South Dakota state income tax
South Dakota has no state individual income tax. Wages, self-employment income, capital gains, and retirement withdrawals are not taxed by South Dakota at the state level (federal tax still applies). The state funds itself through sales tax and property tax instead.
Does South Dakota have a state income tax?
No. South Dakota is one of the states with no individual income tax, so there is no state tax on your wages or salary. South Dakota does not impose state individual income tax
| Item | South Dakota |
|---|---|
| State income tax | None |
| Capital gains tax | None (no income tax) |
| State sales tax | 4.2% (plus local) |
| Avg. property tax rate | 1.16% of home value |
| Estate / inheritance tax | None |
How does South Dakota tax capital gains?
South Dakota does not tax capital gains, because it has no state income tax. You still owe federal capital gains tax. See how capital gains tax works in 2026.
What about retirement income in South Dakota?
Because South Dakota has no income tax, Social Security, pensions, and 401(k)/IRA withdrawals are all untaxed at the state level. See South Dakota retirement taxes for the full picture.
Sources
- South Dakota income tax: South Dakota Department of Revenue / Taxation.
- South Dakota capital gains treatment: South Dakota tax authority.
- South Dakota sales tax: South Dakota Department of Revenue.