State taxes: South Dakota
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South Dakota is 1 of only 7 states that does not tax individual wage income. More on South Dakota taxes can be found in the tabbed pages below.
Personal income tax
There is no personal income tax levied in South Dakota.
The state sales tax in South Dakota is 4%.
There may be additional municipal sales and use taxes.
South Dakota in 2012 repealed its refund of sales taxes on food for lower-income residents and instead authorized funds for emergency food assistance grants.
Personal and real property taxes
Personal and property taxes are local taxes and are the primary sources of dollars for school systems, counties, municipalities and other local government units. Their administration is a local responsibility. The state revenue department does not collect or use property taxes, but it does centrally assess the property of large companies.
Property owners in South Dakota may be taxed by 2 or more of the following units of government: cities, counties, townships, school districts, water districts and, in some cases, units such as fire and sanitary sewer districts.
Assessors determine the market value of property. Since 1997, all taxing districts — except school districts — have been capped as to what they can ask from the tax rolls. The cap equals what was payable the previous year plus a percentage increase due to growth or new construction, and the percentage increase in the consumer price index, or CPI, up to but not exceeding 3%.
The state offers a number of property tax relief programs that are designed to offer financial assistance to the elderly and disabled.
Taxpayers may appeal property tax issues directly to the County Board of Equalization.
Inheritance and estate taxes
South Dakota voters repealed the state’s inheritance tax effective June 30, 2001.
Because of the phaseout of the federal estate tax credit, South Dakota’s estate tax has not been imposed on estates of people who have died since 2005.
Other South Dakota tax facts
South Dakota does not assess tax on intangible personal property.
South Dakota’s Department of Revenue special tax division is responsible for licensing and collecting a variety of state taxes and fees. They include cigarette excise tax, bank franchise tax, ore and energy mineral severance tax, coin-operated laundromat license fees, gaming excise fees, and alcohol fees.
For more information, visit the South Dakota Department of Revenue and Regulation’s website.
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