). Check with your county assessor or the SD Department of Revenue for eligibility.
Putting South Dakota taxes together
A typical South Dakota resident may see:
- ✓Federal income tax (Form 1040)
- ✓No state income tax on wages and salaries
- ✓State and local sales and use taxes on purchases
- ✓Local property taxes if they own a home or property
If you understand how federal filing works, South Dakota's structure (no income tax, but sales and property taxes) fits more easily into your overall plan. You can also explore what Form 1040 is to understand the federal side.