Sales Tax Is Aberdeen's Main Business Tax
Without a state income tax, the tax an Aberdeen business deals with most often is sales tax. South Dakota taxes most goods and a broad list of services, and the city adds its own taxes on top. A farm supplier, a motel, a plumbing contractor and a downtown boutique all collect under different rules, and each has to file on time with the Department of Revenue. BOMCAS prepares and reviews sales, use and gross receipts tax returns for Aberdeen businesses remotely.
Licensing, taxable services and remote sellers are covered statewide in our South Dakota sales and use tax page; here we deal with Aberdeen's own rates, hotel charges and farm exemptions.
The Rates in Aberdeen
- State sales and use tax: 4.2 percent, scheduled to rise to 4.5 percent on July 1, 2027.
- Aberdeen municipal sales and use tax: 2 percent, reported under city code 001-2.
- Aberdeen municipal gross receipts tax: 1 percent on lodging, alcoholic beverages, prepared food and admissions, reported under code 001-1.
- State tourism tax: 1.5 percent on lodging stays under 28 days and certain visitor services.
- Business Improvement District No. 2: $2 per room night at hotels and motels with 25 or more rooms; stays of 28 or more consecutive nights and complimentary rooms are exempt.
- Brown County: no county sales tax, after voters rejected a proposed half-percent tax on November 3, 2026.
A typical Aberdeen retail sale is taxed at 6.2 percent, a meal or drink at 7.2 percent and a hotel night at 8.7 percent plus the $2 district charge where it applies.
Farm Sales and Exemptions
Many sales in Aberdeen's farm economy are exempt from sales tax but subject to other rules. Seed, fertiliser, agricultural chemicals and livestock feed for agricultural use are generally exempt. New and used farm machinery sold to farmers is not subject to sales tax but carries South Dakota's farm machinery excise tax, filed on its own return. Repair parts and labour on farm machinery are treated differently from the machinery itself, and dealers need to code them carefully. Agricultural exemptions should be documented with exemption certificates or proof of agricultural use, especially for customers buying both farm and household items.
Hotels, Restaurants and Pheasant Season
When pheasant season opens in October, hunters from across the country fill Aberdeen's hotels, restaurants and outfitters. Hotels collect state sales tax, city sales tax, the city gross receipts tax, the state tourism tax and, at qualifying properties, the district charge, which is passed to the visitors bureau through the city. Restaurants and bars add the 1 percent gross receipts tax. Guided hunts, hunting lodges and game cleaning are generally taxable services, and some visitor services also carry the tourism tax. Seasonal businesses that open only for a few months still need to file every return for their filing periods, even with no sales.
Contractors
Construction in South Dakota is taxed differently from retail. Prime contractors pay the 2 percent contractor's excise tax on the gross receipts of a project, and Aberdeen's municipal tax does not replace it. Materials are generally purchased with sales or use tax paid, and the tax on materials varies when a project is for an exempt entity, such as a public school or hospital owned by a government body. Residential builders also need an Aberdeen residential contractor licence, and the city asks for proof of the excise tax licence as part of that application.
Use Tax for Equipment and Supplies
Aberdeen manufacturers, clinics and contractors often purchase equipment or supplies from out-of-state vendors that do not charge South Dakota tax. The buyer then owes state and city use tax at the rate where the item is first used. Our reviews compare fixed asset additions and large supply purchases against the use tax reported, which is often where audits find problems.
Selling Into North Dakota
North Dakota's sales tax has a 5 percent state rate plus local taxes, but it taxes far fewer services than South Dakota. An Aberdeen business with a location, employees or regular deliveries in North Dakota has a physical presence there and must register. Remote sellers without a presence must register and collect once taxable sales into North Dakota exceed $100,000 in the current or previous calendar year, starting by the next calendar year or 60 days after crossing the threshold, whichever comes first. Farm machinery, contractors and building materials each have their own North Dakota rules, so we review them separately.
Filing and Record Keeping
Most small Aberdeen businesses file monthly or bimonthly, with larger businesses filing monthly and returns due on the 20th of the following month, or the 23rd for electronic filers. Returns must separate gross sales, exempt sales and city-coded taxable sales correctly. We reconcile the sales recorded in your point-of-sale or accounting system to each return, check that exemption certificates are on file and keep the workpapers for audit support.
Aberdeen Sales and Use Tax Questions
Is there a Brown County sales tax in Aberdeen?
No. Brown County voters rejected a proposed half-percent county sales tax in November 2026, so only the state and city taxes apply.
What does a hotel stay cost in tax in Aberdeen?
Most stays under 28 nights are taxed at 8.7 percent: 4.2 percent state, 2 percent city, 1 percent city gross receipts and 1.5 percent tourism. Qualifying hotels with 25 or more rooms also charge $2 per night for Business Improvement District No. 2.
Do farm machinery dealers charge sales tax?
Farm machinery sold for agricultural use generally carries South Dakota's farm machinery excise tax instead of sales tax. Parts and repair labour follow their own rules.
When must an Aberdeen seller register in North Dakota?
If you have a physical presence in North Dakota or more than $100,000 in taxable sales into the state in the current or previous year, you must register and collect North Dakota sales tax.
Talk to BOMCAS About Sales and Use Tax in Aberdeen
Sales tax returns rely on books that keep each tax separate from revenue, and the same figures feed the business return. Periods that were missed can be filed through our catch-up work, large purchases ahead of 2027 are a planning question, and seasonal staff are handled through payroll. Owners can add their personal returns, and Canadian sellers should review cross-border rules. Across South Dakota, we also explain business returns, personal returns, bookkeeping, payroll, planning, back taxes and Canada–U.S. tax on our state pages, which start from the South Dakota overview.
Tell us a little about your Aberdeen business or household and BOMCAS will reply with next steps and what we need to quote. Reach us through the contact page or the form below, by phone at 780-667-5250 or by email at info@bomcas.ca. You can also go back to the Aberdeen overview to compare services. This page is general information and is not advice for your own situation.