South Dakota Sales and Use Tax at a Glance
Sales tax is South Dakota's main state tax, and it reaches further than in most states. It applies to sales, leases and rentals of goods, to products delivered electronically and to most services, unless a specific exemption applies. BOMCAS helps South Dakota businesses and out-of-state sellers register, decide what is taxable, file accurate returns and keep the records an auditor will ask for.
Current Rates and the 2027 Change
- State sales and use tax: 4.2 percent. This is a temporary rate set in 2023. Under current law it ends June 30, 2027, and the state rate returns to 4.5 percent on July 1, 2027. In 2026 the Legislature chose to direct the revenue from that increase to homeowner property tax relief.
- Municipal sales and use tax: up to 2 percent, depending on the city.
- Municipal gross receipts tax: up to 1 percent on alcoholic beverages, eating establishments, lodging, and admissions to amusement, athletic and cultural events, in addition to municipal sales tax.
- Tourism tax: 1.5 percent on certain lodging, amusement services and motor vehicle rentals.
- County option tax: a 2026 law lets counties adopt a tax of up to 0.5 percent to fund owner-occupied property tax credits. The earliest effective date is January 1, 2027, and some counties have already adopted it.
Because local rates differ and change, we confirm each location with the Department of Revenue's rate lookup tool rather than relying on a list.
Services Are Taxable Unless Exempt
Many businesses that would not collect sales tax in other states must collect it in South Dakota: repair shops, cleaning and landscaping companies, personal care businesses, marketing and software providers, and many professional and business services. The exemptions are specific. Examples the Department of Revenue lists include health services, educational services, social services, agricultural services, forestry services, trucking, travel agent services, certain financial services, and construction services, which are taxed separately under contractor's excise tax. We review each revenue stream against the law and the department's tax facts instead of assuming a service is exempt.
Where a Sale Takes Place
South Dakota taxes a sale where the customer receives the product or service, and that decides which municipal rate applies. Goods picked up at your store are taxed at your location. Delivered goods are taxed where they are delivered. Services performed on a person, such as haircuts or massages, are taxed where performed, and repairs are taxed where the repaired item is delivered back to the customer. A business that delivers across several cities reports each city separately on the return.
Contractor's Excise Tax
Prime contractors performing construction services or realty improvements in South Dakota need a contractor's excise tax license and pay a 2 percent tax on their gross receipts, including any tax collected from the customer. Because the tax is on gross receipts, the department allows a bid factor of 2.041 percent when building the tax into a bid or invoice, while the return itself uses a straight 2 percent. Subcontractors working under a prime contractor's exemption certificate generally are not liable for the excise tax on that work, but they need the certificate on file. Speculative builders, owners who build for lease, and remodelers who flip properties have their own rules, including the $100,000 rule for buildings built for lease. We set up project-level records that support every return.
Remote Sellers and Marketplace Providers
South Dakota v. Wayfair, Inc., decided by the U.S. Supreme Court in 2018, began here. Today a business with no physical presence in South Dakota must hold a South Dakota sales tax license and remit tax once its gross revenue from sales into the state exceeds $100,000 in the previous or current calendar year. The separate 200-transaction test was removed effective July 1, 2023. A seller must register by the first day of the month that begins at least 30 days after crossing the threshold. Marketplace providers have collected on behalf of their sellers since March 1, 2019. Any business with a physical presence must be licensed regardless of sales volume. South Dakota is also a member of the Streamlined Sales Tax project, which offers a single registration across member states.
Filing, Due Dates and Penalties
A licensed business files a return every reporting period, even when it made no sales. The department assigns a filing frequency, such as monthly, bimonthly or semiannual. Electronic returns are due the 20th of the month and electronic payments the 25th, while paper returns and payments are due the 20th. A return not received within 30 days after the month it is due carries a penalty of 10 percent of the tax, with a $10 minimum even when no tax is due, and interest runs at 1 percent a month on unpaid tax. We keep a filing calendar for every client so nothing is missed.
Use Tax and Exemption Certificates
When a South Dakota business buys taxable goods or services without paying South Dakota tax, such as software subscriptions or out-of-state services, it owes use tax at the same rates. Use tax is also due on items taken out of inventory for the business's own use. On the selling side, exemption certificates support resale and exempt sales. They do not expire unless the information changes, but the department recommends updating them every three to four years.
Events, Rallies and Temporary Vendors
Vendors at the Sturgis Motorcycle Rally need a new temporary South Dakota sales tax license every year, even if they already hold a permanent license, and first-time vendors post a $500 bond. We help event vendors register in time and file the temporary return.
Unregistered and Behind?
A business that should have registered but did not may qualify for the department's voluntary disclosure program, which can waive penalties, rules out criminal prosecution and allows 60 days to calculate the tax. It is not available to businesses that are already licensed, have collected tax, or have been contacted for an audit. See our back taxes and late filing page for more.
South Dakota Sales and Use Tax Questions
What is the South Dakota sales tax rate?
The state rate is 4.2 percent, plus up to 2 percent municipal sales tax. Under current law the state rate returns to 4.5 percent on July 1, 2027. Lodging, dining, alcohol and admissions can also carry municipal gross receipts tax and tourism tax.
Do I charge South Dakota sales tax on services?
Usually yes. South Dakota taxes most services unless a specific exemption applies, such as health, educational, social and agricultural services, trucking, and construction services covered by contractor's excise tax.
When does an out-of-state seller have to register in South Dakota?
When gross revenue from sales into South Dakota exceeds $100,000 in the previous or current calendar year. Registration is due by the first day of the month starting at least 30 days after the threshold is met.
What is the contractor's excise tax rate?
It is 2 percent of a prime contractor's gross receipts, including tax collected from the customer. A 2.041 percent bid factor can be used to build the tax into a bid or invoice.
Talk to BOMCAS About Sales and Use Tax in South Dakota
Sales tax returns are easiest when the bookkeeping already keeps tax out of revenue, and the same figures feed the federal business return. Businesses that have fallen behind can start with back taxes and late filing. Canadian sellers approaching the remote seller threshold should also look at cross-border tax, and owners timing large purchases around the 2027 rate change can work it through in tax planning. Employers often add payroll, and owners can have their personal returns done alongside. For a summary of how South Dakota taxes businesses and residents, see the South Dakota accounting and tax overview or our United States services.
Tell us what you need help with and we will reply with next steps. Contact BOMCAS, use the contact form below, call 780-667-5250 or email info@bomcas.ca. You can also go back to the South Dakota overview. This page is general information, not advice for a particular situation.