Personal Returns in Rapid City
Rapid City households file a federal return and nothing at the state level, because South Dakota has no personal income tax. That does not make every return simple. A large share of the city's residents are connected to Ellsworth Air Force Base, many work seasonal jobs tied to the Black Hills tourist season, and the city is a popular place to retire. Each group has its own federal issues, and some still owe returns to another state. BOMCAS prepares personal returns for Rapid City residents remotely, from a single W-2 to a return with several rental cabins and a business.
South Dakota's lack of an income tax, and what it means when you move in or out, is covered in South Dakota personal tax preparation. Here we focus on Rapid City households.
Military Families at Ellsworth
Ellsworth employs about 4,100 people directly, including about 3,100 active-duty airmen and 1,000 civilians, according to figures Elevate Rapid City published from the base's 2023 economic impact statement. The Air Force expects personnel numbers to rise while the B-21 arrives and the B-1 fleet is retired.
Service members
Under the Servicemembers Civil Relief Act, being stationed in South Dakota does not by itself change a service member's legal residence. An airman whose home of record is a state with an income tax may still owe that state tax on military pay, unless the state exempts it. Members who have genuinely made South Dakota their permanent home and follow the steps to establish it owe no state tax on their pay. Federally, we check that housing and subsistence allowances are left out of income, apply any combat zone exclusion shown on the W-2, and claim the moving expense deduction for permanent change of station moves, which remains available to active-duty members.
Military spouses
Federal law allows a military spouse to keep their own state of residence or to elect the service member's state for tax purposes. A spouse working at a Rapid City clinic, store or school has no South Dakota tax withheld, but may owe tax to their home state. Spouses who run a business from home or work remotely for an out-of-state employer need to know which state, if any, taxes that income.
Civilians and contractors
Civilian employees and contractors who moved here for the B-21 work often have part-year returns in their former state, relocation payments that may be taxable, and the sale of a former home to report.
Seasonal and Tourism Workers
Hotels, restaurants, attractions and outfitters around Rapid City, Keystone and Hill City hire heavily for the summer. Seasonal workers often have several W-2s, tip income, and sometimes a winter job in another state. Tips must be reported, and the new federal deduction for qualified tips, available for 2025 through 2028 under the 2025 federal tax law, can reduce the tax on them. Students who work a summer in the Black Hills may still be dependants on a parent's return, and that affects who claims education credits.
Retirees in the Black Hills
Retirees are drawn to Rapid City by the scenery, the lack of a state income tax and the regional hospital network. Their returns usually involve Social Security, pensions, IRA and 401(k) withdrawals, required minimum distributions and investment income. Military retirees from Ellsworth who stay in the area receive retired pay that is taxable federally but not by South Dakota. For new arrivals from a state with an income tax, we prepare the final part-year return there and check whether that state continues to tax any pension or deferred compensation.
Cabins, Vacation Rentals and Side Work
Many Rapid City households own a cabin in the Hills or rent a room or home to visitors. Rental income is reported federally, and the number of days the property is used personally decides how expenses are limited. Short stays booked through a platform can also be subject to South Dakota sales tax and the 1.5 percent tourism tax, which the owner may have to collect if the platform does not. Side businesses, such as guiding, photography, crafts sold at summer markets or consulting, belong on Schedule C with self-employment tax.
Income From Wyoming, Montana and Nebraska
Wyoming has no income tax, so a Rapid City resident who works a job in Gillette or Newcastle files nothing there. Work in Montana, Nebraska or North Dakota is different, because those states tax nonresidents on wages earned there. A Rapid City resident working a rotation in the Bakken or on a Nebraska job may owe a nonresident return, and we prepare it with the federal return.
How It Works
You upload your W-2s, 1099s, rental records and last year's return through our secure portal. We send one list of questions, prepare the federal return and any other state returns, review the results with you by phone or video, and file electronically. Military clients can work with us the same way after a permanent change of station.
Rapid City Personal Tax Preparation Questions
Do I pay South Dakota income tax while stationed at Ellsworth?
South Dakota has no income tax. Whether you owe tax to another state depends on your legal residence, which the Servicemembers Civil Relief Act protects while you are stationed here on military orders.
Can my spouse use South Dakota as their tax home?
Federal law lets a military spouse keep their own state of residence or elect the service member's state. If the service member's legal residence is South Dakota, the spouse may be able to elect it.
Are tips from a summer job in the Black Hills taxable?
Yes, tips are taxable income and must be reported. For 2025 through 2028, eligible workers may deduct qualified tips on their federal return, subject to income limits.
I rent my Black Hills cabin to tourists. Do I owe sales tax?
Stays of less than 28 days are generally subject to South Dakota sales tax and the 1.5 percent tourism tax, plus any municipal tax where the cabin is located. If a booking platform does not collect it for you, you may need a sales tax licence.
Talk to BOMCAS About Personal Tax Preparation in Rapid City
Households that own a business or a rental cabin usually pair this with business tax preparation and, if the records are thin, bookkeeping. Families who hire a caregiver can leave the household payroll to us. Anyone facing a PCS move or a retirement should talk through tax planning first, years that were never filed can be dealt with through back taxes and late filing, and Canadian spouses and cabin owners should read cross-border tax. Short-term rental owners also need to think about sales and tourism tax. For the general South Dakota rules on everything else, our state pages cover business returns, sales and use tax, bookkeeping, payroll, planning, catching up on late filings and Canada–U.S. tax, with the South Dakota overview tying it all together.
Tell us what is happening in your Rapid City business or household and we will reply with a plan and a quote. Use the BOMCAS contact page or the form at the bottom of this page, phone 780-667-5250 or write to info@bomcas.ca. To see how the pieces fit together, head back to the Rapid City overview. This page gives general information and is not advice on your own situation.