South Dakota State Income Tax Withholding
Last Updated: January 2026
Overview
South Dakota has no state income tax. The state repealed its income tax in 1943 and has remained income tax-free since then.
Tax Status
| Tax Type | Status |
|---|---|
| State Income Tax | None |
| Withholding Required | No |
No Withholding Required
Employers with employees working in South Dakota:
- Do NOT withhold state income tax
- Do NOT file state withholding returns
- Do NOT need state withholding accounts
Special Considerations
- Federal Withholding: Federal income tax withholding still applies to all employees
- FICA Taxes: Social Security and Medicare taxes still apply
- Unemployment Insurance: South Dakota requires employer unemployment insurance contributions
- No Payroll Income Tax: South Dakota is one of nine states with no individual income tax
States With No Income Tax
South Dakota joins these states in having no individual income tax:
- Alaska
- Florida
- Nevada
- New Hampshire (interest/dividends only until 2025, then fully tax-free)
- South Dakota
- Tennessee
- Texas
- Washington (no wage tax; has capital gains tax)
- Wyoming
Multi-State Employees
If employees work in multiple states:
- No South Dakota withholding is required for work performed in South Dakota
- Employees may still owe income tax to their state of residence
- Follow the resident state's withholding rules for days worked in South Dakota