Doing Business in South Dakota's College Town
Brookings is home to South Dakota State University, the state's largest university, and to a manufacturing base that is unusually strong for a city of its size. The Census Bureau estimated its population at about 25,400 in 2025, up from 23,400 at the 2020 census, and nearly 12,000 students were enrolled at SDSU in fall 2026. With no state income tax, the main local tax questions here are sales tax, payroll for a workforce that includes students and Minnesota commuters, and federal returns for engineers, researchers and business owners. BOMCAS works with Brookings businesses and households remotely, and our Brookings pages are written for the way the city works.
The tax rules that apply in every South Dakota county are explained in our South Dakota overview, so this page stays focused on Brookings.
A University, Scoreboards and Cheese
The city's 2023 annual financial report lists SDSU as by far the largest employer, with close to 4,000 people. Daktronics, which grew out of SDSU and still has its headquarters in Brookings, comes next, followed by Solventum, the health care company that took over the former 3M plant, and then Walmart, Brookings Health System, the school district, Hy-Vee and Larson Manufacturing. Bel Brands makes Mini Babybel cheese in Brookings and is carrying out a $200 million expansion due to start production in 2028, which it expects to add about 150 jobs. A 2023 city economic development plan found that advanced manufacturing, agricultural inputs and services, food processing and ag innovation together employ more than 6,000 people, close to a third of the local labour force, and the Research Park at SDSU houses younger technology and bioscience firms.
Brookings Taxes at a Glance
- The city's 2 percent sales tax sits on top of the state's 4.2 percent, for 6.2 percent on most purchases and taxable services.
- A further 1 percent, which the city budget calls the "3rd penny" or 3B tax, applies to lodging, alcohol, prepared food and admissions, so a restaurant meal or a ticket costs 7.2 percent.
- Hotel rooms also carry the 1.5 percent state tourism tax, for 8.7 percent on stays shorter than 28 days.
- Hotels and motels with 25 or more rooms are in Business Improvement District No. 1 and add the city's $2-per-night "pillow" tax.
- Brookings County is not among the six counties adopting the new half-percent county tax in January 2027, so the local rates do not change then. The state rate is still scheduled to return to 4.5 percent on July 1, 2027.
One County, Close to Minnesota
The whole city lies in Brookings County, home to about 37,600 people in 2025. The Minnesota line is roughly 20 miles to the east, and Interstate 29 links the city to Sioux Falls about 60 miles south and Watertown to the north. Many Brookings employers have staff who live in Minnesota, and many local contractors, dealers and service firms work on the Minnesota side. Minnesota taxes wages and business income, has its own sales tax, and since 2026 runs a paid leave program funded by employer and employee premiums. Our payroll, sales tax and business tax pages explain what that means for a Brookings business.
City Licences
Brookings has no general business licence. The city licenses particular activities, including food trucks, temporary vendors, transient merchants and peddlers, pawnbrokers, taxis, and vendors at the Brookings Summer Arts Festival. Residential building contractors need a city residential contractor licence for work that requires a building permit; the application asks for an excise tax number, proof of workers' compensation and at least $500,000 of liability insurance, and the licence runs for the calendar year.
How BOMCAS Helps in Brookings
Brookings businesses often begin with monthly bookkeeping, sales tax filing and payroll, especially when they employ students or work in Minnesota. At year end, we prepare business returns and owners' individual returns, then review planning opportunities such as equipment timing, start-up equity and farm transitions. If records have fallen behind, start with our late-filing service. Canadian students, researchers, founders and suppliers can read about Canada–U.S. tax.
For statewide background, our South Dakota guides cover business tax returns, individual returns, sales and use tax, bookkeeping, payroll, tax planning, late filing and cross-border tax.
Brookings Questions
What is the sales tax rate in Brookings?
Most purchases carry 6.2 percent, the state's 4.2 percent plus the city's 2 percent. Meals, drinks, lodging and admissions carry 7.2 percent, and a hotel room is taxed at 8.7 percent, plus $2 a night at hotels with 25 or more rooms.
Will Brookings sales tax change in 2027?
Brookings County has not adopted the new county gross receipts tax, so nothing changes locally on January 1, 2027. Under current law, the state portion rises from 4.2 to 4.5 percent on July 1, 2027.
Do I need a city business licence in Brookings?
Not a general one. You need a city licence only for certain activities, such as food trucks, temporary vending, peddling, pawnbroking or residential contracting, plus a South Dakota sales tax licence if you sell taxable goods or services.
Can BOMCAS help SDSU faculty and staff?
Yes. We prepare returns for university employees, researchers and graduate students, including those who arrived from another state or country, working remotely by secure upload, email and phone.
Talk to BOMCAS About Your Brookings Taxes
In the southeast corner of the state, our Sioux Falls pages cover South Dakota's largest city, its split between Minnehaha and Lincoln counties, its own lodging tax and a workforce that commutes in from Minnesota and Iowa.
On the other side of the state, our Rapid City pages deal with Black Hills tourism taxes, the hotel improvement district, Ellsworth Air Force Base and crews working across the Wyoming line.
In the northeast, our Aberdeen pages deal with farm cooperatives and equipment dealers, 3M and other plants, two hospitals, Northern State University, the city's hotel and downtown district taxes and jobs across the North Dakota line.
Between Lake Kampeska and Pelican Lake, our Watertown pages cover Terex and the city's other manufacturers, Lake Area Tech, lake cabin rentals, the hotel improvement district and jobs over the Minnesota border.
On the Missouri River across from Nebraska, our Yankton pages look at Avera Sacred Heart, the city's manufacturers, Mount Marty University, Lewis and Clark Lake businesses and the many households that live or work on the Nebraska side.
Share a few details about your Brookings situation, and BOMCAS will reply with practical next steps and the information needed for a quote. Use the contact page or the form below, call 780-667-5250 or email info@bomcas.ca. To compare services, return to the South Dakota overview. This information is general and does not replace advice for your specific facts.