The statewide sales tax rate in South Dakota is 4.5%. This includes:
- 4% state sales tax
- 1.5% tourism tax
- Various local sales taxes – typically ranging from 1-3%
Some cities and counties in South Dakota have additional local sales taxes that bring the total sales tax rate to over 7% in some areas.
South Dakota Sales Tax Calculator
Calculating sales tax in South Dakota involves two steps:
- Find the total statewide and local tax rates for your purchase location. Use the tax rate lookup tool on the South Dakota Department of Revenue website or refer to the tax rate charts above.
- Apply the combined tax rate to the purchase price. Multiply the total tax rate decimal (ex. 6.5%) by the amount of purchase to calculate the total sales tax due.
For example, if a product costs $100 and the total sales tax rate is 6.5%, the sales tax on the purchase would be:
$100 x 0.065 = $6.50
For convenience, you can also use our South Dakota Sales Tax Calculator below to lookup the rate and calculate the sales tax due on a purchase.
South Dakota Sales Tax Calculator
South Dakota Sales Tax Calculator
Sales Tax Rates in Major South Dakota Cities
| City | Total Sales Tax Rate |
|---|---|
| Sioux Falls | 6.5% |
| Rapid City | 7% |
| Aberdeen | 6% |
| Brookings | 6% |
| Watertown | 6% |
What is taxable in South Dakota?
South Dakota sales tax applies to most retail purchases of goods and some services. Taxable goods include things like:
- Clothing and footwear
- Furniture and home furnishings
- Electronics
- Toys and games
- Jewelry
- Sporting goods
- Alcoholic beverages
- Cigarettes and tobacco products
Examples of taxable services in South Dakota include:
- Hotel rooms and other lodging rentals
- Restaurant meals
- Admissions to entertainment events
- Telecommunications services like cell phone plans
Some services are exempt from sales tax in South Dakota, such as medical services, legal services, and most personal services like haircuts and auto repairs.
What goods are exempt from sales tax in South Dakota?
Some categories of goods are exempt from South Dakota sales tax, including:
- Most food items for home consumption
- Prescription drugs and over-the-counter medications
- Agricultural equipment and machinery
- Farm products sold in their original state
- Gasoline and other motor fuels
- Newspapers and periodicals
Does South Dakota have sales tax holidays?
South Dakota does not have any general statewide sales tax holidays. However, some cities or school districts may hold occasional sales tax holidays for specific purposes like school supplies or clothing. These vary by location.
Shoppers should check with their local city, county or school district to see if any special sales tax holidays have been authorized in their area.
Sales Tax Exemptions in South Dakota
Certain buyers and products may qualify for exemptions from South Dakota sales tax in some situations. Common sales tax exemptions include:
Exemptions for Non-Profits and Religious Organizations
Qualified non-profit organizations and religious groups may purchase goods and services tax-free when the purchases are related to the organization’s core mission. Proper tax exemption certificates must be presented at time of purchase.
Agricultural Exemptions
Farmers and ranchers do not pay sales tax on many items used primarily for agriculture, like livestock, feed, seeds, fertilizers, fencing supplies, and farm equipment and machinery.
Manufacturing Exemptions
Purchases of raw materials, components, and processing equipment used primarily for manufacturing, fabricating or processing activities may be exempt from South Dakota sales tax.
Exemptions on Medical Items
Sales tax is not charged on prescription drugs and medical devices purchased with a prescription. This includes things like eyeglasses, contact lenses, prosthetic limbs, wheelchairs and diabetic supplies.
Government Exemptions
South Dakota state and local government agencies may make tax-exempt purchases of goods and services related to official government activities. Federal government agencies are exempt from sales tax in all states.
Businesses and organizations should consult the South Dakota Department of Revenue to determine if they qualify for any sales tax exemptions on their purchases. Proper documentation may be required.
How to Get a South Dakota Sales Tax License
Any person or company making retail sales of taxable goods or services in South Dakota must obtain a sales tax license, also called a seller’s permit. This includes:
- Businesses selling taxable goods in a store, online, by mail order, at craft fairs, etc.
- Restaurants, bars, hotels, and other sellers of taxable services
- Marketplace facilitators like eBay, Etsy, and Amazon facilitating sales for South Dakota sellers
To register for a South Dakota sales tax license:
- Complete the online application or printable form
- Pay a $20 registration fee
- Register with the SD Secretary of State if operating as a business entity
The sales tax license allows you to legally make retail sales and collect sales tax in South Dakota. Vendors must collect the applicable state and local sales tax rates at the point of sale and file regular sales and use tax returns with the state.
Managing Sales Tax Reporting and Remittance
South Dakota has the following policies for managing sales tax reporting and payment:
Reporting Frequency
- Large retailers (over $100,000 in annual sales) must file sales tax returns monthly.
- Small and seasonal retailers may request to file quarterly or annually instead.
Online Filing
Sales tax returns and payments must be submitted online through the SD eForm Portal.
Due Dates
- Monthly returns are due the last day of the following month.
- Quarterly returns are due on April 30, July 31, October 31, and January 31.
- Annual returns are due on January 31 following the end of the calendar year.
Allowable Collection Period
Retailers are allowed 30 days after the reporting period ends to reconcile their books and collect any remaining taxes from customers before remitting to the state.
For example, taxes for the January monthly return can be collected until the end of February before the return and payment are due on March 31.
Online Resources
The SD Department of Revenue provides additional resources for managing sales tax reporting, including:
- Online account access
- Filing calendars
- Return status and payment history
- Remittance options like EFT and ACH credit
Accurate reporting is critical – penalties may apply for late payments or tax underpayment. Consult the Department of Revenue if you have any questions.
Handling Audits and Nexus in South Dakota
Retailers with a physical or economic presence (nexus) in South Dakota must register and collect local sales taxes for customers in the state. This includes:
- In-state retailers with locations, employees, inventory etc. in South Dakota
- Out-of-state retailers with warehouses, affiliates, advertising partnerships or other connections to South Dakota
South Dakota economic nexus laws stipulate that out-of-state sellers exceeding $100,000 in sales or 200 transactions in South Dakota within a calendar year have nexus and must collect and remit sales tax to the state.
The South Dakota Department of Revenue conducts regular sales and use tax audits to ensure correct tax collection and remittance. Retailers should maintain detailed records that support their tax calculations and remittance.
During an audit, the auditor will review your records, systems, and previous returns to verify that:
- All required taxes were properly calculated
- Exemptions were properly documented
- Remittances match the books and no taxes are owed
- Nexus rules and registration requirements are being followed
Maintaining organized records will streamline the audit process. Supporting documents like sales invoices, purchase invoices, exemption certificates, and accounting summaries should be kept a minimum of 3 years.
Audits resulting in discrepancies or unremitted taxes will lead to an assessment bill for additional tax due, plus interest and penalties. Failing to register and collect appropriate taxes if nexus exists in South Dakota can also result in substantial penalties.
South Dakota Sales Tax Filing FAQs
1. When do I need to register for a South Dakota sales tax license?
If you are selling taxable goods or services in South Dakota, you must register for a sales tax license through the SD Department of Revenue before making any retail sales. This applies to in-state and out-of-state sellers exceeding the South Dakota economic nexus thresholds.
2. What records do I need to keep for South Dakota sales tax purposes?
You should keep detailed records that support the figures reported and taxes collected and remitted on your South Dakota sales and use tax returns. This includes sales invoices, purchase invoices, exemption certificates, accounting records, and remittance confirmations. Records should be kept a minimum of 3 years.
3. Do I need to collect sales tax on shipping charges?
Yes, the total sales price subject to South Dakota sales tax includes any shipping or delivery charges to the customer. Make sure to add shipping charges at checkout when calculating sales tax.
4. Can I file a South Dakota sales tax return if I had no sales this period?
Yes, you must file a $0 return for any reporting period when you did not have any sales subject to South Dakota sales tax. This avoids non-filing penalties and shows you are still an active registered seller.
5. What if I collect too much sales tax from my customers?
If you accidentally collect too much sales tax, you must still remit it to the state. You can request a refund from the Department of Revenue for the overpayment amount. Don’t adjust a future return to account for excess collections.
Conclusion
Understanding South Dakota sales tax laws and properly managing tax reporting obligations is crucial for all retailers making taxable sales in the state. Failure to register if nexus exists, collect appropriate amounts of sales tax, and make timely and accurate return filings can lead to audits and substantial interest and penalty bills from the South Dakota Department of Revenue.
By obtaining a South Dakota sales tax license, using proper calculation methods, claiming valid exemptions, meeting all due dates, and keeping detailed records, sellers can remain compliant and avoid unnecessary penalties and headaches. Consult the resources above or reach out to the Department of Revenue if you need help understanding South Dakota sales tax requirements for your retail business.
