South Dakota Paycheck Calculator (2026)

South Dakota levies no personal income tax and no corporate income tax, a combination shared only with Wyoming and Nevada. There is no state paid-leave or disability deduction, and unemployment insurance is employer-funded, so a South Dakota paycheck loses only federal income tax, Social Security and Medicare. The state has held this position for decades and it is a large part of why Sioux Falls became a national hub for bank card operations and trust companies.

The money comes from a 4.2% state sales tax (cut from 4.5% in 2023, with the lower rate currently scheduled through mid-2027), which cities top up by 1% to 2%, so Sioux Falls and Rapid City shoppers pay about 6.2%. South Dakota taxes groceries at the full rate, one of a handful of states that still do. Property taxes are moderate and fund most of local government and schools. Banks pay a franchise tax on net income in place of a corporate tax.

With nothing to reciprocate, South Dakota has no agreements with neighbors, and the traffic runs one way: Iowa, Minnesota and Nebraska residents who work in Sioux Falls or Sioux City-area South Dakota employers owe their home state's income tax on those wages, while South Dakota residents who work across the border in Minnesota or Iowa owe tax there and get no credit at home because there is nothing to credit against.