What is the sales tax rate in South Dakota?
In South Dakota, the state sales tax rate is 4.5%. Additionally, local municipalities can levy their own sales tax, which can range from 1% to 2%, making the combined state and local sales tax rate anywhere from 4.5% to 6.5%.
It’s important to note that the state has temporarily reduced the sales tax rate to 4.2% effective from July 1, 2023 to July 1, 2024. After this period the rate will return to 4.5%.
When should your business collect Sales Tax in South Dakota?
If your business has a sales tax nexus in South Dakota, you must collect and remit sales tax. A sales tax nexus is established if you have a physical presence in the state (e.g., a storefront, office, or warehouse) or meet certain economic thresholds (e.g., $100,000 in annual sales or 200 transactions in a year).
Once you establish a sales tax nexus in South Dakota, you should begin collecting sales tax on your taxable sales. Keep in mind that the sales tax rate varies depending on the location of your business and where the sale is made, as local jurisdictions may impose additional sales tax.
South Dakota Physical Sales Tax Nexus
A physical nexus in South Dakota occurs when a business has a tangible presence within the state. This presence can manifest in various ways, including:
- A brick-and-mortar store, office, or warehouse.
- An employee or sales representative working in the state.
- Attending trade shows, fairs, or conferences within South Dakota.
If your business meets any of the above criteria, you must collect and remit sales tax on your taxable sales in South Dakota.
If you only sell products via eCommerce or other online platforms to South Dakota residents and do not have a physical presence, you may still be required to collect sales tax under the state’s economic nexus law.
South Dakota Economic Nexus Threshold: Revenue, Thresholds and Transactions
In South Dakota, an economic nexus is established when a remote seller exceeds a certain threshold in annual sales or transactions within the state. The current economic nexus threshold in South Dakota is:
- $100,000 in annual gross sales, or
- 200 separate transactions in a calendar year.
If your business meets or exceeds either of these thresholds, you must register for a sales tax permit and start collecting and remitting sales tax on your sales to South Dakota customers.
Note that economic nexus applies to out-of-state businesses without a physical presence in South Dakota but still meet the above thresholds through online or other remote sales.
Which are services taxable in South Dakota?
South Dakota is one of the few states that impose a sales tax on services as well as tangible personal property. Generally, South Dakota’s sales tax applies to most services that are subject to the control, guidance, or instruction of the purchaser.
Some of the services that are taxable in South Dakota include:
- Repair and maintenance services.
- Personal services such as haircuts and beauty treatments.
- Professional services like accounting and legal advice.
- Telecommunication services.
- Hotel accommodations.
Keep in mind that there are exceptions to this rule, so it’s essential to verify the taxability of your specific service with the South Dakota Department of Revenue.
South Dakota Sales Tax on Products: How to Calculate What Your Business Should be Charging
Calculating the sales tax your business should charge in South Dakota involves considering both the state and local sales tax rates. Start with the statewide rate of 4.5% and then add any applicable local rates. In South Dakota, local rates can range from 1% to 2%, depending on the municipality. Here’s how to calculate the sales tax:
- Determine the base price of the item or service.
- Identify the local sales tax rate for the location where the sale occurs.
- Add the state and local rates to get the total sales tax rate.
- Multiply the base price by the total sales tax rate to calculate the tax amount.
- Add the tax amount to the base price to get the total price the customer should pay.
Remember, some items may be exempt from sales tax, and it’s crucial to stay updated on South Dakota’s sales tax regulations to ensure compliance.
How much is the South Dakota clothing tax?
In South Dakota, clothing is considered tangible personal property and is subject to the state sales tax of 4.5%, plus any local sales tax. As mentioned earlier, local rates can vary from 1% to 2%.
There are no special exemptions for clothing in South Dakota, so it’s essential to charge the correct sales tax on these items.
South Dakota Online Sales Tax: Are SaaS and Digital Services Taxable?
In South Dakota, Software as a Service (SaaS) and digital services are generally subject to sales tax. If you provide these services and have a sales tax nexus in the state (either physical or economic), you must collect and remit sales tax on your sales.
SaaS Sales Tax South Dakota: Does my Business Need to Charge Sales Tax for SaaS in South Dakota?
Yes, if your business provides SaaS to customers in South Dakota and has a sales tax nexus in the state, you are required to charge South Dakota SaaS Sales Sax. Ensure you’re charging the correct tax rate by considering both the state and local rates, as mentioned earlier.
How can a business get a sales tax permit in South Dakota?
To get a sales tax permit in South Dakota, follow these steps:
- Visit the South Dakota Department of Revenue website.
- Complete the online application for a sales tax permit.
- Provide the required information, such as business details, owner information, and anticipated sales volume.
- Submit the application and wait for approval.
Once you receive your sales tax permit, you can start collecting sales tax on your taxable sales in South Dakota.
Collecting Sales Tax in South Dakota as a Business
When collecting sales tax in South Dakota, consider the following:
- Determine the applicable sales tax rate, including state and local rates.
- Collect sales tax on all taxable sales.
- Keep accurate records of your sales and tax collections.
- File sales tax returns and remit the collected tax on time.
South Dakota Tax Return Due Dates Explained
In South Dakota, the frequency with which you need to file a sales tax return is determined by the total amount of sales tax you collect from buyers within the state. The filing frequency can be monthly, quarterly, or annually, depending on your total tax liability.
What is the required frequency for sales tax returns in South Dakota?
Here are the typical sales tax return due dates based on the filing frequency:
- Monthly: Returns are due by the 20th of the following month. For example, January’s sales tax return is due by February 20th.
- Quarterly: Returns are due by the last day of the month following the end of the quarter. For example, the Q1 return (January – March) is due by April 30th.
- Annually: Returns are due by January 31st of the following year.
Remember, these dates can vary depending on the year and any changes to tax regulations, so always confirm the due dates with the South Dakota Department of Revenue.
