What do you need to know about the South Dakota sales tax?

1 min read by Unbiased team Last updated June 28, 2024

Explore the intricacies of South Dakota's sales tax system and how it impacts consumers and businesses alike.

Summary 

  • As of July 1, 2023, the base South Dakota state sales tax rate is 4.2%, down from 4.5%. 

  • South Dakota taxes services like lodging and repairs but exempts essential services such as medical and educational services. 

  • South Dakota requires sales tax on online purchases, with the responsibility for collection typically falling on the retailer. 

  • When developing your tax strategy, a financial advisor can help you follow all the rules and regulations to ensure you’re not paying any more tax than you need to.  

What is the sales tax in South Dakota? 

South Dakota imposes a state sales tax on the sale of goods and certain services to fund various public services and infrastructure projects.  

As of July 1, 2023, the base South Dakota state sales tax rate is 4.2%, a reduction from the previous rate of 4.5%. This change was implemented through House Bill 1137 and will remain effective until June 30, 2027​​. 

However, the complexity arises when considering additional local taxes imposed by cities and counties.  

These local taxes vary, meaning that the overall sales tax rate can differ significantly depending on the specific location within the state.  

How do you calculate the South Dakota sales tax by city? 

Calculating the South Dakota sales tax by city involves adding the state base rate of 4.2% to the local city tax rate.  

Here's a table illustrating the South Dakota sales tax rates by city

CityMinimum combined rateCityMinimum combined rate
Aberdeen 6.20% Milbank 6.20%
Belle Fourche 6.20% Mitchell 6.20%
Box Elder 6.20% Mobridge 6.20%
Brandon 6.20% North Sioux City 6.20%
Brookings 6.20% Pierre 6.20%
Canova 5.95% Rapid City 6.20%
Canton 6.20% Sioux Falls 6.20%
Dell Rapids 6.20% Spearfish 6.20%
Dupree 5.20% Sturgis 6.20%
Harrisburg 6.20% Summerset 6.20%
Hartford 6.20% Tea 6.20%
Hot Springs 6.20% Vermillion 6.20%
Huron 6.20% Watertown 6.20%
Lead 6.20% Winner 6.20%
Lennox 6.20% Yankton 6.20%
Madison 6.20%

How do you calculate the South Dakota sales tax by county? 

Similar to city taxes, counties in South Dakota may also impose their own sales tax, which is added to the state rate.  

Here's a table showing the maximum combined sales tax rates by county

CountyMinimum combined rateCountyMinimum combined rate
Beadle County 6.20% Hutchinson County 6.20%
Brookings County 6.20% Lake County 6.20%
Brown County 6.20% Lawrence County 6.20%
Butte County 6.20% Lincoln County 6.20%
Charles Mix County 6.20% Meade County 6.20%
Clay County 6.20% Minnehaha County 6.20%
Codington County 6.20% Moody County 6.20%
Custer County 6.20% Pennington County 6.20%
Davison County 6.20% Shannon County 4.20%
Day County 7.20% Spink County 6.20%
Fall River County 6.20% Todd County 6.20%
Grant County 6.20% Turner County 6.20%
Hamlin County 6.20% Union County 6.20%
Hughes County 6.20% Yankton County 6.20%

Does South Dakota charge sales tax on services? 

Yes, South Dakota charges sales tax on a variety of services.  

Taxable services include lodging, amusements, and services related to tangible personal property, such as repairs.  

The tax rate applied to these services is the same as the general sales tax rate, which is 4.2% plus any applicable local taxes. 

What services are exempt from sales tax in South Dakota? 

In South Dakota, certain services are exempt from sales tax. These typically include: 

  • Medical services: This exemption covers most healthcare services provided by medical professionals. 

  • Educational services: Services provided by educational institutions, including tuition and educational materials, are tax-exempt. 

  • Legal services: Legal consultations and other related services are exempt from sales tax. 

  • Nonprofit organization services: Services provided by nonprofit organizations are often exempt to encourage charitable activities. 

These South Dakota sales tax exemptions help to lower the financial burden on essential and nonprofit services, recognizing their importance to society. 

Other services are exempt from sales tax include: 

  • Social services  

  • Agricultural services   

  • Forestry services   

  • Services provided by certain membership organizations  

  • Financial services performed by institutions registered under bank franchise  

  • Commissions paid by an insurance company to an agent for the sale of a policy  

  • Stock and commodity broker service; services of brokers and agents licensed under Title 47  

  • Trucking  

  • Travel agent services  

  • Construction services 

A full list of exempt services can be found here

Are personal services subject to sales tax in South Dakota? 

Personal services, such as beauty and grooming services, fitness and recreational services, and personal care services, are generally subject to sales tax in South Dakota.  

For instance, haircuts, spa treatments, and fitness club memberships are taxable at the combined sales tax rate, including both state and local taxes. 

However, there are exceptions.  

For example, personal training services provided by independent contractors may be exempt if they meet specific criteria, such as operating under a different business model or classification. Service providers need to verify their tax obligations to ensure compliance. 

Does South Dakota require sales tax for online purchases? 

Yes, South Dakota requires sales tax on online purchases. T 

his regulation came into effect after the landmark 2018 Supreme Court decision in South Dakota v. Wayfair, Inc., which allowed states to require online retailers to collect and remit sales tax, even if they do not have a physical presence in the state. 

The retailer generally has the responsibility for collecting the tax.  

This means that when you purchase goods online from an out-of-state retailer, they are required to charge and remit South Dakota sales tax if they meet the economic nexus threshold, typically defined by a certain number of transactions or a specific sales revenue threshold. 

If a retailer does not collect the sales tax, the consumer is responsible for paying use tax on the purchase. This ensures that all sales, whether online or offline, contribute fairly to state revenue. 

Is there a South Dakota sales tax holiday? 

Sales tax holidays are periods when specific items can be purchased tax-free. Other states typically use them to provide economic relief or stimulate spending during certain times of the year, such as back-to-school shopping periods. 

South Dakota does not currently have a sales tax holiday. The bill to give South Dakotans a “tax holiday” that went into effect on July 1, 2023, and temporarily lowered the state sales tax rate from 4.5% to 4.2%​ does not equate to a traditional sales tax holiday, where specific items can be purchased tax-free during a set period. Instead, it represents a broader, temporary reduction in the overall sales tax rate. 

Get expert financial advice 

While the temporary reduction in the South Dakota state sales tax rate from 4.5% to 4.2% provides some relief, businesses and consumers must stay informed about the varying rates by city and county. Additionally, the taxation of online purchases and the exemptions for essential services add layers of complexity.  

Unbiased will connect you with a financial advisor for expert financial advice to ensure tax compliance and maximize your financial strategy.   

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Unbiased team

Our team of writers, who have decades of experience writing about personal finance, including investing and retirement, are here to help you find out what you must know about life’s biggest financial decisions.