South Dakota Sales Tax

When you’re thinking about opening a business in South Dakota, or you’re contemplating expanding your service area into the state, it’s important to learn about the sales tax laws there and how they will impact you. While there are many similarities between the sales tax laws in South Dakota when compared with those in other states, there are also some details that are specific to South Dakota that you’ll need to be aware of to ensure you stay compliant at all times.

South Dakota Sales Tax Rates

Like most states, South Dakota has a blanket state sales tax rate of 4.2% that applies everywhere. Note that through June 30, 2023, the state tax rate was 4.5%. It was decreased to 4.2% effective July 1, 2023.

The state rate is supplemented in many parts of the state by local taxes that bring the total effective rate up to as much as 7.2%. A few local jurisdictions in the state, like Pine Ridge and Blackhawk, don’t add a tax, which means customers in that area will only pay the 4.2% state rate. There are several special jurisdictions listed in the municipal tax guide, including Cheyenne River, Crow Creek, Oglala, Rosebud, Standing Rock, Sisseton Wahpeton, and Yankton, that include an additional excise tax. An additional 1% municipal gross receipts tax can be imposed locally on alcohol, restaurants, and lodging. Tax rate lookup is available in the municipal tax guide. 

Tax Sourcing

South Dakota is a destination-based state regarding sales tax, which means that the applicable rate will be at the place the customer takes possession of the product purchased or the location of services rendered. If you have a physical store, your customers will all pay the rate that is in effect at the store’s location. If you’re shipping products to your customers, however, the applicable rate will be that of the delivery address.

South Dakota Nexus

Physical Nexus

Under SDCL § 10-45, a business establishes physical nexus if it maintains a physical presence in the state. This includes:

• Maintaining a physical office, retail outlet, warehouse, or storage facility.
• Having employees, independent contractors, back-office staff, or representatives operating in the state.
• Storing seller-owned inventory in a third-party fulfillment center or warehouse inside South Dakota.

Economic Nexus

South Dakota’s economic nexus law requires any out-of-state business to collect and remit sales tax to the state if, in the previous or current calendar year:

• They have more than $100,000 in sales of tangible personal property, electronically-delivered products, or services rendered in South Dakota; or
• They sold tangible personal property, electronically-delivered products, or rendered services in 200 or more separate transactions.

At first, this law was considered unconstitutional, and several retailers sued South Dakota. The case was finally settled in June 2018 by the U.S. Supreme Court in a decision known as South Dakota v. Wayfair, Inc. In this case, the Supreme Court overturned the 1992 decision that prevented states from being able to compel retailers with no physical presence to collect sales tax on purchases made within a given state. So it’s important to know the economic nexus law in South Dakota and to understand if your sales are high enough to meet the threshold.

Marketplace Facilitators

Under SDCL Chapter 10-65, marketplace providers (such as Amazon, eBay, or Etsy) that meet the economic nexus criteria are legally required to collect and remit sales tax on all sales facilitated into South Dakota. Remote sellers selling through a marketplace must still count those sales toward their own $100,000 economic nexus threshold.

What is Taxable in South Dakota

Tangible Goods

Most sales of tangible personal property, including groceries, are taxable in South Dakota, as are the vast majority of services. Some notable exemptions include:

• Food stamp and WIC purchases
• Water
• Warranty parts
• Raw materials
• Lottery sales
• Livestock
• Farm machinery
• Medical devices
• Prescription medicine
• Raw materials

Services

Unlike most states, South Dakota taxes almost all services by default under SDCL § 10-45-4. Professional, personal, and business services are subject to full state and local sales tax unless specifically exempted by statute (e.g., medical, educational, or agricultural services).

Shipping and Handling

Delivery, freight, and shipping charges billed by the seller are taxable under SD DOR Tax Fact guidelines.

• If the underlying product or service is taxable, the delivery fee is taxable.
• If the product is tax-exempt, the associated delivery charge is exempt.
• For mixed shipments (taxable and exempt items), delivery charges are allocated proportionally by weight or sales price.

Digital Goods and Services

• Products Transferred Electronically: Under SDCL § 10-45-108, downloadable digital goods—including e-books, music, movies, and digital codes—are taxed identically to physical goods.
• SaaS & Cloud Computing: Taxable. Software-as-a-Service (SaaS) and hosted software applications are treated as taxable services or digital products.
• Streaming Services: Taxable. Subscription streaming for video, music, and digital audio is classified as a taxable digital service.

South Dakota Sales Tax Holidays

No Annual Tax Holiday: South Dakota does not host an annual sales tax holiday.

Registration and Filing

If you are obligated to collect and remit sales tax in South Dakota, you will have to register with the state. This can be done online through the state website or in person. Because South Dakota is also a full member of the Streamlined Sales and Use Tax Agreement (SSUTA), you can register for a sales tax license through the SSUTA website. However, registering in that way requires you to register with all member states at once, which may or may not make sense for you depending on your situation. 

Regardless of how you register, there is no fee, and you may begin making taxable sales in South Dakota as soon as you receive your license in the mail. When you obtain your license, you will also be assigned a filing frequency by the state based on your expected sales. This can be monthly, quarterly, semiannually, or annually. Returns can be filed either online or through the mail.

Filing Frequencies and Deadlines

Sales tax returns are due on the 20th of the month following the close of the period in question for those filing both electronically and non-electronically. Payments made electronically must be received by the 25th of that same month, while payments for returns filed by mail must accompany those returns. If any of these due dates fall on a weekend or holiday, the returns and payments will be considered timely if received by the next business day.

Monthly Due Dates

Period	Due Date
January	February 20
February	March 20
March	April 20
April	May 20
May	June 20
June	July 20
July	August 20
August	September 20
September	October 20
October	November 20
November	December 20
December	January 20

Penalties and Interest

Failure to file or pay on time results in statutory penalties and interest enforced by the SD DOR:

• Late Penalty: 10% of the tax due (or a minimum $10 penalty, whichever is greater) for failure to file or pay on time.
• Interest: 1.0% per month (or fraction thereof) on the unpaid tax balance from the due date until paid in full.

Resources

• South Dakota Sales Tax Forms
• South Dakota Sales Tax Guide
• South Dakota Department of Revenue

South Dakota Sales Tax Software

Whether you’re selling only in South Dakota or multiple states, keeping track of your sales tax collection, returns, and payments can be a challenge. The various rates in local jurisdictions, combined with the fact that the regulations surrounding the collection of sales tax in each state can change at any time, means that you have to stay vigilant to ensure you’re always completely compliant. 

Of course, there are plenty of other aspects of your business you’d rather focus on, and fortunately, TaxTools is a piece of software and tax calculator that can allow you to do just that. With TaxTools, you can be sure your sales are accurately tracked, that sales tax is collected from your South Dakota customers at the appropriate rate, and that all returns are filed on time. 

TaxTools keeps abreast of all changes to local and state sales tax laws, and it can provide up-to-date reports on your taxable sales with applicable location information any time you need them. This program also integrates smoothly with all eCommerce platforms, so you won’t have to change anything about how you do business. So if you’re ready to learn how TaxTools can help streamline your sales processes and help your business grow, click here to sign up for a free trial today.

Last Updated June 2026