Sales tax
South Dakota Sales Tax in 2026: 4.2% State Rate, City Taxes, Services and Filing
South Dakota sales tax 2026: the 4.2% state rate and its 2027 sunset, city taxes, Sioux Falls 6.2% and 7.2% on meals, the free license, Wayfair and examples.
Edited by Sumeet YadavFounder & editor, MSMETOOLS · fact-checked against official sources
Contents (10)
- 1. How the South Dakota rate is built
- 2. The 4.2% rate and the 2027 sunset
- 3. Sioux Falls, Rapid City and other city rates
- 4. What's taxable: groceries, services and exemptions
- 5. Worked examples in dollars
- 6. Getting a South Dakota sales tax license
- 7. Filing returns and paying
- 8. Wayfair, remote sellers and marketplaces
- 9. Common mistakes and how to fix them
- 10. What to do next
South Dakota has no state income tax, so sales tax does the heavy lifting, and it reaches further than in most states: it applies to services as well as goods, and to groceries at the full rate. The state rate has been 4.2% since July 1, 2023, but that cut is scheduled to expire in 2027. This guide is for retailers, restaurants, contractors, service businesses and online sellers who need the 2026 rules: state and city rates, what Sioux Falls and Rapid City charge, the extra taxes on meals, hotels and attractions, what's taxable, how to get a license and file, and how the Wayfair case still shapes remote selling. We checked each figure with the South Dakota Department of Revenue (DOR) in October 2026.
Quick answer
South Dakota's state sales tax rate is 4.2% through June 30, 2027, when it's scheduled to return to 4.5%. Cities add 1% to 2%, so Sioux Falls and Rapid City total 6.2%. Meals, alcohol, lodging and admissions add a 1% city gross receipts tax, and lodging and attractions add a 1.5% tourism tax.
Services are taxable unless specifically exempt
Groceries are taxed at the full rate; SNAP and WIC purchases are exempt
The sales tax license is free
Returns are due the 20th; electronic payments by the 25th
Remote sellers register after $100,000 of sales into the state
How the South Dakota rate is built
South Dakota's sales tax applies to the gross receipts of all retail sales, including the sale, lease or rental of tangible goods, products transferred electronically, and services. The state rate is 4.2%. A use tax at the same rate applies when you buy something taxable without paying South Dakota tax, such as equipment from an out-of-state website that didn't collect.
Cities layer their own taxes on top. A municipality may levy a general sales and use tax of 1% to 2%; most larger cities, including Sioux Falls, Rapid City, Aberdeen, Brookings, Watertown, Mitchell, Pierre, Spearfish and Yankton, charge the full 2%. Many of them also levy a municipal gross receipts tax (MGRT) of 1% on a narrower base: alcoholic beverages, eating establishments, lodging, and admissions to places of amusement and athletic and cultural events. Counties in South Dakota don't levy a general sales tax, so there's no county layer to track, and areas outside city limits pay the state rate alone.
Two state-level add-ons apply to particular businesses. The tourism tax of 1.5% applies year-round to hotels and other lodging, campgrounds, motor vehicle rentals, recreational equipment rentals, recreational services, spectator events and visitor attractions, and to "visitor-intensive businesses" in June, July, August and September. Contractors pay a separate contractor's excise tax of 2% on the gross receipts of construction and realty improvement projects, instead of charging sales tax on the work.
South Dakota sales tax at a glance (2026)
4.2%
State sales tax rate
Until June 30, 2027
6.2%
Sioux Falls and Rapid City
7.2%
Sioux Falls restaurant meals
1.5%
Tourism tax on lodging and attractions
free
Sales tax license
The 4.2% rate and the 2027 sunset
For years the state rate was 4.5%. House Bill 1137, passed in the 2023 session, lowered it to 4.2% from July 1, 2023. The reduction covered the state sales and use tax and the related state taxes set at the same rate, including tax collected in Indian Country under tribal collection agreements. City tax rates didn't change.
The cut came with a condition. DOR notes that HB 1137 includes a sunset clause that repeals the reduction on June 30, 2027. Unless the Legislature acts, the rate goes back to 4.5%. Lawmakers have tried several times to remove the sunset. In 2024, the House passed House Bill 1001 to make the lower rate permanent, but a Senate committee tabled it. In February 2026, Senate Bill 195, which would have done the same, stalled on a 17-17 vote in the Senate, with opponents arguing the decision could wait for the 2027 session.
For businesses, the practical point is to plan for a possible rate change on July 1, 2027. DOR's guidance from the 2023 change shows how it handles a switch: accrual-basis sellers use the rate in effect when the customer is billed, cash-basis sellers the rate in effect when payment is received, and service providers with billing periods straddling the date apply the new rate to bills issued on or after it. Watch DOR's announcements after the 2027 session.
Sioux Falls, Rapid City and other city rates
Sioux Falls, the state's largest city, charges a 2% general sales tax (code 330-2) and a 1% MGRT (code 330-1). Most purchases there total 6.2%. Restaurant meals, drinks at a bar, movie and concert tickets and other admissions total 7.2%. Sioux Falls also has its own lodging tax of 1% (code 800-1), so a hotel room there carries the state rate, the city's 2%, the MGRT, the tourism tax and the lodging tax: 9.7% in all.
Rapid City has the same structure, 2% general (298-2) plus 1% MGRT (298-1), for 6.2% on most sales and 7.2% on meals and admissions. Hotels in Rapid City add the 1.5% tourism tax, for 8.7% on room charges. Aberdeen, Brookings, Pierre, Spearfish, Deadwood, Watertown, Mitchell and Yankton all charge 2% plus the 1% MGRT under DOR's July–December 2026 rate chart.
Some smaller towns charge less. DOR's chart lists towns at 1% or 1.5% general rates, and some without an MGRT. Rates can change on January 1 or July 1, and DOR publishes a new municipal tax guide and rate chart for each half-year, so download the current version every January and July.
| Purchase in Sioux Falls | State | City | MGRT | Tourism | Lodging | Total |
|---|---|---|---|---|---|---|
| Clothing, hardware, groceries | 4.2% | 2% | — | — | — | 6.2% |
| Restaurant meal or bar tab | 4.2% | 2% | 1% | — | — | 7.2% |
| Movie ticket | 4.2% | 2% | 1% | — | — | 7.2% |
| Concert or sporting event ticket | 4.2% | 2% | 1% | 1.5% | — | 8.7% |
| Hotel room | 4.2% | 2% | 1% | 1.5% | 1% | 9.7% |
| Haircut or car repair | 4.2% | 2% | — | — | — | 6.2% |
The location rule decides which city's tax applies. DOR's rule is that sales tax applies where the customer receives the product or service. Goods picked up at your store use your store's location; goods you deliver, or ship by a carrier the customer hires, use the delivery address. Services performed on a person, such as haircuts or massages, are taxed where they're performed. Repairs are taxed where the repaired item is delivered back to the customer. A Sioux Falls appliance store delivering to a farmhouse outside city limits charges only 4.2%; delivering to Brandon it charges Brandon's rate.
What's taxable: groceries, services and exemptions
South Dakota is one of a handful of states that taxes groceries at the full rate. A bag of flour, a gallon of milk and a box of cereal pay the same 6.2% in Sioux Falls as a television. The exceptions are purchases made with SNAP benefits or WIC, which are exempt. In November 2024, voters rejected Initiated Measure 28, which would have repealed the tax on food, by a wide margin, so the grocery tax stays in 2026.
Services are taxable by default. DOR's guide says sales tax applies to the sale of services unless a specific exemption applies. That means auto repair, appliance repair, haircuts and salon work, cleaning, lawn care, pet grooming, photography, computer services and most professional services carry tax. Exempt categories include health services, educational services, social services, agricultural and forestry services, certain financial and brokerage services, travel agent services, services of certain membership organizations, and construction services, which pay the contractor's excise tax instead.
Exempt buyers include South Dakota state and local governments, municipal and volunteer fire and ambulance departments, public schools, nonprofit hospitals, relief agencies and religious and private schools, each with documentation. A buyer purchasing for resale gives you an exemption certificate. If a purchase is exempt, keep the certificate on file; without it, the sale is taxable and the tax is yours.
Worked examples in dollars
A Sioux Falls store sale. A customer buys a $1,200 refrigerator and takes it home. At 6.2%, tax is $74.40, for $1,274.40. If the store delivers it to a farm outside any city, only the 4.2% state rate applies: $50.40.
A restaurant bill. A Rapid City restaurant serves a $90 dinner with drinks. State, city and MGRT together come to 7.2%, or $6.48.
A hotel stay. Two nights at $150 a night in Sioux Falls is $300 of room charges. At 9.7%, the hotel collects $29.10, and reports it on its return in parts: state tax, city tax under 330-2, MGRT under 330-1, tourism tax under 700-1 and lodging tax under 800-1.
A service business. A Brookings cleaning company bills a dental office $800 a month. Cleaning is a taxable service, so at 6.2% the company charges $49.60 a month. Many states don't tax cleaning at all, which is why businesses moving to South Dakota often miss this.
A contractor. A Watertown contractor builds a $60,000 garage. It doesn't charge sales tax on the job; it owes the 2% contractor's excise tax on its gross receipts, $1,200, and it pays sales or use tax on the materials it buys.
Try it — Sioux Falls sales tax on $1,000
Getting a South Dakota sales tax license
Any business with a physical presence in South Dakota that makes taxable sales needs a sales tax license before it starts selling. Apply with DOR's online Tax License Application, which covers sales, use, contractor's excise, manufacturer and wholesaler licenses. The license is free: DOR's licensing tax fact says there's no fee for a sales or contractor's excise tax license.
When DOR issues the license, it tells you how often to file. Filing periods include monthly, bimonthly and semiannual, and DOR sets yours based on your business. You file and pay through EPath, DOR's online filing and payment system.
Licenses aren't transferable. A change of ownership or legal organization, such as a sole proprietor forming a corporation, two partners splitting, or a merger, requires a new license, and the old license must be cancelled within 15 days with a final return filed and all tax paid. A change of officers or members of an existing corporation or LLC doesn't require a new license, but address changes must be reported.
Before your first South Dakota sale
0/6Filing returns and paying
Every licensed business files a return for each period, even with no sales. On the return, report state tax in the main section and each city tax, MGRT, tourism tax and lodging tax in the City and Special Jurisdiction section under its own code. DOR asks you not to combine taxes or report everything under one code.
Due dates depend on how you file. Electronic returns are due on the 20th of the month after the period, and electronic payments by the 25th. Paper returns and payments must arrive by the 20th. A due date on a weekend or legal holiday moves to the next business day.
If a return isn't received within 30 days after the month it was due, DOR charges a penalty of 10% (minimum $10), and the $10 minimum applies even if no tax was due. Interest of 1% a month runs on unpaid tax, with a $5 minimum for the first month. Amended returns can be filed through EPath.
South Dakota due dates (2026)
| How you file | Return due | Payment due |
|---|---|---|
Electronically (EPath) | 20th of the next month | the 25th of the next month |
Paper | 20th of the next month | 20th, with the return |
Late (30+ days after the due month) | Penalty 10% (minimum $10) | Interest 1% a month |
Electronically (EPath)
- Return due
20th of the next month
- Payment due
the 25th of the next month
Paper
- Return due
20th of the next month
- Payment due
20th, with the return
Late (30+ days after the due month)
- Return due
Penalty 10% (minimum $10)
- Payment due
Interest 1% a month
If you collect more tax than was due, for example by charging a city rate where the sale was outside city limits, the extra must be refunded to the customer or sent to DOR. South Dakota calls this undue enrichment, and you can't keep it.
Wayfair, remote sellers and marketplaces
South Dakota is where modern online sales tax began. In 2016 the Legislature passed a law requiring out-of-state sellers to collect sales tax if they had more than $100,000 of sales into the state or 200 or more separate transactions in a year, knowing it conflicted with the Supreme Court's 1992 Quill decision requiring physical presence. The state sued Wayfair, Overstock.com and Newegg to test it. On June 21, 2018, in South Dakota v. Wayfair, Inc., the Court ruled 5-4 for the state, overruling Quill and opening the door for every state to tax remote sales.
The thresholds have changed since. From July 1, 2023, South Dakota dropped the transaction test. Today a business with no physical presence must get a license and collect tax only if its gross revenue from sales into South Dakota exceeded $100,000 in the previous or current calendar year. Marketplace providers have collected on all sales they facilitate since March 1, 2019, under the same threshold. Remote sellers charge state tax plus the city tax for each delivery address, using DOR's rate lookup or its rates and boundary database.
South Dakota is a member of the Streamlined Sales and Use Tax Agreement, which lets remote sellers register in several member states at once and use certified service providers to calculate and file.
Common mistakes and how to fix them
Charging the old 4.5% rate. Some older systems still have it. Charge 4.2% until DOR announces a change, and refund or remit any excess.
Not taxing services. Unless your service is on the exempt list, charge tax. Under-collected tax becomes your bill in an audit; fix your invoicing and file amended returns.
Forgetting MGRT and tourism tax. Restaurants, bars, hotels, campgrounds and attractions need the extra 1% and, where it applies, the 1.5% tourism tax, each reported under its own code.
Using the store's rate for deliveries. Delivered goods take the rate at the delivery address. Charging city tax on deliveries outside city limits is over-collection.
Treating groceries as exempt. South Dakota taxes food at the full rate. Only SNAP and WIC tenders are exempt.
Continuing an old license after a change of ownership. A new owner or new entity needs a new license; cancel the old one within 15 days.
Official links
- DOR — Sales & Use TaxRates, licensing, remote sellers
- Sales and Use Tax Guide (PDF, July 2026)Rates, exemptions, due dates
- Municipal Tax Guide (PDF, July 2026)City sales and gross receipts tax rates
- 2023 Legislative Updates4.2% rate and 2027 sunset
- Tourism Tax fact (PDF)What the 1.5% applies to
- DOR online servicesTax License Application, EPath, rate lookup
What to do next
Apply for your free license, look up the city rate and MGRT for every place you sell or deliver, and check whether your services are taxable. If you run a restaurant, hotel or attraction, add the MGRT and tourism tax codes to your system, and put the 20th and 25th on your calendar. Use the sales tax calculator to check a Sioux Falls receipt at 6.2%, and our guide to calculating sales tax for tax-included prices. Selling across the border? Compare our Nebraska, Iowa and Minnesota guides, and read about economic nexus and use tax.
This is general information, not legal or tax advice — confirm on the official source or with a professional.
Frequently asked questions
The state rate is 4.2%, cut from 4.5% on July 1, 2023. Most cities add a general sales tax of 1% to 2%, so the usual total in towns is 5.2% to 6.2%. Meals, alcohol, lodging and admissions can carry another 1% city gross receipts tax, and lodging and attractions also carry the 1.5% state tourism tax.
It's scheduled to. House Bill 1137 of 2023 lowered the rate to 4.2% but included a sunset that repeals the cut on June 30, 2027, which would restore 4.5%. Bills to make the lower rate permanent passed the House in 2024 but died in the Senate, and Senate Bill 195 stalled on a 17-17 vote in February 2026. The 2027 session will decide.
Sioux Falls charges 6.2% on most purchases: 4.2% state plus the city's 2%. Restaurant meals, alcohol and admissions add the city's 1% gross receipts tax, for 7.2%. Hotel rooms also pay the 1.5% tourism tax and the 1% Sioux Falls lodging tax, for 9.7% in total.
Yes to both. Groceries are taxed at the full state and city rate; only purchases made with SNAP benefits or WIC are exempt, and voters rejected a grocery tax repeal in November 2024. Services are taxable unless specifically exempt, so repairs, haircuts, cleaning, landscaping and most professional services are taxed. Health, education, social, agricultural and financial services are among the exemptions.
It's free. The Department of Revenue says there's no fee for a sales or contractor's excise tax license. You apply with the online Tax License Application, and the Department tells you your filing frequency when it issues the license. A license can't be transferred, so a new owner or new entity needs its own.
On June 21, 2018, the U.S. Supreme Court ruled 5-4 for South Dakota, overruling the Quill physical-presence rule and allowing states to require remote sellers to collect sales tax. South Dakota's law then required collection at $100,000 of sales or 200 transactions. Since July 1, 2023, only the dollar test remains: remote sellers must register once sales into the state exceed $100,000.
Sources & verification
Figures on this page were checked against the sources below when it was last reviewed on 11 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify
- 1.Sales & Use Tax — South Dakota Department of Revenue · accessed 11 October 2026
- 2.2023 Legislative Updates — South Dakota Department of Revenue · accessed 11 October 2026
- 3.Sales and Use Tax Guide (July 2026) — South Dakota Department of Revenue · accessed 11 October 2026
- 4.Municipal Tax Guide (July 2026) and Municipal Tax Rate Chart (July–December 2026) — South Dakota Department of Revenue · accessed 11 October 2026
- 5.Tax Fact: Tourism Tax (April 2025) — South Dakota Department of Revenue · accessed 11 October 2026
- 6.Tax Fact: License Requirements for Sales, Use & Contractor's Excise Tax — South Dakota Department of Revenue · accessed 11 October 2026
- 7.Docket No. 17-494, South Dakota v. Wayfair, Inc. — Supreme Court of the United States · accessed 11 October 2026
- 8.Effort to keep South Dakota's reduced sales tax rate permanent stalls — KOTA Territory News · accessed 11 October 2026
- 9.South Dakota voters reject grocery tax repeal — South Dakota Public Broadcasting · accessed 11 October 2026
MSMETOOLS is an independent platform and is not affiliated with any government agency, ministry or department.
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