South Dakota Income Tax Calculator 2026

Living in a state with no income tax: what you still owe

South Dakota residents do not file a state income tax return. Wages, interest, dividends, capital gains, pensions and Social Security are all free of state income tax. Your annual income tax bill is the federal Form 1040 alone, due April 15, 2027 for the 2026 tax year.

That does not mean low taxes across the board. South Dakota relies on sales tax: the state rate is 4.2% and cities add about 1.91% on average, for a typical combined rate of 6.11%. Groceries are taxed at the full rate, which matters more for households that spend a large share of income on food.

Federal tax examples for South Dakota residents in 2026

Since federal tax is the only income tax, the figures below are your complete income tax bill. They assume wages only and the standard deduction.

Deducting sales tax instead of income tax

If you itemize deductions on your federal return, you can choose to deduct state and local general sales taxes instead of state income taxes. With no income tax to deduct, South Dakota residents who itemize should almost always take the sales tax option. You can use actual receipts or the IRS optional sales tax tables, plus sales tax on major purchases.

State and local taxes, including property tax, are deductible up to a combined $40,400 for 2026, reduced for very high incomes but not below $10,000. Most people still take the $32,200 joint standard deduction, so this only helps if your mortgage interest, charitable gifts and taxes add up to more.

Retirees and Social Security

South Dakota does not tax retirement income of any kind. The federal government can still tax up to 85% of Social Security benefits: some benefits become taxable when half your benefits plus other income exceed $25,000 (single) or $32,000 (married filing jointly), and up to 85% once that total passes $34,000 or $44,000.

Retirees aged 65 or older can also claim the federal senior deduction of up to $6,000 per person, which phases out above $75,000 of income ($150,000 joint).

Federal credits are the only credits

South Dakota has no state child tax credit or earned income credit, because there is no state income tax for them to reduce. Families rely on the federal credits instead. For 2026, the child tax credit is $2,200 per child under 17, with up to $1,700 refundable, and $500 for other dependents.

The federal earned income tax credit is worth up to $4,427 with one child, $7,316 with two and $8,231 with three or more. For a single parent with two children, it phases out completely at $58,629 of income. Lower-income South Dakota workers should file a federal return even if no tax was withheld, because both credits can be paid as a refund.

Moving to or from South Dakota

If you move into South Dakota during the year, you still file a part-year resident return in the state you left, reporting income earned while you lived there. If you live in South Dakota but work in a state with an income tax, that state can tax the wages you earn there and you file a nonresident return with it. Keep records of your move date, new address and where you physically worked.