South Dakota allows retirees to keep all of their retirement income, but property and local sales taxes have a particularly far reach. Below, we explain various South Dakota state taxes affecting retirement income, such as sales tax, inheritance tax, and property taxes.
For information regarding taxes in other states, see Retirement Taxes by State.
South Dakota Tax Rates
|State Sales Tax||4.50%|
|Avg State/Local Sales Tax||6.50%|
|Gas Tax||$0.28 per gallon|
|Diesel Tax||$0.28 per gallon|
|Cigarette Tax||$1.53 per pack|
|Effective Tax Rate:||0%|
|Social Security Tax||None|
|Federal Income Tax Deduction:||None|
South Dakota State Taxes Explained
South Dakota Sales Tax
The sales tax in South Dakota is 4.5% (prescription drugs are usually exempt); municipalities may add up to an additional 4.50%. Residents who are age 66 and older and have an annual income under $12,880 (single) or total household income under $17,420 are eligible for a sales tax refund. To qualify, you must live in your home for at least three years or be a South Dakota resident for five or more years.
Residents who do not receive a property tax refund and do not own a home may apply for the South Dakota sales tax refund.
South Dakota Income Taxes
South Dakota does not impose a state income tax.
South Dakota Property Taxes
The average effective property tax rate in South Dakota is 1.31%, which equates to $1,295 on a $109,400 home.
A tax freeze and municipal property tax reduction are available for seniors age 65 and older and disabled persons. Residents must meet income requirements to qualify for the assessment freeze and reside in a single-family dwelling for at least 200 days of the previous calendar year. Single filers with income under $30,423 or $38,029 for multi-member households may qualify.
South Dakota offers a property tax refund for single homeowners age 66 and instances where the head of household is 66 or older if the taxpayer as been a state resident for one year or more.
South Dakota also has a homestead exemption for homeowners who are at least 70 years of age (or surviving spouses). The unpaid taxes count as a lien on the property, which includes 4% interest, payable before the property transfer to a new owner. Annual income requirements are under $16,000 for a single homeowner and $20,000 for a multi-member household.
Veterans rated as permanently and totally disabled due to a service-connected disability may be eligible for an exemption. This rule includes up to $100,000 of real property value. For more information on property taxes, see South Dakota’s Property Tax information.
South Dakota Retirement Taxes
South Dakota does not tax retirement income.
South Dakota Estate and Inheritance Taxes
South Dakota has no inheritance tax or estate tax. Federal estate taxes still apply.
For general information on South Dakota taxes, visit the South Dakota Department of Revenue.