South Dakota Tax: Guide to Income, Sales, Property, and Retirement Taxes

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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.

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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

picture of Pierre South Dakota waterfront

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

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Product	Tax Amount
Gasoline	$0.28 per gallon
Diesel	$0.28 per gallon

Source: Sales Tax Handbook

South Dakota taxes on tobacco and alcohol

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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

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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.

Kelley R. Taylor is the senior tax editor at Kiplinger.com, where she breaks down federal and state tax rules and news to help readers navigate their finances with confidence. A corporate attorney and business journalist with more than 20 years of experience, Kelley has helped taxpayers make sense of shifting U.S. tax law and policy from the Affordable Care Act (ACA) and the Tax Cuts and Jobs Act (TCJA), to SECURE 2.0, the Inflation Reduction Act, and most recently, the 2025 “Big, Beautiful Bill.” She has covered issues ranging from partnerships, carried interest, compensation and benefits, and tax‑exempt organizations to RMDs, capital gains taxes, and energy tax credits. Her award‑winning work has been featured in numerous national and specialty publications.