Personal Returns for a Growing Sioux Falls
Sioux Falls has grown fast. The Census Bureau estimates the population at about 213,700 in 2025, up from about 192,700 in 2020. Of those residents, roughly 172,000 live in the Minnehaha County part of the city and about 41,600 in the Lincoln County part. Many are new to the state, many cross a state line for work, and almost all of them file only a federal income tax return, because South Dakota has no individual income tax. BOMCAS prepares federal returns for Sioux Falls households, along with any Minnesota or Iowa returns their work requires.
Why South Dakotans file only a federal return, and what changes when you move in or out, is covered in South Dakota personal tax preparation. This page deals with the Sioux Falls side.
Hospital, Bank and Plant Employees
Health care is the city's largest employer group, with Sanford Health and Avera Health each employing thousands. Their nurses, technicians and physicians often have shift differentials, overtime, on-call pay, health savings accounts and retirement plans with several parts. Employees at Citi, Wells Fargo, First PREMIER and other financial firms often have stock awards, deferred compensation and bonuses. Smithfield Foods and other processors employ many people paid by the hour with regular overtime. For these workers we check:
- The federal overtime deduction, available from 2025 through 2028, for the premium part of qualified overtime, up to $12,500 ($25,000 for joint filers), with phase-outs above $150,000 of modified adjusted gross income ($300,000 joint).
- Health savings account contributions through payroll and directly.
- Stock awards and employee stock purchase plans, where the cost basis shown on brokerage forms is often incomplete.
- Withholding that fits the household, especially for two-income couples.
Restaurant and Hospitality Workers
Downtown Sioux Falls, the Phillips Avenue corridor and the dining and hotel areas near the Empire Mall and the Denny Sanford PREMIER Center employ many tipped workers. From 2025 through 2028, workers in occupations the IRS lists as customarily receiving tips can deduct up to $25,000 of qualified tips. The same income phase-outs apply. We compare the tips shown on the W-2 with the worker's own records.
Commuting Across the Minnesota and Iowa Lines
Sioux Falls draws workers from southwest Minnesota and northwest Iowa, and some Sioux Falls residents work across those lines. The filing rules depend on which way the commute runs.
Minnesota or Iowa residents working in Sioux Falls
Minnesota taxes its residents on all their income, including wages earned in Sioux Falls. A South Dakota employer is not required to withhold Minnesota tax. An employee can ask for voluntary withholding, but the employer can decline. Without withholding, a Minnesota resident who expects to owe $500 or more generally needs to make estimated payments. Iowa also taxes its residents on all their income, at a flat 3.8 percent for 2026, so Iowa residents working in Sioux Falls should check whether Iowa tax is being withheld or plan for estimates.
Sioux Falls residents working in Minnesota or Iowa
Wages earned while working in Minnesota or Iowa are generally taxable there, even though you live in South Dakota. Those workers file a nonresident return in that state. We prepare it with the federal return and check the withholding on each W-2.
New Arrivals From Other States
Many people moving to Sioux Falls come from states that tax income. In the year of the move, you usually file a part-year return in the former state covering income up to the move date. Large items near the move, such as selling a house, a bonus, stock option exercises or a retirement distribution, can be taxed by the former state depending on timing. A South Dakota driver license, vehicle registration, voter registration and a lease or home purchase in Sioux Falls all help show the move is complete. We prepare the part-year return, the federal return and a short checklist of records to keep.
Retirees
South Dakota does not tax pensions, Social Security, IRA withdrawals or investment income. For Sioux Falls retirees, the federal return is usually the only income tax return. We review required minimum distributions, the taxable part of Social Security, qualified charitable distributions from IRAs, and the extra $6,000 federal deduction for taxpayers 65 and older from 2025 through 2028, which phases out above $75,000 of modified adjusted gross income ($150,000 joint).
Side Businesses and Rentals
A growing city brings side income: rental units, short-term rentals, rideshare and delivery work, and small online shops. These need Schedule C or Schedule E, self-employment tax where it applies, and quarterly estimates. Short-term rentals in Sioux Falls also collect the lodging taxes described on our Sioux Falls sales and use tax page.
How It Works
You upload your documents securely, we review last year's return and send focused questions, then we prepare the federal and any other-state returns and go over them with you before e-filing.
Sioux Falls Personal Tax Preparation Questions
Do Sioux Falls residents file a state income tax return?
Not for South Dakota, which has no individual income tax. Sioux Falls residents file a federal return, plus a nonresident return in Minnesota, Iowa or another state if they earned wages or other income there.
I live in Minnesota and work in Sioux Falls. Who taxes my wages?
Minnesota taxes its residents on all their income, including Sioux Falls wages. Your South Dakota employer is not required to withhold Minnesota tax, so you may need voluntary withholding or estimated payments.
I live in Iowa and work in Sioux Falls. What should I plan for?
Iowa taxes residents on all income at a flat 3.8 percent for 2026. Check whether Iowa tax is being withheld from your Sioux Falls paycheck, and if not, plan for estimated payments.
Can hospital workers deduct overtime on their federal return?
From 2025 through 2028, eligible workers can deduct the premium part of qualified overtime, up to $12,500 ($25,000 joint), with phase-outs above $150,000 of modified AGI ($300,000 joint).
Talk to BOMCAS About Personal Tax Preparation in Sioux Falls
If you own a Sioux Falls business, the return links to our business tax preparation and, when the records need work, bookkeeping. Families who pay a nanny or caregiver can hand us that payroll. Newcomers from Minnesota or Iowa often want tax planning for the move, anyone with missed years can start with back taxes and late filing, and Canadians at Sanford, Avera or the universities should read cross-border tax. A side business that sells taxable goods or services also needs to think about sales tax in Sioux Falls. The statewide rules behind the rest of our work are explained on our South Dakota pages for business tax preparation, sales and use tax, bookkeeping, payroll, tax planning, back taxes and late filing and cross-border tax, and the South Dakota overview brings them together.
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 Sioux Falls overview. Nothing on this page is advice for your specific circumstances.