South Dakota Sales Tax Rates

Total Range for 2024

4.5%–6.5%

south dakota department of revenue

Why do you need to collect sales tax in South Dakota?

If you’re selling goods and services in South Dakota then sales tax might apply! To determine your obligation, you need to understand “nexus,” which ties businesses to states for tax purposes.

Two types of nexus exist:

  1. Physical Nexus: Having a physical presence, like an office, warehouse, or employees in South Dakota, triggers this type. If you do, you likely need to collect sales tax.
  2. Economic Nexus: This kicks in when your sales within South Dakota exceed a certain economic threshold. Even without a physical presence, surpassing this threshold requires collecting sales tax.

Is what you’re selling taxable in South Dakota?

Now that you understand the basics of South Dakota’s sales tax and nexus thresholds, let’s delve into whether your specific products or services are taxable.

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How to register for sales tax in South Dakota

To register for sales tax in South Dakota, you can apply online through the South Dakota Tax Application website: https://dor.sd.gov/businesses/

Here’s what you’ll typically need to have on hand when registering:

  • Personal identification information (Social Security Number, address, etc.)
  • Business identification information (Employer Identification Number (EIN), address, etc.)
  • Business entity type (Sole proprietorship, LLC, Corporation, etc.)
  • Brief business description
  • Date you started operating in South Dakota

Alternatively, you can call the South Dakota Department of Revenue at 1-800-829-9188 to inquire about applying in person.

How to collect sales tax in South Dakota

  1. Charge the Correct Tax:

During checkout, add the appropriate sales tax (state and local combined) to the sales price of taxable goods and services.  Some point-of-sale systems can automate this process.

  1. Collect the Tax:

Include the sales tax amount in your total price and collect it from the customer at the time of sale. You can accept payment for the total amount, including tax.

  1. Keep Records:

Maintain accurate records of your sales and the sales tax you collect.  This includes details like the date, customer information, items sold, sales price, and the amount of sales tax collected.

Example:
  • Jacket price: $59.99 (before tax)
  • Rapid City sales tax: 6.5% (4.5% state + 2% local)
  • Quick calculation: multiply price by tax (rounded): $59.99 x 0.07 = $4.20 (estimated tax)
  • Total price: $59.99 + $4.20 (estimated tax) = $64.19 (approx.)

FAQs

Do you have a physical nexus in South Dakota?

South Dakota considers these factors to establish physical nexus:

  • Owning or leasing property: This includes a brick-and-mortar store, warehouse, or any other tangible property located in South Dakota.
  • Having employees or representatives: If you have employees, salespeople, or agents who regularly work within South Dakota to solicit sales or perform services, it can establish nexus.
  • Storing inventory: Storing inventory in South Dakota, even if through a fulfillment service like Amazon FBA, can trigger physical nexus.
  • Having a business license: Obtaining a South Dakota business license might be considered an indication of physical presence.
Do you have an economic nexus in South Dakota?

South Dakota uses a sales-based economic nexus threshold. This means you’ll have economic nexus if your total sales of taxable goods and services in South Dakota exceed $100,000 in the previous or current calendar year.

What is use tax in South Dakota?

In South Dakota, use tax applies to purchases of tangible personal property and certain services that you don’t pay sales tax on at the time of purchase, but that you will eventually use, store, or consume within the state.

Here’s a breakdown of use tax in South Dakota:

  • Who is responsible: The purchaser or consumer is responsible for reporting and paying use tax on qualifying purchases.
  • What’s taxable: Generally, use tax applies to items you buy out-of-state or online without paying sales tax, and then bring to South Dakota for use, storage, or consumption.
  • Use tax rate: The use tax rate in South Dakota is the same as the combined state and local sales tax rate for your location.
Do you need a seller/reseller permit?

In South Dakota, a seller/reseller permit is technically called a Sales Tax License. You might need one depending on your business activities:

  • Generally required: If your business has a physical presence in South Dakota or meets the economic nexus threshold, you’ll need a Sales Tax License.
How to get a sales tax permit/license in South Dakota?

Here’s how to get a sales tax permit/license (officially called a Sales Tax License) in South Dakota:

Online Application: The quickest and easiest way is to apply online through the South Dakota Department of Revenue website.

Alternatively: You can call the South Dakota Department of Revenue at 1-800-829-9188 to inquire about applying in person.

When are South Dakota's Returns Due?

The due date for South Dakota sales tax returns depends on the frequency with which you file them, which in turn depends on your total sales tax liability. Here’s a breakdown:

  • Monthly Filers: If your total sales tax liability is high enough, you’ll be required to file returns monthly. These returns are due by the 20th of the following month. For example, the January sales tax return would be due by February 20th.
  • Quarterly Filers: If your sales tax liability falls within a certain range, you might be categorized as a quarterly filer. Quarterly returns are due by the last day of the month following the end of the quarter. So, the return for the first quarter (January – March) would be due by April 30th.
  • Annually: Businesses with a very low sales tax liability may only need to file a sales tax return annually. These annual returns are due by January 31st of the following year.
How to file sales tax in South Dakota
  1. File Electronically (Recommended):

South Dakota offers online filing through their EPath system: https://apps.sd.gov/RV23EPath/login.aspx This is the quickest and most efficient method.

  • You’ll need to create an account if you haven’t already.
  • The system will guide you through filing your return and making your payment electronically.
  1. File by Mail (Alternative):

If you can’t file electronically, you can mail your return and payment to the South Dakota Department of Revenue. You can find the address and specific instructions for mailing returns on the department’s website: https://dor.sd.gov/individuals/taxes/sales-use-tax/

Is anyone exempt from sales tax in South Dakota?

Yes, there are certain entities exempt from paying sales tax on their purchases in South Dakota. Here’s a breakdown:

  • Government Agencies: Federal, state, and local government agencies are generally exempt from paying sales tax on purchases made for official government business.
  • Certain Non-Profit Organizations: Qualifying non-profit organizations may be exempt from sales tax on purchases used exclusively for exempt purposes. Relief agencies and religious and private schools typically need to apply for exemption with the Department of Revenue.
  • Merchants Purchasing for Resale: Businesses with a valid sales tax permit/license can purchase goods for resale tax-free by providing a resale certificate to the seller.
  • Specific Purchases: Certain items may be exempt from sales tax, including prescription drugs, some groceries (excluding prepared food), and certain agricultural supplies.

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