Sioux Falls Business Taxes at a Glance
Sioux Falls is South Dakota's largest city, with about 213,700 residents in the Census Bureau's 2025 estimate, and it is the centre of a metro area that reaches into Minnesota. Businesses here pay no state or city income tax, but they collect one of the more detailed local sales tax mixes in the state, often employ people who live in Minnesota or Iowa, and operate across two counties. BOMCAS provides remote accounting, tax and payroll support to Sioux Falls businesses and households, with every service below built around how Sioux Falls actually works.
The taxes that apply across the state, from sales tax on most services to contractor's excise tax, are explained in our South Dakota overview, so this page concentrates on what is different in Sioux Falls.
An Economy Built on Health Care, Finance and Trade
The Sioux Falls Development Foundation lists Sanford Health and Avera Health as the city's two largest employers, followed by the Sioux Falls School District, Smithfield Foods, Amazon and Hy-Vee. Citi, Wells Fargo, First PREMIER Bank and PREMIER Bankcard, and Sammons Financial Group lead a finance sector that took off in 1981, when Citibank moved its credit card operations to Sioux Falls after South Dakota removed its interest rate caps. Manufacturers such as Daktronics, Raven Industries and the Showplace and StarMark cabinet makers, the ethanol company POET, and a regional retail and dining trade round out the mix. Agriculture still matters too, through meat processing, food production and the farm and ranch families who bank, shop and get medical care in the city.
Local Taxes in Sioux Falls
- A 2 percent municipal sales tax on top of the 4.2 percent state tax, for 6.2 percent on most sales.
- A 1 percent municipal gross receipts tax on alcohol, eating establishments, lodging and admissions, for 7.2 percent at restaurants, bars and venues.
- For lodging, the 1.5 percent state tourism tax and a 1 percent Sioux Falls lodging tax, for 9.7 percent on stays of less than 28 days. Hotels with 40 or more rooms also charge a $2-per-night business improvement district tax that is paid to the city.
- From January 1, 2027, a 0.5 percent Lincoln County gross receipts tax on taxable sales in Lincoln County, which includes the southern part of Sioux Falls. Minnehaha County has not adopted the tax.
- Under current law, the state rate rises to 4.5 percent on July 1, 2027.
Two Counties in One City
About 172,000 Sioux Falls residents live in Minnehaha County and about 41,600 in Lincoln County, according to Census estimates. The county line affects property tax, and from 2027 it will also affect the sales tax rate at a delivery address. Businesses that deliver, install or perform services across the city should record the county as well as the city for each job.
City Licences
Sioux Falls does not issue a general business license. The city licenses specific activities under Chapter 110 of its code, including electrical, mechanical, plumbing, refrigeration, fireplace and sign contractors, peddlers and mobile food vendors. Every business that sells taxable goods or services also needs a South Dakota sales tax license from the Department of Revenue.
A Workforce From Three States
The Census Bureau's Sioux Falls metropolitan area includes Rock County, Minnesota, because of commuting, and many workers also travel in from northwest Iowa. Minnesota and Iowa tax their residents' wages, so Sioux Falls employers often get questions about voluntary withholding. Sioux Falls companies with jobs or staff across the line may owe returns in those states. Our payroll, business tax and personal tax pages cover these situations in detail.
How We Help Sioux Falls Businesses and Households
For companies, the work usually starts with bookkeeping that keeps the city sales, gross receipts and lodging taxes out of revenue, followed by regular sales and use tax returns and payroll for staff who may live in Minnesota or Iowa. At year end we prepare the federal business tax return and the owners' personal returns, then use the results for tax planning around the 2027 rate changes. If filings have slipped, back taxes and late filing explains how we catch up, and Canadians working, studying or investing in the city should read cross-border tax.
The statewide rules behind these services are explained on our South Dakota pages for business tax preparation, personal tax preparation, sales and use tax, bookkeeping, payroll, tax planning, back taxes and late filing and cross-border tax.
Sioux Falls Questions
What is the sales tax rate in Sioux Falls?
Most sales carry 6.2 percent: the 4.2 percent state tax and the 2 percent Sioux Falls municipal tax. Restaurants, bars and admissions add 1 percent, and hotel stays of less than 28 days carry 9.7 percent.
Is Sioux Falls in Minnehaha County or Lincoln County?
Both. About 172,000 residents live in the Minnehaha County part of the city and about 41,600 in the Lincoln County part, according to the Census Bureau's 2025 estimates.
Does BOMCAS work with Sioux Falls clients remotely?
Yes. BOMCAS works with Sioux Falls businesses and households remotely, by secure upload, email and phone, for bookkeeping, payroll, tax returns and planning.
Do I need a Sioux Falls business license?
There is no general city business license, but specific trades and activities need a city licence, and any business selling taxable goods or services needs a South Dakota sales tax license.
Talk to BOMCAS About Your Sioux Falls Taxes
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.
Send us a short note about your Sioux Falls situation and we will come back with next steps. Reach us through the BOMCAS contact page or the form below, call 780-667-5250 or email info@bomcas.ca. You can also return to the South Dakota overview. Nothing on this page is advice for your specific circumstances.