South Dakota State Tax Guide

State tax rates and rules for income, sales, property, fuel, cigarette, and other taxes that impact South Dakota residents.

Bottom Line

Middle-Class Families: Tax-Friendly (Go to the Kiplinger Tax Map for Middle-Class Families)

Retirees: Not Tax-Friendly (Go to the Kiplinger Tax Map for Retirees)

Sure, it's cold in the winter. But low taxes for middle-class families will offset some of the cost of staying warm in the Mount Rushmore state (retirees will have to freeze). South Dakota has no income tax – that's a good start. The combined state and local sales tax rate is below average for the U.S., although sales taxes have a broad reach in the state and include taxes on both groceries and clothing.

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For some bad news, take a look at the state's median property tax rate, which is on the high side.

South Dakota Income Taxes

South Dakota has no income tax.

South Dakota Sales Tax

4.5% state levy. Localities can add as much as 4.5%, and the average combined rate is 6.4%, according to the Tax Foundation.

  • Groceries: Taxable
  • Clothing: Taxable
  • Motor Vehicles: Exempt from ordinary sales tax, but taxable under special 4% excise tax
  • Prescription Drugs: Exempt

South Dakota Real Property Taxes

In South Dakota, the median property tax rate is $1,078 per $100,000 of assessed home value.

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, 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 multi-member household, the limit is $20,000.

For 2022, single homeowners 66 and older who earned $13,653 or less in 2021 can get a property tax refund based on income. Multi-person households headed by someone 66 or older, where the combined 2021 income was $18,465 or less, are also eligible. Refunds are only available for single-household dwellings, and you must have been a South Dakota resident for all of the previous year. People who don't receive a property tax refund and who don't own a home may apply for a refund of sales tax.

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. Unmarried surviving spouses may also qualify for a freeze or reduction. For 2023 applications, income is limited to $37,065 for individuals and $47,655 for multimember households. In addition, the property generally can't be valued at more than $317,700.

South Dakota Motor Fuel Taxes

Gasoline: 30¢ per gallon.

Diesel: 30¢ per gallon.

South Dakota Sin Taxes

Cigarettes: $1.53 per pack

Other tobacco products: 35% of the wholesale price

Beer: $0.27 per gallon

Wine: $0.90 per gallon ($2.07 if sparkling)

Liquor: $3.93 per gallon

2% wholesale tax also due on wine and liquor.

Marijuana: A 15% excise tax was authorized by a November 2020 ballot initiative, but the South Dakota Supreme Court invalidated the ballot initiative in November 2021

South Dakota Estate and Inheritance Taxes

No estate or inheritance tax.

Rocky Mengle
Senior Tax Editor, Kiplinger.com

Rocky was a Senior Tax Editor for Kiplinger from October 2018 to January 2023. He has more than 20 years of experience covering federal and state tax developments. Before coming to Kiplinger, he worked for Wolters Kluwer Tax & Accounting and Kleinrock Publishing, where he provided breaking news and guidance for CPAs, tax attorneys, and other tax professionals. He has also been quoted as an expert by USA Today, Forbes, U.S. News & World Report, Reuters, Accounting Today, and other media outlets. Rocky has a law degree from the University of Connecticut and a B.A. in History from Salisbury University.