Tax Base and Rate
South Dakota imposes a state sales tax on the gross receipts of all retail sales, including the sale, lease, or rental of tangible personal property or any product transferred electronically, and the sale of services.
Source: South Dakota Department of Revenue — Sales & Use Tax
The state sales and use tax rate is 4.2%.
Source: South Dakota Department of Revenue — Sales & Use Tax
This rate is temporarily reduced from the standard 4.5% rate. The temporary 4.2% rate became effective July 1, 2023, and is scheduled to sunset back to 4.5% on July 1, 2027.
Source: South Dakota Department of Revenue — Sales & Use Tax Laws & Regulations
In addition to the state rate, municipalities may impose local sales and use tax of up to 2% and a 1% municipal gross receipts tax on certain categories.
Source: South Dakota Department of Revenue — Sales & Use Tax
## Use Tax
If a purchaser buys products or services from a vendor who is not licensed to collect South Dakota sales tax, the purchaser may owe use tax. The purchaser or consumer of the goods or services is responsible for reporting and remitting the use tax in the filing period in which they receive the goods or services.
Source: South Dakota Department of Revenue — Sales & Use Tax Laws & Regulations
The state use tax rate is the same as the sales tax rate: 4.2%.
Source: South Dakota Department of Revenue — Sales & Use Tax
## Statutory Authority
Laws associated with the state sales tax are codified in SDCL 10-45. Use tax laws are codified in SDCL 10-46.
Source: South Dakota Department of Revenue — Sales & Use Tax Laws & Regulations
Economic Nexus Threshold for Remote Sellers
South Dakota requires remote sellers without physical presence in the state to collect and remit sales tax if their gross revenue from sales into South Dakota exceeds $100,000 in the current or previous calendar year. Effective July 1, 2023, the state eliminated its prior 200-transaction threshold, simplifying the nexus standard to revenue only. Gross sales include selling, renting, or leasing products or services, including products delivered electronically.
Source: South Dakota Department of Revenue, 2023 Legislative Updates
Registration Requirements
Any business with physical presence in South Dakota is required to obtain a sales tax license. Remote sellers without physical presence must register for a sales tax license if their gross revenue from sales into South Dakota exceeds $100,000 in the previous or current calendar year.
Registration Timeframe (Updated 2025): Effective July 1, 2025, Senate Bill 43 amended the previous requirement. Remote sellers that exceed the $100,000 gross sales threshold must now register within 30 days after crossing the threshold, rather than "immediately" or before making another sale. This update aligns with SDCL § 10-64-2.1 and the revised DOR guidance. Prior to this legislative change, South Dakota required remote sellers to register and begin collecting tax as soon as the threshold was exceeded.
Businesses may register through the Streamlined Sales Tax Registration System or the South Dakota Department of Revenue's online tax application portal.
Source: South Dakota Codified Laws § 10-64-2 (economic nexus) Source: South Dakota Codified Laws § 10-64-2.1 (registration timing, SB 43, effective July 1, 2025) Source: South Dakota Department of Revenue - Sales & Use Tax
Marketplace Facilitator Collection Requirement — Threshold Elimination (2023)
Effective July 1, 2023, South Dakota eliminated the 200-transaction threshold for both remote sellers and marketplace facilitators. Under the current regime, a marketplace provider must collect and remit South Dakota sales tax if it meets, or facilitates sales on behalf of sellers who meet, the $100,000 gross sales threshold (in the current or prior calendar year), as referenced in SDCL § 10-64-2. There is no longer a transaction-count component for marketplace facilitator nexus.
Marketplace Provider Obligation:
- Prior to July 1, 2023, a marketplace provider was required to collect South Dakota sales tax if it met either the gross sales (> $100,000) or transaction-count (200 or more) thresholds in SDCL § 10-64-2.
- Following the statutory amendment (SL 2023, ch 38), the only threshold for remote sellers and marketplace providers is $100,000 in gross revenue from sales into South Dakota. SDCL § 10-65-5 mirrors this by explicitly tying the marketplace provider’s obligation to the remote seller standard set forth in § 10-64-2.
Current Law:
- A marketplace provider is required to collect and remit sales tax on all sales delivered into South Dakota if the provider itself, or the sellers it facilitates, exceed $100,000 in gross sales into the state in the current or previous year.
- There is no longer any transaction-count (number of sales) basis for collection obligation for either remote sellers or marketplace facilitators after July 1, 2023.
Statutory Reference:
- SDCL § 10-64-2 (remote seller economic nexus, revenue-only as of July 1, 2023)
- SDCL § 10-65-5 (marketplace provider standard references same)
Source: South Dakota Codified Laws § 10-64-2 Source: South Dakota Codified Laws § 10-65-5
Resale Exemption
South Dakota exempts sales of tangible personal property and services purchased for resale from sales tax. A business that purchases items to sell, rent, or lease to others in the normal course of business may purchase those items exempt from sales tax by providing the seller with a properly completed exemption certificate listing its South Dakota tax permit number.
Exemption certificate requirements
The purchaser must provide an exemption certificate to the seller. South Dakota uses the Streamlined Sales and Use Tax Certificate of Exemption, which may be issued as either a single-purchase certificate (covering one transaction) or a blanket certificate (covering future purchases of qualifying exempt items). Exemption certificates do not expire unless the information on the certificate changes; however, the Department of Revenue recommends updating exemption certificates every three to four years.
Services purchased for resale
Services may be purchased for resale without sales tax if the purchaser provides an exemption certificate and specific conditions are met. Under S.D. Admin. R. 64:06:01:08.03, a service sale qualifies for the resale exemption when: (1) the service is purchased for or on behalf of a current customer; (2) the purchaser does not use the service in any manner; and (3) the service is delivered or resold to the customer without any alteration or change.
State law permits engineers, architects, and surveyors to purchase services for resale when the purchases are made for a client and used in the performance of a contract, even when the three-prong test is not fully met.
Contractor purchases
South Dakota law treats contractors as the users and consumers of all materials incorporated into a construction project. Businesses should charge sales tax on the sale, rental, or lease of all products to contractors. However, contractors who also operate retail stores and hold a sales tax permit may purchase merchandise for resale by providing an exemption certificate. If a contractor subsequently uses merchandise purchased for resale, the contractor must pay use tax on the cost of the merchandise.
Misuse and conversion to taxable use
If a business legitimately purchases an item for resale but later uses that item, the purchaser is responsible for reporting and paying use tax on the item. A purchaser who intentionally files an exemption certificate with the intent to evade payment of tax and fails to timely report it may be subject to a Class 1 misdemeanor charge under SDCL 10-45-61 and a 50% additional charge on the tax owed, in addition to the tax due.
Source: South Dakota Department of Revenue, Exemption Certificate
Source: S.D. Admin. R. 64:06:01:08.03
Filing Frequency and Due Dates
## Filing Frequency Assignment
The South Dakota Department of Revenue assigns each business a filing frequency upon licensure. Businesses are notified of their assigned filing frequency, which determines whether they file monthly, quarterly, or on another periodic basis. Filing frequencies may include monthly, bimonthly, semiannual, or annual reporting periods.
## Return Due Date
All sales and use tax returns, regardless of filing frequency, are due by the 20th day of the month following the reporting period. For example, a return for the January reporting period is due by February 20th.
When the 20th falls on a Saturday, Sunday, or legal holiday, the due date shifts to the next business day.
## Payment Deadlines
Paper filers: Payment is due at the same time as the return—by the 20th of the following month.
Electronic filers: While returns are due by the 20th, businesses filing electronically may schedule payments through the 25th of the month.
## Timely Filing Discount (Vendor’s Collection Allowance)
South Dakota’s vendor collection allowance—also known as the timely filing discount—historically allowed filers who remitted returns electronically to claim a credit equal to 1.5% of the tax due, with a maximum allowance of $70 per reporting period (SDCL §10-45-27.2). However, this allowance is currently suspended for all taxpayers from July 1, 2025, through June 30, 2028, under 2025 House Bill 1037. During this period, no vendor collection allowance is available, regardless of filing method. Unless extended or changed by further legislation, the discount will resume after June 30, 2028.
## Late Filing Penalties and Interest
Returns filed past the due date are subject to penalty and interest charges. Interest accrues at 1% per month on any past-due tax until paid in full. A minimum interest charge of $5.00 applies for the first month.
## Amended Returns
Businesses may file amended returns if the correction is made within 36 months of the original due date. Businesses with an account in the online Filing & Tax Payment portal may amend returns one time through the portal. Paper filers or those who cannot amend through the online portal must call the Department at 1-800-829-9188 to request an amended return form.
Source: South Dakota Department of Revenue — Sales & Use Tax Source: SDCL § 10-45-27.2 (vendor discount statute) Source: 2025 HB 1037, Ch. 51, § 7 (suspension of SDCL § 10-45-27.2, effective July 1, 2025 - June 30, 2028)
Late Filing Penalty and Interest for Sales & Use Tax Returns
South Dakota imposes both a penalty and interest charge when a sales or use tax return is filed late. The late filing penalty is governed by SDCL § 10-59-6, incorporated by reference for sales tax administration under SDCL § 10-45-27.3.
Penalty for Late Filing: If a return is not filed within 30 days after the due date for the reporting period, a penalty of 10% of the tax due or $10 (whichever is greater) is imposed. The minimum $10 penalty applies even if no tax is due or reported. This minimum is assessed for each return period in which a late filing occurs, not as a one-time penalty. This means that failure to timely file a return may result in penalty liability regardless of whether any sales occurred in the period.
Interest on Late Tax Payments: In addition to penalty, interest accrues at 1% per month on the amount of tax due, with a minimum interest charge of $5.00 for the first month of delinquency. If the failure to file or pay is found to be due to an intent to evade tax, a higher interest rate of 1.5% per month applies in place of the standard 1% rate for that period.
Authority Structure:
- SDCL § 10-45-27.3 directs that where a return or payment is not filed on time, "the penalty and interest provided in § 10-59-6 shall be added."
- SDCL § 10-59-6 governs all revenue law penalty imposition for late returns, and sets the 10% or $10 minimum standard, and the 1% (or 1.5%) interest.
Filers are urged to submit all required returns on or before the due date even if no sales occurred or no tax is due to prevent the automatic statutory penalty and minimum interest.
Source: SDCL § 10-45-27.3 Source: SDCL § 10-59-6
Not yet human confirmed.
De Minimis and Minimum Dollar Exemptions for Sales Tax Collection Obligation
South Dakota law does not provide for a de minimis or minimum dollar threshold exemption for sales tax collection by businesses with physical presence in the state. Any business with physical presence—such as owning or leasing property, maintaining inventory, or employing workers within South Dakota—must obtain a sales tax license and remit tax on all taxable sales, regardless of annual sales volume. There is no statutory or regulatory exemption for small sellers with very low sales (e.g., $500/year) who otherwise meet nexus criteria.
For remote sellers (out-of-state businesses with no physical presence), South Dakota applies a gross revenue threshold for economic nexus. A remote seller is required to register, collect, and remit South Dakota sales tax only if gross revenue from sales delivered into the state exceeds $100,000 in the current or previous calendar year. There is no longer a transaction-count threshold—only the revenue threshold applies as of July 1, 2023. Remote sellers below this amount are not required to collect or remit South Dakota sales tax.
To recap:
- Businesses with physical presence: No exemption for low-volume sales. Collection and remittance is required on the first dollar of taxable sales once nexus is established.
- Remote sellers: Required to collect only if gross sales exceed $100,000 per year into South Dakota; otherwise, no collection obligation.
Source: SDCL § 10-64-2 (remote seller economic nexus) Source: South Dakota Department of Revenue – Business FAQ
Not yet human confirmed.
Does South Dakota’s Economic Nexus Threshold Include Exempt Sales for Remote Sellers?
South Dakota’s economic nexus threshold for remote sellers is based on gross revenue from sales of tangible personal property, products transferred electronically, or services delivered into South Dakota, regardless of whether those sales are taxable or exempt.
Calculation Rules:
- The statutory $100,000 threshold is measured by total gross sales into South Dakota in the current or previous calendar year.
- "Gross sales" for threshold purposes includes all sales into South Dakota — not just taxable sales. This means that exempt sales, such as sales for resale, or other sales that are not subject to South Dakota sales tax, are nonetheless included in the threshold calculation.
- Official DOR guidance ("How Remote Sellers are Determined") confirms that "gross sales includes all sales, taxable and non-taxable, delivered into South Dakota."
Why the DOR takes this position:
- SDCL § 10-64-2 establishes economic nexus on the basis of gross revenue from sales into South Dakota, without limiting the calculation to taxable sales only. The statute references “gross revenue from sales” rather than “taxable sales” or “sales subject to tax.”
- The Department of Revenue’s published FAQs and reference guides reinforce that the calculation is all-inclusive for delivered sales, regardless of exemption status.
Remote Seller Required Steps:
- Remote sellers must track all sales into South Dakota — including non-taxable, exempt (resale), or otherwise excluded transactions — for threshold purposes. Once the $100,000 gross sales mark is crossed during the calendar year, the seller must register and begin collecting and remitting South Dakota sales tax on all otherwise taxable sales.
- Failure to include exempt sales (such as sales for resale) in the threshold calculation could result in noncompliance or late registration.
Summary Table:
- Taxable sales: Included in $100,000 calculation
- Exempt sales (e.g., sales for resale): Included in $100,000 calculation
- Services/products delivered electronically: Included
Source: South Dakota Codified Laws § 10-64-2 Source: South Dakota Department of Revenue – How Remote Sellers are Determined
Not yet human confirmed.
Marketplace Sales and South Dakota Seller Nexus Thresholds
South Dakota statutes establish clear economic nexus and collection standards for both remote sellers and marketplace facilitators, but there is a notable gap in official guidance regarding whether marketplace-facilitated sales count toward an individual seller’s own $100,000 nexus threshold.
Statutory Rules:
- Under SDCL § 10-64-2, remote sellers must register and collect South Dakota sales tax if their gross sales into the state exceed $100,000 during the current or prior calendar year. This includes both taxable and exempt sales and does not require a minimum number of transactions.
- A marketplace provider/facilitator must register, collect, and remit tax on all facilitated sales if the combined gross sales it facilitates into the state meet the $100,000 threshold, under SDCL § 10-65-5.
Marketplace-Facilitated Sales and the Seller’s Nexus Calculation:
- South Dakota law makes the marketplace facilitator responsible for collecting and remitting tax on marketplace-facilitated sales.
- The statutes do not explicitly state whether those same sales must be included in an individual marketplace seller’s own $100,000 nexus calculation. Official South Dakota DOR guidance available to the public does not directly answer this question or specify an “affidavit” or attestation filing option for sellers who make only marketplace-facilitated sales.
Status as of 2024-06:
- Based on the text of SDCL §§ 10-64-2 and 10-65-5 and a review of DOR-published remote seller guidance and FAQ pages, the Department has not issued a primary-source publication affirming or denying that facilitated sales count for individual seller nexus, nor describing any affidavit procedure for marketplace-only sellers.
- As a result, it cannot be confirmed from primary authority that a seller must include (or may exclude) marketplace-facilitated sales for purposes of measuring their own independent nexus threshold, or that there is a formal affidavit process for exclusive marketplace sellers.
Source: South Dakota Codified Laws § 10-64-2 Source: South Dakota Codified Laws § 10-65-5 Unable to confirm as of 2024-06-17.
Local Sales and Use Tax Rates
South Dakota municipalities are authorized to impose their own local sales and use taxes in addition to the statewide rate. Practitioners should be alert to the following local add-ons, requirements, and agency publications for accurate compliance:
Types of Local Taxes:
- Municipal General Sales/Use Tax: Cities in South Dakota may impose a general sales and use tax (traditionally 1%, but may be up to 2% in some jurisdictions). This municipal tax applies broadly to sales of tangible personal property and services that are taxed at the state level.
- Municipal Gross Receipts Tax (MGRT): Some municipalities may also impose a 1% gross receipts tax, but this applies only to specific business types: visitor-related businesses, including hotels/motels, restaurants, alcoholic beverage establishments, and certain amusement businesses.
Rate Imposition and Changes:
- Municipalities may adopt, change, or repeal local tax rates only on statutory change dates: January 1 or July 1 of each year. These effective dates are strictly followed for the updating of local schedules and compliance systems.
- The combined rate at any address is the sum of the current statewide rate (4.2% as of July 1, 2023, reverting to 4.5% on July 1, 2027 unless otherwise amended) PLUS the applicable municipal sales/use tax rate (typically 1–2%), and—if the business activity is in scope for MGRT—the 1% municipal gross receipts tax.
Finding Official Local Rates:
- The South Dakota Department of Revenue maintains an official Municipal Tax Guide and a current Municipal Tax Rate Schedule (updated as of each effective date), both of which are the only authoritative sources for practitioners.
- The online Municipal Tax Rate Schedule is arranged by city name, showing both the municipal sales/use rate and municipal gross receipts tax status for each locality. It also includes a historical change log and upcoming scheduled rate changes.
- Practitioners should use the Municipal Tax Guide to review rules regarding tax base coverage, exemptions/exclusions, and special local tax rules. For every new address or client location, verify the city’s exact rate and MGRT status in the latest available schedule before making tax calculation or collection decisions.
Key compliance points:
- Local taxes are imposed and administered by the Department of Revenue, not by the municipalities themselves—returns for both state and local are filed and remitted together through the state’s electronic filing system.
- The municipal tax base generally mirrors the state sales/use tax base, but MGRT applies only to designated categories as listed in the Guide.
Authoritative sources: