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
-
The Fall Garden 'Tax': What to Plant and How to PrepareTax Tips Fall gardening could increase your taxes this season. Here’s what to know while planting in 2025.
-
July CPI Report Boosts Rate-Cut Odds: What the Experts SayThe July CPI report shows that tariffs are having a slight impact on inflation, though not enough to keep the Fed from cutting interest rates.
-
The Fall Garden 'Tax': What to Plant and How to Prepare
Tax Tips Fall gardening could increase your taxes this season. Here’s what to know while planting in 2025.
-
Texas Sales Tax-Free Weekend 2025Tax Holiday Here's what you needed to know about the Texas sales tax holiday.
-
Retirees Should Watch These Four Key Tax Changes in 2025Tax Changes This year brings key tax changes that could affect your retirement taxes and income.
-
The Most Tax-Friendly State for Retirement in 2025: Here It IsRetirement Tax How do you retire ‘tax-free’? This state doesn’t tax retirement income, has a low median property tax bill, and even offers savings on gas. Are you ready for a move?
-
Virginia Tax-Free Weekend 2025 Is Here August 1–3: What to KnowSales Tax Three days, no sales tax. Here’s what qualifies for Virginia’s tax-free weekend.
-
Virginia Sales Tax Holiday 2025
Sales Tax Three days, no sales tax. Here’s what qualifies for Virginia’s tax-free weekend.
-
Georgia Could Be Latest State to Eliminate Income TaxesState Tax Eliminating the Georgia state income tax: Last-minute summer trend or permanent policy?
-
Biggest Winners and Losers in Trump's New Tax PlanTax Law Trump’s mega tax overhaul, known as the ‘One Big Beautiful Bill,’ has distinct winners and losers. Which group do you fall into?
