Income Tax by State South Dakota state income tax in 2025: A guide Read the Article Open Share Drawer Share this:Click to share on Facebook (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Pinterest (Opens in new window)Click to print (Opens in new window) Written by TurboTaxBlogTeam Published Mar 26, 2025 3 min read Reviewed by Monika Krulic, EA South Dakota is one of a handful of states without an individual state income tax. Additionally, the Mount Rushmore State is also known as a corporate income tax haven due to its lack of corporate income tax. Even though residents can reap these benefits, they’re still subject to federal income tax, sales tax, and property tax. *Note that even though South Dakota has no state income tax, you are still responsible for federal taxes if you meet the IRS income filing threshold. This article addresses state-specific taxes only. Specific income tax considerations in South Dakota South Dakota’s lack of individual income tax means all income, including retirement and pension funds, investment earnings, Social Security benefits, and military pay, is exempt from taxation at the state level. That’s a big advantage for retirees, investors, and military service members, allowing them to keep more of their earnings. However, income is still subject to federal income taxes. Staying informed about federal obligations is critical to avoid penalties. If you lived in a state with income tax but earned money in South Dakota, you’ll need to report that information on your home state’s tax return. That’s because you likely have a tax burden in your home state. In addition, if you live in South Dakota and earned money outside the state, you may need to file a nonresident tax return for the state in which you have income. Talk to a tax expert for free Do you have tax questions? Get answers from one of our tax experts. Experts available 5am – 8pm PST – 7 days a week Connect with an expert Other types of common taxes in South Dakota Without an income tax, South Dakota generates most of its revenue through property and sales tax. Property tax: South Dakota relies on property taxes as a significant source of revenue for funding local services, including schools, roads, and public safety. While tax rates in the state vary by county, they’re competitive compared to national averages, with an average 1.01% effective tax rate on owner-occupied housing values. Sales tax: Sales tax is more varied. The state assesses a statewide sales tax of 4.2%. Local governments can add their own sales taxes, which increases the total rate in some places. This tax applies to most goods and some services, impacting household budgets and business operations. How to file income tax in South Dakota Filing your income taxes in South Dakota is fairly simple, thanks to the lack of state income tax. You’ll still need to file your federal tax return—including any deductions and credits—and factor in other taxes like property taxes throughout the year. TurboTax helps South Dakota residents understand their tax responsibilities when filing, especially if they receive income from other states requiring complex returns. Whether you want to file your taxes on your own or get help from a professional, TurboTax makes completing your tax return easy. Get Started You know your small business—we know business taxes. Our self-employed and business tax experts will ensure you get every tax break with 100% accuracy, guaranteed. Start for free 100% free to start. Pay only when you file. Previous Post New Hampshire state income tax in 2025: A guide Next Post Utah state income tax in 2025: A guide Written by TurboTaxBlogTeam More from TurboTaxBlogTeam Leave a ReplyCancel reply Browse Related Articles Tax Help How to File a Business Tax Extension: Deadlines, Forms, and Penalties Tax Tips The White Lotus Tax Lessons: Navigating Gift Taxes, Lump Sum Payouts, Hush Money, and the IRS Tax Questions What Day Are Taxes Due? April 15! How to File for a Tax Extension or Pay Taxes Online Tax Questions What Happens If You File Your Taxes Wrong? Late Filing Penalties, Interest, and More Tax Questions What’s Tax Deductible? A Guide to Mortgage Interest, Long-Term Care, Funeral Expenses, Student Loans, and Roth IRA Contributions Tax Questions Is it Better to Get Your Taxes Done or Do Them Yourself? (And Other Tax Questions Answered) Tax Forms What is a 1099-K Form? How to Report Payments on Your Tax Return (2024) Tax Forms What is a 1099 Form? A Guide to Understanding Your Tax Obligations Income Tax by State Wisconsin State Income Tax in 2025: A Guide Income Tax by State West Virginia State Income Tax in 2025: A Guide