Overview of South Dakota Taxes
On a statewide basis, South Dakota does not levy a personal income tax. The state's sales tax is also among the lowest in the country. However, the average effective property tax rate in South Dakota is above the national average.
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Your Income Taxes Breakdown
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* These are the taxes owed for the 2023 - 2024 filing season.
Your 2023 Federal Income Tax Comparison
- Your marginal federal income tax rate
- Your effective federal income tax rate
- Your federal income taxes
Total Estimated 2023 Tax BurdenIncome Tax $ Sales Tax $ Fuel Tax $ Property Tax$ Total Estimated Tax Burden $ Percent of income to taxes = % | $ |
- About This Answer
Our income tax calculator calculates your federal, state and local taxes based on several key inputs: your household income, location, filing status and number of personal exemptions.
How Income Taxes Are Calculated
- First, we calculate your adjusted gross income (AGI) by taking your total household income and reducing it by certain items such as contributions to your 401(k).
- Next, from AGI we subtract exemptions and deductions (either itemized or standard) to get your taxable income. Exemptions can be claimed for each taxpayer as well as dependents such as one’s spouse or children.
- Based on your filing status, your taxable income is then applied to the the tax brackets to calculate your federal income taxes owed for the year.
- Your location will determine whether you owe local and / or state taxes.
- Last Updated: January 1, 2024
When Do We Update? - We regularly check for any updates to the latest tax rates and regulations.
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Taxes in South Dakota
South Dakota State Tax Quick Facts
- Income tax: None
- Sales tax: 4.2% - 6.2%
- Property tax: 1.24% average effective rate
- Gas tax: 28 cents per gallon of regular gasoline and diesel
When considering all types of taxes, South Dakota is one of the most taxpayer-friendly states in the U.S. It is one of the few states without a personal income tax and its sales taxes are in the bottom third of the country. Sales tax rates range from 4.2% to 6.2% when including local rates, for a combined average of 5.99%. The only major tax in South Dakota that stands above the national average is its property tax, which is 1.24%, compared to the 1.02% national mark.
A financial advisor can help you understand how taxes fit into your overall financial goals. Finding a financial advisor doesn't have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
South Dakota Income Taxes
If you want to avoid income taxes, you should consider relocating to South Dakota, as there's no income tax in the state. This means your income from wages, salaries, capital gains, interest and dividends are not taxed at the state level. Furthermore, taxpayers in South Dakota do not need to file a state tax return.
South Dakota Sales Tax
South Dakota’s state sales tax rate is 4.20%. In addition, cities in South Dakota have the option of collecting a local sales tax of up to 2%.
Sales tax in the Mount Rushmore State applies to all retail sales, leases or rentals of tangible personal property, services and electronically downloaded products. Unless an item or service is specifically exempt, the sales tax applies.
South Dakota has sales tax exemptions on a number of items and services. Exempt services include travel agencies, banking services performed by registered institutions, social services, agricultural services, educational services and medical services. Exempt products include prescription drugs, lottery tickets, purchases made with food stamps and water purchased in bulk or through a water supply system. All food sales are taxed in South Dakota (excluding those made with food stamps).
South Dakota Property Tax
Property taxes in South Dakota are the principal source of revenue to support local services like schools, law enforcement, libraries and parks. Property taxes are administered at the local level, but the state oversees property assessments to ensure fairness and compliance with state law. The state’s average effective tax rate is 1.24%, the 16th-highest rate in the country. Rates vary significantly between counties, though.
If you are considering buying a home or thinking about refinancing in the Mount Rushmore State, have a look at our South Dakota mortgage guide. It includes the most relevant information you’ll want to be familiar with before getting a mortgage.
South Dakota Gas Tax
The state gas tax in South Dakota is 28 cents per gallon of regular gasoline. Diesel fuel faces the same state tax of 28 cents per gallon. These are the 35th- and 31st-highest rates in the U.S., respectively.
South Dakota Cigarette Tax
Cigarettes in South Dakota are taxed at a rate of $1.53 per pack of 20, slightly lower than the national mark.
South Dakota Alcohol Tax
Along with the sales tax rates described above, some cities in the state levy an additional 1% tax on alcohol sales (bringing the total rate up to 7.5% in many cities). Alcohol in South Dakota is also subject to excise taxes, which are charged to the wholesaler and therefore included in the price.
The rates of these excise taxes vary by beverage type. The tax on liquor is $4.67 per gallon, the tax on wine is $0.93 per gallon and the tax on beer is 27 cents per gallon.
South Dakota Inheritance Tax
South Dakota’s inheritance tax was repealed in 2000, so the state no longer taxes inheritances. Likewise, there is no estate tax in South Dakota.
- The Sturgis Motorcycle Rally, held every August in Sturgis, South Dakota, brings over 400,000 people to the town of just over 6,000.
- South Dakota is the sixth largest producer in the U.S. of the corn-based fuel ethanol.
- The sculpting of Mount Rushmore began in 1927 and took 14 years to complete, costing just under $1 million. No workers died during its construction.
