South Dakota State Tax Guide

Bottom Line

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

Sure, it's cold in the winter. But low taxes will offset some of the cost of staying warm in the Mount Rushmore state. 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. 

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 $1,288 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 2022 applications, income is limited to $30,423 for individuals and $38,029 for multi-member households ($35,000 and $45,000, respectively, effective July 1, 2022). In addition, the property generally can't be valued at more than $208,828 ($300,000 effective July 1, 2022).

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.