Tool | September 2014
State-by-State Guide to Taxes on Retirees
State Sales Tax
4% (prescription drugs are exempt). Municipalities may add up to 2%, and they may change this tax rate on January 1 or July 1 of each year. Residents who are 65 or older and have an annual income of less than $10,250 (single) or $13,250 (household) are eligible for a sales-tax refund.
Income Tax Range
There's no state income tax.
Benefits are not taxed.
Exemptions for Other Retirement Income
Retirement income is not taxed.
Property is assessed at 85% of market value. Local government entities assess and collect property taxes.
Median property tax on the state's median home value of $126,200 is $1,620, according to the Tax Foundation.
Tax breaks for seniors: A tax freeze and/or municipal property-tax reduction is available for seniors 65 and older. To qualify for the assessment freeze, you must meet income requirements and have resided in a single-family dwelling for at least 200 days of the previous calendar year. Unmarried surviving spouses may also qualify for a freeze or reduction. Income is limited to $26,566 for individuals and $33,208 for multi-member households, and the value of the home must be less than $182,358.
Single homeowners 65 and older who earn $11,670 or less can get a property tax refund based on income. Multi-person households headed by someone 65 or older, where the combined income is $15,730 or less, are also eligible. Refunds are only available for single-household dwellings, and you must have been a South Dakota resident for the entire previous year. People who do not receive a property tax refund and who do not own a home may apply for a refund of sales tax.
South Dakota also has a property tax homestead exemption for homeowners 70 or older (or surviving spouses), which delays payment of property taxes until the property is sold. Taxes are a lien on the property, which includes up to one acre, and must be paid along with 4% interest before the property can be transferred. For a single person, annual income must be less than $16,000. For a multimember household, the limit is $20,000.
There is no inheritance tax or estate tax.
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