Navigating the complexities of state taxes can be daunting, but understanding South Dakota's tax landscape is essential for residents and newcomers alike.
In this guide, we'll explore key components of The Mount Rushmore State's tax system, from income and sales taxes to property taxes and retirement benefits.
South Dakota state tax: Overview
Thinking about taxes in South Dakota? Here are some key points to know.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The state doesn’t take a bite out of your paycheck as there’s no income tax here, which is a positive for many residents. Plus, the combined state and local sales tax rate in South Dakota is relatively low compared to much of the country.
But there’s a catch: sales tax is charged on both groceries and clothing, which can add up.
And while you might save on income and sales taxes, keep in mind that South Dakota’s property taxes are on the higher side compared to other states.
[Data for this state tax guide was gathered from a number of sources including the Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]
South Dakota income tax
South Dakota has no income tax.
South Dakota retirement taxes
You won’t pay any state income taxes in South Dakota. That’s because there is no personal income tax in South Dakota. There is no estate or inheritance tax in the state either.
- Tax on Taxable Income: N/A
- Social Security: Not taxable
- Pensions: Not taxable
- 401(k) and IRA Distributions: Not taxable
South Dakota sales tax
The sales tax in South Dakota is 4.20%. The average local sales tax is 1.91%, resulting in a combined sales tax rate of 6.11%, according to the Tax Foundation.
Source: Tax Foundation
- Groceries: Taxable
- Clothing: Taxable
- Motor Vehicles: Exempt from ordinary sales tax, but taxable under a special 4% excise tax
- Prescription Drugs: Taxable
How much is South Dakota property tax?
In South Dakota, the median property tax rate is 1.01% of assessed home value, according to the Tax Handbook.
South Dakota Property Tax Breaks for Retirees
South Dakota offers 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.
A property tax "freeze" is also 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.
South Dakota gas tax
Product | Tax Amount |
|---|---|
Gasoline | $0.28 per gallon |
Diesel | $0.28 per gallon |
Source: Sales Tax Handbook
South Dakota taxes on tobacco and alcohol
Product | Tax Amount |
|---|---|
Cigarettes | $1.53 per pack |
Other Tobacco Products | 35% of the wholesale price |
Medical Marijuana | 0.00% |
Recreational Marijuana | 19.50% (4.50% cannabis sales tax + 15% state excise tax) |
Source: Sales Tax Handbook
Product | Tax Amount |
|---|---|
Beer | $0.27 per gallon |
Wine | $0.93 per gallon |
Liquor | $3.93 per gallon |
There is also a 2% wholesale tax on wine and liquor.
Source: Sales Tax Handbook
South Dakota estate and inheritance taxes
South Dakota has no estate or inheritance tax.
Related Content
-
Denmark Raised the Social Security Age to 70. Should the US Do the Same?Social Security is facing a shortfall. One idea is to raise the retirement age, as Denmark did recently, but would it work in America?
-
Californians to Save Thousands on Property Tax with New 2025 SALT DeductionTax Breaks The federal state and local sales tax (SALT) deduction cap is higher this year, and could translate into bigger savings for Golden State homeowners.
-
Californians to Save Thousands on Property Tax with New 2025 SALT Deduction
Tax Breaks The federal state and local sales tax (SALT) deduction cap is higher this year, and could translate into bigger savings for Golden State homeowners.
-
Money for Your Kids? Three Key Ways Trump's ‘Big Beautiful Bill’ Impacts Your Child's FinancesTax Tips The Trump tax bill could help your child with future education and homebuying costs. Here’s how.
-
These Summer 2025 Back-to-School Tax-Free Weekends Are Starting NowSales Tax Over a dozen states offer back-to-school shoppers a sales tax holiday this summer.
-
Why Your Summer Budget Feels Tighter: Tariffs Push Up InflationTariffs Your summer holiday just got more expensive, and tariffs are partially to blame, economists say.
-
Alabama Tax-Free Weekend 2025Tax Holiday Here’s everything you need to know about the 2025 back-to-school Alabama sales tax holiday.
-
Parents Prepare: Trump's Megabill Brings Three Crucial Tax ChangesTax Changes Are you a parent? The so-called ‘One Big Beautiful Bill’ (OBBB) impacts several key tax incentives that can affect your family this year and beyond.
-
‘I Play Pickleball in Retirement.’ Is It HSA-Eligible?Retirement Tax Staying active after you retire may be easier with these HSA expenses. But there’s a big catch.
-
Mississippi Tax-Free Weekend 2025Tax Holiday Just in time for Prime Day, Mississippi celebrated a tax holiday in July. Find out what back-to-school essentials were included.
