Mitchell's Layers of Sales Tax
A Mitchell business may collect three or four separate taxes on a single receipt, and each is reported on its own line. The state's 4.2 percent tax applies to goods and most services; the city's 2 percent municipal sales tax, reported under code 242-2, applies on the same base; the city's 1 percent gross receipts tax, code 242-1, applies to lodging, alcohol, prepared food and admissions; and the state's 1.5 percent tourism tax covers lodging and certain visitor services. BOMCAS prepares Mitchell sales tax returns remotely and keeps those amounts separate in your books.
For licensing and the statewide list of taxable services, start with sales and use tax in South Dakota. Mitchell's codes, the hotel district and Davison County's position are set out below.
Rates in Practice
- Hardware, clothing, parts and most taxable services: 6.2 percent.
- Restaurant meals, bar sales and tickets to the city's attractions and events: 7.2 percent.
- Hotel and motel rooms under 28 days: 8.7 percent, plus $2 a night at hotels with more than 28 rooms.
- From July 1, 2027, the state portion is scheduled to rise to 4.5 percent, so each of these figures goes up by 0.3 percent.
The Hotel District Charge
Mitchell's hotel business improvement district has collected $2 per occupied room night since January 2024, replacing the earlier $1.50 charge. It applies to hotels with more than 28 rooms and does not apply to rentals booked through Airbnb or Vrbo. The hotel owners can also ask the city to repeal it. Hotels should show the charge separately on folios and record it as a liability, not as room revenue.
No County Tax in Davison County
South Dakota counties gained the option of a county sales tax in 2026, and six counties start collecting on January 1, 2027. Davison County is not one of them. Its commission held informational meetings in September and October 2026 without voting, and any tax adopted later could not take effect before July 1, 2027. Businesses delivering to customers in other counties should check those counties' status, because a delivery is taxed where the customer receives it.
Contractors
Prime contractors on realty improvement projects pay the 2 percent contractor's excise tax on their gross receipts and generally pay sales or use tax on the materials they install. Some projects for exempt entities and utilities follow different rules, so contracts should be reviewed before bidding. Contractors that also sell materials over the counter need a sales tax licence for those sales.
Use Tax on Purchases
Equipment, supplies and software bought online or from out-of-state vendors that did not charge South Dakota tax owe use tax at the same combined rate. Manufacturers and farm businesses often have exemptions on some purchases and not others, so we review large purchases and keep exemption certificates on file.
Farm Sales and Exemptions
Many agricultural inputs, including seed, fertiliser, livestock and feed for livestock, are exempt when sold for agricultural use, but the seller should keep the paperwork that supports each exemption. Farm machinery and repair parts follow separate rules, and the treatment of a single sale may depend on how the item is used.
Event and Seasonal Sellers
Vendors at the Corn Palace Festival, the county fair or craft shows need a South Dakota sales tax licence and report sales in the city where they took place. A temporary licence is available for short-term events.
Filing and Records
Most businesses file monthly, though smaller sellers may be allowed to file less often. We reconcile point-of-sale and processor reports to each return, track exempt sales and certificates, and keep returns ready for any Department of Revenue audit.
Mitchell Sales and Use Tax Questions
What sales tax do I charge in a Mitchell restaurant?
Prepared food and drinks are taxed at 7.2 percent: 4.2 percent state, 2 percent municipal and 1 percent gross receipts tax.
Will Davison County add a sales tax?
Not on January 1, 2027. The county discussed the option without acting, and any tax adopted later could not start before July 1, 2027.
Does the hotel district charge apply to all lodging?
No. It applies at hotels with more than 28 rooms. Vacation rentals booked through Airbnb or Vrbo are excluded.
Do I owe use tax on equipment bought online?
Yes, if the seller did not charge South Dakota tax and the purchase is not exempt. Use tax is due at the rate where the item is used.
Talk to BOMCAS About Sales and Use Tax in Mitchell
Returns are easier with books that hold each tax in its own account, and the same sales totals flow into the business return. Seasonal and event staff run through payroll, unfiled periods go through catch-up filing, purchases ahead of July 2027 are a planning question, hosts report rental profit on personal returns, and exporters shipping to Canada should look at GST and cross-border rules. If your business also operates elsewhere in the state, our South Dakota guides to business returns, personal returns, bookkeeping, payroll, planning, late filing and cross-border tax cover the same ground, and the state overview ties them together.
Write to BOMCAS about your Mitchell business or household and we will reply with the next steps and the information we need to quote. Use the contact page or the form below, call 780-667-5250 or email info@bomcas.ca. Every Mitchell service is listed on the Mitchell overview. This page is general information, not advice for your particular situation.