South Dakota State Income Tax

South Dakota’s state tax rates are very conservative compared to other states and offer great benefits for businesses. The state also has low property and sales taxes, affordable FICA (Social Security and Medicare) taxes, no inheritance or personal income tax, and no corporate or inventory tax. However, residents and businesses must pay other types of taxes. For example, the state has a 4% sales tax, and most cities have an additional local sales tax. In addition, the state has a use tax, which applies when sales tax has not been paid on goods or services. The state use tax rate is 4%, and the local use tax rates vary.

In addition to sales and use taxes, South Dakota also has a state excise tax on certain property and services. For example, South Dakota state has an excise tax on gasoline and diesel fuel and a tax on alcoholic beverages. In addition, the state has a 4% ag excise tax on farm machinery and equipment. South Dakota is one of only six states that does not levy an individual income tax. However, residents still must pay other types of state and federal taxes, such as property taxes. The following chart compares the top state and local tax rates in South Dakota with neighboring states.

This lack of income tax makes South Dakota an attractive option for people and businesses looking to lower their tax burden. However, it’s important to remember that the state makes up for lost income tax revenue through other means, such as higher sales taxes and property taxes. For more information, visit South Dakota Department of Revenue: https://dor.sd.gov/

South Dakota State Excise Tax

The South Dakota Excise Tax applies to specific activities and goods within the state. Here’s a breakdown of its key points:

Contractor’s Excise Tax: A 2% tax imposed on the gross receipts of prime contractors and subcontractors engaged in construction services or realty improvement projects in South Dakota.

Fuel Taxes: Taxes levied on gasoline, diesel fuel, and other motor fuels. The current rate for gasoline is 28 cents per gallon and 26.9 cents per gallon for diesel fuel.

Tobacco Taxes: Taxes on cigarettes, cigars, and other tobacco products. The current rate for cigarettes is $1.53 per pack, plus a 6% sales tax.

Alcohol Taxes: Taxes on beer, wine, and spirits. The tax rate varies depending on the type of alcohol and its alcohol content.

Telecommunications Excise Tax: A 4% tax on the gross receipts of providers of telecommunications services, such as telephone, internet, and cable TV.