South Dakota Income Tax Rates & Brackets (Tax Year 2025 — Filed in 2026)
⚠️Informational only — not legal or tax advice.
Tax year covered: 2025 (federal returns filed in 2026)
Applies to: Income earned January 1 – December 31, 2025
Federal returns filed: January – April 2026
Last verified: February 19, 2026
Table of Contents
- Quick Reference
- Key Takeaways
- Quick Questions
- Statutory and Constitutional Authority
- Who Must File — South Dakota
- What Income Is — and Is Not — Taxed in South Dakota
- South Dakota's Actual Tax Obligations for Residents
- Filing Deadlines
- Remote Workers and South Dakota
- Domicile and Residency
- Military Personnel
- Retirees
- Students
- Part-Year Residents
- Property Tax Relief Programs
- Common Tax Situations
- Resources
- Tax Glossary
Quick Reference
Does South Dakota have income tax? No
State income tax rate: 0%
Corporate income tax: No
Local income tax: No
State income tax return required: No
Inheritance tax: No (repealed July 1, 2001)
Estate tax: No
Official source: dor.sd.gov/individuals/taxes
Key Takeaways
- No state income tax: South Dakota is one of nine states with no individual income tax. Residents owe $0 in state income tax on wages, salaries, retirement income, capital gains, dividends, interest, or any other income.
- No state tax return: South Dakota residents are not required to file a state income tax return.
- Federal tax still applies: All South Dakota residents and workers must comply with federal income tax obligations to the IRS.
- No local income tax: No South Dakota municipality levies a local income tax.
- Revenue model: South Dakota funds government services through sales tax, property tax, excise taxes, and gaming revenues — not income taxes.
- Constitutional protection: Any new tax or rate increase requires either a two-thirds vote of both legislative chambers or approval by voters (SD Constitution, Art. XI, § 14).
Source: South Dakota Department of Revenue – Individual Taxes
Quick Questions About South Dakota Income Tax
Does South Dakota have a state income tax?
No. South Dakota is one of nine states that do not impose a state individual income tax. This applies to all income types: wages, self-employment income, retirement distributions, Social Security benefits, investment income, capital gains, and military pay.
Do I need to file a South Dakota state income tax return?
No. Because South Dakota does not collect income tax, there is no state income tax return to file. South Dakota residents still must file a federal return with the IRS if their income meets federal thresholds.
Is Social Security taxed in South Dakota?
No. South Dakota does not tax Social Security benefits at the state level. (Federal income tax on Social Security may apply depending on your total income.)
Does South Dakota tax retirement income?
No. Pensions, 401(k) distributions, IRA withdrawals, and other retirement income are not taxed at the state level in South Dakota.
Is military pay taxed in South Dakota?
No. Active duty military pay and military retirement pay are fully exempt from South Dakota state income tax because the state has no income tax.
Are capital gains taxed in South Dakota?
No state capital gains tax exists in South Dakota. Capital gains are subject only to federal income tax.
Does South Dakota have a corporate income tax?
No. South Dakota does not impose a corporate income tax. Businesses are subject to federal corporate tax but not state corporate income tax.
Source: South Dakota Department of Revenue – Individual Taxes
Statutory and Constitutional Authority
South Dakota’s absence of an income tax is grounded in both legislative history and constitutional constraints:
Constitutional Framework (SD Constitution, Article XI – Revenue and Finance):
- Article XI, § 2 – Governs classification of property for taxation and income; the state has broadly refrained from exercising income taxing authority.
- Article XI, § 13 – Vote required to increase certain tax rates or valuations; prohibits rate increases without supermajority or voter consent.
- Article XI, § 14 – Key protection: “The rate of taxation imposed by the State of South Dakota in regard to any tax may not be increased and no new tax may be imposed by the State of South Dakota unless by consent of the people by exercise of their right of initiative or by two-thirds vote of all the members elect of each branch of the Legislature.” Enacted by voters November 5, 1996.
- Article XI, § 15 – Inheritance tax prohibited.
What this means practically: Establishing a new state income tax in South Dakota would require either a citizen-initiated ballot measure or a two-thirds vote of both chambers of the South Dakota Legislature — a high bar that has preserved the no-income-tax status.
Source: South Dakota Constitution, Article XI | SD Legislature – Constitutional Article 11
Who Must File — South Dakota
State income tax return: No one. South Dakota does not have a state income tax return.
Federal income tax return: South Dakota residents must file a federal return with the IRS if their gross income meets federal filing thresholds. For Tax Year 2025, general IRS thresholds are:
| Federal Gross Income Thresholds (Tax Year 2025) | |
|---|---|
| Filing Status | Federal Gross Income Threshold |
| Single (under 65) | $14,600 |
| Single (65 or older) | $16,550 |
| Married Filing Jointly (both under 65) | $29,200 |
| Married Filing Jointly (one spouse 65+) | $30,750 |
| Married Filing Jointly (both 65+) | $32,300 |
| Head of Household (under 65) | $21,900 |
| Head of Household (65+) | $23,850 |
Note: These are federal IRS thresholds. Consult IRS Publication 501 or IRS.gov for the most current figures.
Source (Federal): IRS.gov – Do I Need to File a Tax Return?
Source (SD): South Dakota Department of Revenue – Individual Taxes
What Income Is — and Is Not — Taxed in South Dakota
South Dakota does not tax any of the following at the state level:
| South Dakota — Tax Treatment of Common Income Types | |
|---|---|
| Income Type | South Dakota State Tax |
| Wages and salaries | Not taxed |
| Self-employment income | Not taxed |
| Business income | Not taxed |
| Interest and dividends | Not taxed |
| Capital gains (short and long-term) | Not taxed |
| Social Security benefits | Not taxed |
| Military pay (active duty) | Not taxed |
| Military retirement pay | Not taxed |
| Public pension income | Not taxed |
| Private pension income | Not taxed |
| 401(k), IRA, Roth IRA distributions | Not taxed |
| Rental income | Not taxed |
| Unemployment compensation | Not taxed (state level) |
| Trust and estate income | Not taxed |
All of the above income types remain subject to applicable federal income tax under the Internal Revenue Code.
Source: South Dakota Department of Revenue – Individual Taxes
South Dakota's Actual Tax Obligations for Residents
Although South Dakota has no income tax, residents are subject to the following taxes:
1. Federal Income Tax
All South Dakota residents earning income above IRS thresholds must file and pay federal income tax. The IRS administers federal tax; the South Dakota Department of Revenue has no role in federal tax collection.
- IRS Contact: 1-800-829-1040
- IRS Website: irs.gov
2. Sales and Use Tax
South Dakota’s statewide sales and use tax rate is 4.2% (reduced from 4.5% effective July 1, 2023 per HB 1137, with a sunset clause effective June 30, 2027 — rate reverts to 4.5% on July 1, 2027 unless legislature acts).
- Applies to retail sales of tangible personal property, certain services, and electronically transferred products
- Local municipalities may add additional sales tax of generally 1–2%
- Combined state and local average: approximately 6.11%
- Use tax applies at the same rate when South Dakota sales tax has not been paid on items used in the state
Source: SD DOR – Sales & Use Tax | SD DOR – 2023 Legislative Updates
3. Property Tax
Property taxes are levied by local governments — counties, municipalities, school districts, and special districts — not the state. Rates vary by jurisdiction.
- Property is assessed at full and true market value
- Owner-occupied homes qualify for a reduced assessment classification
- Application for owner-occupied status: due March 15 each year to county Director of Equalization
- South Dakota’s effective property tax rate on owner-occupied housing: approximately 0.99–1.02% (above national average)
Source: SD DOR – Property Tax | SD DOR – Property Tax Statistical Report
4. Excise and Specialty Taxes
South Dakota collects excise taxes on specific items:
- Motor fuel tax: 30 cents per gallon (gasoline)
- Cigarette/tobacco tax: $1.53 per pack of 20 cigarettes
- Alcohol taxes: Applies to direct wine shipping and certain alcohol sales
- Tourism tax: Applies in certain jurisdictions
- Contractor’s excise tax: Applies to construction services
Source: SD DOR – Individuals – Taxes
Filing Deadlines
| Filing Deadlines | |
|---|---|
| Federal Income Tax (applies to South Dakota residents) | |
| Deadline | Date |
| Federal return due | April 15, 2026 |
| Federal extension request | April 15, 2026 (extends filing to October 15, 2026) |
| Q1 estimated taxes | April 15, 2026 |
| Q2 estimated taxes | June 16, 2026 |
| Q3 estimated taxes | September 15, 2026 |
| Q4 estimated taxes | January 15, 2027 |
South Dakota State Deadlines
There are no South Dakota state income tax deadlines because no state return is required.
For use tax obligations (self-reported purchases from unlicensed vendors), report through the SD DOR online portal.
Source (Federal): IRS.gov – Tax Calendar
Source (SD Use Tax): SD DOR – Report Use Tax
Remote Workers and South Dakota
Living in South Dakota, Working for an Out-of-State Employer
South Dakota has no state income tax, which means South Dakota residents working remotely for employers located in any other state owe zero South Dakota income tax on their earnings.
Key points:
- Your employer’s state of incorporation does not create South Dakota income tax liability
- South Dakota does not withhold state income tax from paychecks
- There is no South Dakota withholding certificate (equivalent to a state W-4) because no state tax applies
- Your employer may be required to withhold income tax for their home state depending on that state’s rules
Example: A South Dakota resident working remotely for a New York employer. South Dakota has no income tax — $0 owed to South Dakota. However, New York may assert the right to tax that income under its Convenience of the Employer rule (see below).
Source: South Dakota Department of Revenue – Individual Taxes
⚠️ Interstate Tax Risk: States That May Tax South Dakota Remote Workers
South Dakota’s zero income tax does not protect residents from the tax rules of other states. Several states have aggressive rules that can reach income earned by residents of other states working for employers based in those states.
States remote workers with out-of-state employers should monitor:
New York — Convenience of the Employer Rule
New York taxes income earned by non-residents working for New York-based employers if the remote work is done for the employee’s convenience (not the employer’s necessity). A South Dakota resident working remotely for a New York company may owe New York income tax. Filing a New York nonresident return (IT-203) would be required if New York-source income exceeds New York’s filing threshold.
California — Aggressive Residency Auditing
California taxes income earned within its borders by nonresidents and conducts residency audits. A South Dakota resident who performs work physically in California (on-site visits, business trips) may generate California-source income subject to California income tax on those days.
Connecticut — Convenience Rule
Connecticut applies a convenience of the employer doctrine similar to New York for income earned by employees of Connecticut-based employers.
Massachusetts — Telecommuter Rules
Massachusetts has applied telecommuter sourcing rules; check current Massachusetts guidance for the tax year.
What this means for South Dakota residents: Working for employers in these states may require filing nonresident returns in those states and paying income tax on a portion of income — even though South Dakota collects nothing.
Recommended action: South Dakota residents employed by companies based in New York, California, Connecticut, or Massachusetts should consult a tax professional regarding multi-state filing obligations.
Source (SD): SD DOR – Individual Taxes | Source (Federal): IRS Publication 505 – Tax Withholding and Estimated Tax
Working in South Dakota, Living in Another State
Non-residents who physically perform work in South Dakota owe income tax to their home state on that income — but not to South Dakota, because South Dakota has no income tax.
- South Dakota will not tax nonresidents on income earned within the state
- No South Dakota nonresident return is required
- Nonresidents pay tax to their state of residence on their worldwide income
Source: SD DOR – Individual Taxes
South Dakota’s Advantage for Remote Workers
South Dakota is one of the most favorable states for remote workers who can establish legal domicile there:
- No state income tax on wages, investment income, or retirement distributions
- No local income tax in any South Dakota municipality
- No corporate income tax for self-employed individuals operating as S-corps or LLCs (at state level)
- No state withholding required — no state W-4 form, no state withholding on paychecks
This combination has made South Dakota a popular domicile choice for digital nomads, RVers, and location-independent workers. Establishing genuine South Dakota domicile provides permanent protection from state income tax on all income types.
Source: SD DOR – Individual Taxes
Domicile and Residency
What Is Domicile?
Domicile is your permanent legal home — the place you intend to return to indefinitely and consider your true home. You can have only one domicile at a time.
For South Dakota purposes, establishing domicile in South Dakota means:
- You are a South Dakota resident for all legal and tax purposes
- Your income is exempt from South Dakota income tax (which is also true for everyone — residents and nonresidents alike)
- Other states cannot claim you as their resident if you have properly changed domicile to South Dakota
Steps commonly used to establish South Dakota domicile:
- Obtain a South Dakota driver’s license
- Register to vote in South Dakota
- Register vehicles in South Dakota
- Establish a South Dakota physical address (owned, rented, or through a legitimate mail forwarding service)
- Update financial accounts, insurance policies, and legal documents with South Dakota address
- File federal return with South Dakota address
Source: SD DOR – Individual Taxes
Why Domicile Matters Even in a No-Tax State
Even though South Dakota has no income tax, your state of domicile matters because:
- Other states may try to claim you as a resident. States like California and New York aggressively audit high-income individuals who claim to have changed domicile away from those states. A clear, documented South Dakota domicile protects against such claims.
- Your employer’s state may withhold tax. If your employer is based in a state with income tax, that state may withhold tax from your paycheck. Having clear South Dakota domicile documentation supports claims for exemption or refunds.
- Federal filing address. The IRS uses your domicile address to track state tax compliance; a consistent South Dakota address supports your residency claim.
Factors courts and state tax authorities examine:
- Where your driver’s license is issued
- Where you are registered to vote
- Where your vehicles are registered
- Where you file homestead or property exemptions
- Where your immediate family resides
- Where you maintain bank accounts
- Where your will/estate documents declare domicile
- Physical presence patterns (day counts)
Important note: South Dakota does not impose a statutory residency test based on day counts (unlike states such as New York, which impose tax on statutory residents present 183+ days with a maintained place of abode). Domicile in South Dakota requires genuine intent, not merely spending a minimum number of days.
Common Domicile Scenarios
Scenario 1: Digital Nomad Establishing SD Domicile
- Obtains SD driver’s license, registers to vote in SD, uses SD mail forwarding address
- Works remotely across multiple states and internationally
- Result: South Dakota domicile established; zero state income tax on all income. However, physical presence in states with income tax may create nonresident filing obligations in those states for days worked there.
Scenario 2: SD Resident Working Partly in New York
- Established SD domicile; employer is based in New York
- Travels to New York office 60 days per year
- Result: South Dakota — $0 state income tax. New York — may owe income tax on the 60 days of NY-source income; NY nonresident return (IT-203) may be required.
Scenario 3: Retired Person Relocating to SD
- Sells primary home in California, purchases home in SD, obtains SD driver’s license, registers to vote in SD
- Receives pension, Social Security, and IRA distributions
- Result: Zero South Dakota state income tax on all retirement income. California will attempt to audit if the change is recent; documentation of SD domicile is critical.
Military Personnel
Servicemembers Civil Relief Act (SCRA)
Active duty military members stationed in South Dakota retain their state of legal residence (domicile) for income tax purposes. Because South Dakota has no income tax, military members stationed in South Dakota face no state income tax in the state of assignment.
Military Spouses Residency Relief Act (MSRRA):
Military spouses may elect to use the same state of legal residence as the servicemember. If the servicemember’s home state is South Dakota (no income tax), the spouse’s income earned in South Dakota is also exempt from South Dakota state income tax — which applies equally to all individuals regardless.
Military pay: Fully exempt from South Dakota state income tax (as is all income — no state income tax exists).
Military retirement pay: Fully exempt from South Dakota state income tax.
What military members with South Dakota as their state of legal residence gain:
No state income tax obligation on any income source, including all military pay, allowances, retirement pay, and civilian supplemental income. Federal income tax still applies.
Source: SD DOR – Individual Taxes | Servicemembers Civil Relief Act – 50 U.S.C. § 571 et seq.
Retirees
South Dakota is widely considered one of the most tax-friendly states for retirees:
Social Security Benefits
Not taxed at the state level. South Dakota does not tax Social Security benefits. (Federal income tax on Social Security may apply depending on total income and IRS rules.)
Pension Income
Not taxed. All pension income — whether from public sector employment, private sector, federal government, or military service — is fully exempt from South Dakota state income tax.
Retirement Account Distributions
Not taxed at state level:
- 401(k) distributions: not taxed
- Traditional IRA distributions: not taxed
- Roth IRA distributions: not taxed
- 403(b) distributions: not taxed
- Annuity payments: not taxed
Investment Income in Retirement
Not taxed at state level:
- Dividends: not taxed
- Interest: not taxed
- Capital gains from portfolio sales: not taxed
Federal Tax Still Applies
All of the above income types remain subject to federal income tax under IRS rules. Retirees in South Dakota still file a federal Form 1040.
Source: SD DOR – Individual Taxes
Students
Students attending college in South Dakota are not South Dakota income tax residents for purposes of any tax return because South Dakota has no income tax. Students:
- Do not owe South Dakota state income tax on wages earned in South Dakota
- Do not need to file a South Dakota state income tax return
- Do need to file a federal return if their income meets IRS thresholds
- May owe income tax to their home state on income earned, depending on their home state’s rules
Working students: Income earned from part-time or full-time work in South Dakota is not subject to South Dakota income tax. Federal income tax applies normally.
Out-of-state students: If your home state has income tax, check whether your home state requires you to report income earned in South Dakota. Because South Dakota imposes no tax on that income, you generally cannot claim a credit for taxes paid to South Dakota on your home state return — but the income itself may be taxable in your home state.
Source: SD DOR – Individual Taxes
Part-Year Residents
South Dakota has no income tax, so there is no part-year resident South Dakota state return to file when moving to or from South Dakota.
Moving TO South Dakota from a state with income tax:
- File a part-year resident return in your former state for income earned while residing there
- No South Dakota state return required for income earned after your move to SD
Moving FROM South Dakota to a state with income tax:
- No South Dakota state return required for the portion of year you lived in SD
- File a part-year resident (or new resident) return in your new state for income earned after your move
Federal return: File Form 1040 as usual, reporting all income from both states. The IRS does not adjust your federal return based on South Dakota’s no-income-tax status.
Source: SD DOR – Individual Taxes
Property Tax Relief Programs
Although there is no state income tax relief to discuss, South Dakota offers several property tax relief programs for qualifying residents:
1. Sales and Property Tax Refund Program (Senior Citizens and Disabled)
Eligible individuals may receive a refund of sales or property taxes paid from the previous year.
Eligibility requirements:
- Age 65 or older by January 1 of the qualifying year, OR disabled at any time during the qualifying year
- Single applicant: income of $16,566 or less; household: combined income of $22,484 or less
- Have owned and occupied the home for at least 3 years, OR been a South Dakota resident for 5 years or more
Application period: May 1 – July 1 each year
Submit to: SD Department of Revenue, Special Tax Division, 445 East Capitol Avenue, Pierre, SD 57501-3185
Source: SD DOR – Relief Programs
2. Owner-Occupied Property Tax Classification
Homeowners who own and occupy their primary residence may qualify for a reduced property tax assessment rate under the owner-occupied classification.
Application deadline: March 15 each year to your county Director of Equalization
Eligibility: Must have purchased and occupied the home before November 1 of the prior year
Source: SD DOR – Owner-Occupied Property Tax
3. Assessment Freeze for Disabled and Senior Citizens
Freezes the assessed value of an eligible homeowner’s property, preventing tax increases due to rising valuations.
Requirements:
- Owner of owner-occupied single-family dwelling
- South Dakota resident for 5 years (or received freeze in prior year)
- Resided in home at least 200 days during the previous calendar year
- Income and property value limits apply
Applications available: January each year, submitted to county treasurer’s office by April 1
Source: SD DOR – Relief Programs
Common Tax Situations
“I work remotely from South Dakota for a company in another state — do I owe that state’s income tax?”
South Dakota imposes no income tax on you. Whether the other state taxes your income depends on that state’s laws. If your employer is in New York, California, Connecticut, or Massachusetts, those states may have rules claiming taxing authority over remote workers. Consult a multi-state tax professional.
“My out-of-state employer is withholding state income tax for their state. Can I get a refund?”
Possibly. You would need to file a nonresident return in the employer’s state and claim that your income was not sourced to that state because you worked in South Dakota. The outcome depends on that state’s sourcing rules. Many states will refund withholding for days genuinely worked outside their borders.
“I moved to South Dakota from California. Does California still tax me?”
California has a residency presumption and conducts aggressive exit audits. Simply moving to South Dakota does not automatically end California residency. You must demonstrate clear domicile change: surrender California driver’s license, re-register vehicles in SD, update voter registration, file your last California return as a part-year resident, and document the intent to permanently relocate. California’s Franchise Tax Board (FTB) may audit the change.
“I receive a pension from my former state employer — does South Dakota tax it?”
No. South Dakota has no income tax on any income, including public pensions from other states.
“I’m a full-time RV traveler using a South Dakota address. Do I owe any state income tax?”
South Dakota does not impose income tax, so no state income tax is owed to South Dakota. However, the states where you physically work and earn income may have their own tax rules if you spend significant time there. Keep detailed records of your physical location each day. Days physically worked in states with income taxes may create filing obligations in those states.
Official South Dakota Tax Resources
All information on this page is compiled from official government sources only.
South Dakota Department of Revenue
Main Website: dor.sd.gov
Individual Taxes: dor.sd.gov/individuals/taxes
Individual FAQs: dor.sd.gov/individuals/individual-faqs
Sales & Use Tax: dor.sd.gov/businesses/taxes/sales-use-tax
Municipal Tax: dor.sd.gov/businesses/taxes/municipal-tax
Property Tax: dor.sd.gov/individuals/taxes/property-tax
Property Tax Relief Programs: dor.sd.gov/individuals/taxes/property-tax/relief-programs
Online Services (Use Tax Reporting): apps.sd.gov/RV23EPath/BusinessTax/UseTax.aspx
Individual Forms: sddor.seamlessdocs.com/sc/individual-forms
Publications Library: sddor.seamlessdocs.com/sc/publications
Sales Tax Rate Lookup (by address): sdgis.sd.gov – Sales Tax Rate Lookup
Newsroom / Updates: dor.sd.gov/newsroom
Tax Fraud Reporting: sddor.seamlessdocs.com/f/2038
South Dakota Legislature and Constitution
SD Constitution (Secretary of State): sdsos.gov – South Dakota Constitution 2023
SD Legislature – Constitution Article XI: sdlegislature.gov/Constitution/11
SD Codified Laws (Title 10 – Taxation): sdlegislature.gov/Statutes/Title/10
Contact Information
South Dakota Department of Revenue
445 E Capitol Avenue
Pierre, SD 57501
Phone: (605) 773-3311
Toll-free: 1-800-829-9188
Email: business.education@state.sd.us (Business Education Program)
Live Chat: dorchat.sd.gov
Hours: Contact SD DOR directly for current business hours.
Federal Tax Resources (For South Dakota Residents)
IRS Main Website: irs.gov
IRS – Do I Need to File?: irs.gov/help/ita/do-i-need-to-file-a-tax-return
IRS Publication 17 (Your Federal Income Tax): irs.gov/pub/irs-pdf/p17.pdf
IRS Publication 505 (Withholding & Estimated Tax): irs.gov/pub/irs-pdf/p505.pdf
IRS Phone: 1-800-829-1040
VITA Free Tax Assistance Locator: irs.gov/vita
TCE (Tax Counseling for the Elderly) Locator: irs.gov/tce
AARP Tax-Aide: aarp.org/money/taxes/aarp_taxaide
Tax Glossary
Domicile:
Your permanent legal home. The state where you intend to live indefinitely and to which you intend to return. Determines residency for tax purposes in other states. South Dakota domicile results in zero state income tax liability.
State Income Tax:
A tax levied by a state on individual income. South Dakota does not levy this tax.
No-Income-Tax State:
A state that does not impose individual income tax. The nine no-income-tax states are: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
Sales Tax:
South Dakota’s primary revenue source. The statewide rate is 4.2%; municipalities add 1–2%.
Use Tax:
The counterpart to sales tax, owed when items are purchased from unlicensed vendors without sales tax having been collected. Same rate as sales tax (4.2% state).
Property Tax:
Annual tax levied by local governments on real property. Not collected by the state; collected by county and local governments.
Convenience of the Employer Rule:
A doctrine used by New York, Connecticut, and some other states to tax income earned remotely by employees of employers based in those states, even when the employee lives and works in another state (including South Dakota).
Nonresident Return:
A state income tax return filed by a non-resident who earned income sourced to that state. South Dakota does not require nonresident returns because it has no income tax.
SCRA:
Servicemembers Civil Relief Act. Federal law protecting military members’ state of domicile from being changed solely due to military assignment.