Research Areas
South Dakota
The Facts on South Dakota's Tax Climate
Here are some basic facts on South Dakota's tax system and how it compares to other states:
Tax Freedom Day Arrives on March 29 in South Dakota
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2010, South Dakota taxpayers work until March 29 to pay their total tax bill, ranking it 47th highest in the nation. This is 20 days earlier than national Tax Freedom Day (April 9). The Tax Freedom days of neighboring states were: North Dakota, April 3 (ranked 39th); Minnesota, April 13 (ranked 8th); Iowa, April 4 (ranked 36th); Nebraska, April 7 (ranked 27th); Wyoming, April 11 (ranked 16th) and Montana, April 5 (ranked 33rd).
Full study of Tax Freedom Day, nationwide and in each state
South Dakota's State/Local Tax Burden Among Nation's Lowest
From 1977 to the present, South Dakota's tax burden ranking has dropped 25 places from 20th, primarily because the state has maintained a zero rate on individual and corporate income. Currently estimated at 7.9% of income, South Dakota's state/local tax burden percentage ranks well below the national average of 9.7%. Taxpayers in South Dakota pay $3,079 per capita in state and local taxes.
South Dakota's State-Local Tax Burden, 1977-Present
Other States' State/Local Tax Burdens
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2008
South Dakota's 2010 Business Tax Climate Ranks 1st
South Dakota ranks 1st in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: North Dakota (25th), Minnesota (43rd), Iowa (46th), Nebraska (33rd), Wyoming (2nd) and Montana (6th).
50-State Comparison of Business Tax Climates (data only)
2009 State Business Tax Climate Index, Sixth Edition (full study)
South Dakota Levies No Individual Income Tax
South Dakota levies no state individual income tax, joining Alaska, Florida, Nevada, Texas, Washington and Wyoming as the only states to do so.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita
South Dakota Levies No Corporate Income Tax
South Dakota levies no general corporate income tax. However, it does impose a bank franchise and bank card tax that collected $87 per capita in FY 2008.
50-State Table of Corporate Income Tax Rates, 2000-2009
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household, 2005
50-State Table of State Corporate Income Tax Collections Per Capita, 2006
South Dakota Sales and Excise Taxes
South Dakota levies a 4% general sales or use tax on consumers, which is below the national median of 5.85%. In 2007 combined state and local general and selective sales tax collections were $1,632 per person, which ranks 13th highest nationally. South Dakota's gasoline tax stands at 24 cents per gallon, ranking 25th highest nationally. South Dakota's cigarette tax stands at $1.53 per pack of twenty and ranks 19th highest nationally. The sales tax was adopted in 1933, the gasoline tax in 1922 and the cigarette tax in 1923.
50-state table of sales, cigarette, gas, beer, wine, and spirits tax rates
50-State Table of State and Local General and Selective Sales Tax Collections Per Capita
South Dakota Property Taxes: Middle of the Pack
South Dakota's local governments collected $978.23 per capita in property taxes during fiscal year 2006, which is the latest year the Census Bureau published state-by-state property tax collections. South Dakota is one of the13 states that collect no state-level property taxes. Its per capita property tax collections in FY2006 rank 32nd nationally.
State property tax collections per capita by state
Federal Tax Burdens and Expenditures: South Dakota is a Beneficiary State
South Dakota taxpayers receive more federal funding per dollar of federal taxes paid compared to the average state. Per dollar of Federal tax collected in 2005, South Dakota citizens received approximately $1.53 in the way of federal spending. This ranks the state 8th highest nationally and represents a rise from 1995 when South Dakota received $1.30 per dollar of taxes in federal spending (ranked 10th). Neighboring states and the federal spending received per dollar of federal taxes collected were: North Dakota ($1.68), Minnesota ($0.72), Iowa ($1.10), Nebraska ($1.10), Wyoming ($1.11), and Montana ($1.47).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state