A College and Factory Town Between Two Lakes
Madison is the Lake County seat, set between Lake Madison and Lake Herman about 50 miles northwest of Sioux Falls. The Census Bureau estimated about 6,100 residents in the city and 11,000 in Lake County in 2025. Two institutions shape the local economy. Dakota State University, known for cybersecurity, computer science and artificial intelligence, enrolled a record 3,975 students in fall 2026, including 867 graduate students and 2,744 studying online only. And the Manitou Group plant, which began as a Gehl facility in 1973, builds skid loaders; in 2023 it employed 265 people, opened a 76,000-square-foot addition and shipped about 45 percent of its products outside the United States. BOMCAS works with Madison households and businesses remotely.
Rules that apply in every South Dakota community are in our South Dakota overview; this page focuses on Madison and Lake County.
Lakes, Farms and Main Street
Around the city, Lake County's farms grow corn and soybeans and raise livestock, and cabins and homes line both lakes. Lake Herman State Park and summer visitors bring business to restaurants, bait shops, marinas and short-term rentals. Madison Regional Health System, the school district, county offices and a downtown of shops and professional offices round out the economy.
Sales Tax in Madison
- Madison levies a 2 percent municipal sales tax (code 221-2), so most purchases are taxed at 6.2 percent.
- Its 1 percent gross receipts tax (code 221-1) applies to lodging, eating establishments and alcohol, taking those to 7.2 percent. According to the Department of Revenue's municipal tax chart, Madison does not apply it to admissions.
- Lake County commissioners decided on July 7, 2026 not to adopt the new half-percent county sales tax, though they said they could revisit it if residents supported it.
- The state rate is scheduled to rise to 4.5 percent on July 1, 2027, taking Madison's general rate to 6.5 percent.
- Lake cabin rentals of under 28 days are lodging, subject to state and city tax, the 1 percent gross receipts tax inside city limits and the 1.5 percent tourism tax.
Who We Work With
Our Madison clients include DSU faculty and staff, graduate students and technology professionals, manufacturing workers and suppliers, lake property owners who rent their cabins, Main Street businesses, clinics and farm families. Many DSU graduates stay in the area or work remotely for employers elsewhere, which raises its own questions about where income is taxed.
Remote Work and Online Students
With so much of DSU's enrollment online and many residents working remotely, Madison households often have employers or schools in other states. South Dakota's lack of an income tax means wages for work done here are not taxed by the state, but some employers withhold for their home state by mistake, and part-year moves can bring returns in the state left behind.
How BOMCAS Helps in Madison
Madison clients often begin with bookkeeping for a tech firm, supplier or lake business, sales and lodging tax filings and payroll that may include staff in other states. Each year we prepare business returns and personal returns, and use them for planning around equity, retirement and family property. Clients with unfiled years can start with back taxes and late filing, and international students and workers can read about cross-border tax.
Elsewhere in South Dakota, our state pages on business taxes, personal returns, sales and use tax, bookkeeping, payroll, tax planning, back taxes and cross-border tax cover the same ground.
Madison Questions
What is the sales tax rate in Madison?
6.2 percent on most purchases and 7.2 percent on lodging, restaurant food and alcohol. It rises to 6.5 percent with the state change on July 1, 2027.
Is Lake County adding a county sales tax?
Not at this time. Commissioners declined in July 2026.
Are admissions subject to Madison's gross receipts tax?
According to the state's municipal chart, no. State sales tax still applies.
Do I collect tax on renting my lake cabin?
Yes, for stays of under 28 days, including the tourism tax.
Talk to BOMCAS About Your Madison 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 eastern South Dakota near the Minnesota line, our Brookings pages cover South Dakota State University, the city's manufacturing employers, its pillow tax for larger hotels and work across the nearby Minnesota 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.
Along Interstate 90 in the James River valley, our Mitchell pages cover the Corn Palace and its visitors, trailer and component manufacturers, Avera Queen of Peace, two colleges and the hotel district charge.
On the James River in the centre of the eastern half of the state, our Huron pages cover the State Fair, Dakota Provisions and its growers, Hutterite colony accounts, Huron's Karen and other new American families and the city's hotel room tax.
At the mouth of Spearfish Canyon in the northern Black Hills, our Spearfish pages deal with Black Hills State, newcomers and retirees, vacation rentals, the Lawrence County tax that starts in 2027 and work over the Wyoming line.
In the state capital on the Missouri River, our Pierre pages cover public employees and retirees, statewide associations and nonprofits, Lake Oahe outfitters, two hotel districts and the Hughes County tax that begins in July 2027.
Beside Ellsworth Air Force Base east of Rapid City, our Box Elder pages focus on military households and veterans, base subcontractors and homebuilders, new businesses and a city split between Pennington and Meade counties.
Home to the University of South Dakota, our Vermillion pages cover faculty and graduate students, international scholars, student-rental landlords, campus-area restaurants and the Clay County sales tax vote.
East of the Big Sioux on I-90, our Brandon pages speak to young families, home-based businesses, trades and homebuilders, new storefronts at the interchange and a Minnehaha County rate that stays put in 2027.
On the Lincoln County edge of the metro, our Harrisburg pages cover subdivision developers and homebuilders, landowners selling to developers, new households and Lincoln County's sales tax that begins in January 2027.
Below Bear Butte, our Sturgis pages deal with rally businesses and temporary vendors, rally-week home rentals, VA staff and veterans at Fort Meade, and the Meade County tax that starts in January 2027.
Just off I-29 in Lincoln County, our Tea pages cover manufacturers and distributors, mechanical and electrical contractors, interstate franchises, young families and the county sales tax that begins in January 2027.
Where the Redwater meets the Belle Fourche River, our Belle Fourche pages look at cattle and sheep ranches, irrigated hay ground, bentonite haulers and mills, jobs in Montana and a Butte County that has not added a sales tax.
Tell BOMCAS about your Madison business or household and we will reply with next steps and what we need for a quote. Use the contact page or the form below, call 780-667-5250 or email info@bomcas.ca. Every Madison service is on the South Dakota overview. This page is general information, not advice for your situation.