South Dakota is one of the most tax friendly states in the country. TaxFoundation.org ranks them as #2 (behind Wyoming). No state tax, no business tax, no gross receipts tax, no estate tax and low sales tax.
State Taxes at a Glance – South Dakota
| Type of Tax | 2022 |
|---|
| Individual Rates | None |
| Corporate / Business Tax Rates | None |
| Gross Receipts Tax | None |
| Sales Tax | 6.40% (average) |
| Property Taxes | 1.18% as a percentage of primary home |
| Estate or Inheritance Tax | None |
Income Taxes
South Dakota is one of the most tax friendly states in the union. It has no personal income tax.
Business Taxes
The state of South Dakota is one of only 2 states that does not have a Corporate Business Tax or Gross Receipts Tax (the only other one being Wyoming).
Sales and Property Taxes
Sales Taxes – Like most states, South Dakota has both local and state sales tax. The state rate is 4.50% the average local rate is 1.90% (bringing the total average sales tax rate for South Dakota to 6.40%). Another thing to be aware of is that South Dakota uses a broad base for charging sales tax. Like states such as Hawaii, New Mexico, and North Dakota, they charge sales tax on many business-to-business personal services.
Property Taxes – The average property tax rate for residential property in the state of South Dakota is 1.18%, making it a bit above the average for the country which is 1.08%.
South Dakota DMV fees
South Dakota has flat fees for vehicle registration. Since they are not based on the vehicles value, they are not deductible. To learn more, here’s a link to the South Dakota’s DMV website.
South Dakota Domicile
Unlike most states that have a number-of-days requirement, in South Dakota you only need three things
- South Dakota address to receive mail
- File a form with the US Post Office that shows your “permanent change of address”
- Be physically present when applying for a South Dakota driver’s license
No Tax on Social Security Benefits
Even though there is a state income tax in South Dakota, they do not assess state income tax on social security benefits.
Payroll Taxes in South Dakota
Unemployment taxes usually consist of three factors. They are the wage base, range of rates, number of schedules. Below is an outline of the three.
- Wage Base – South Dakota has a wage base of $15,000
- UI Rates – range from 0.00% to 9.85%, which is a high upper limit.
- Schedules – South Dakota has multiple schedules regarding UI taxes
South Dakota Business Entities – LLCs
South Dakota has an average cost to setting up an LLC. Here are some important facts:
- Annual fee is $50 per year
- First year you file there is an additional setup fee of $150.00
- Secretary of State of South Dakota website – click here
South Dakota Tax Contact Phone Numbers
Important phone numbers for the South Dakota Department of Taxation:
- Website: dor.sd.gov
- Phone# for Individuals – (800) 829-9188
- Phone# for Businesses – Same