No personal income tax imposed
South Dakota does not impose a state personal income tax. The state is one of seven states that do not tax individual income of any kind, including wages, salaries, self-employment income, retirement distributions, investment income, capital gains, or any other form of personal income.
Because no personal income tax exists, South Dakota residents and other individuals earning income sourced to South Dakota are not required to file a state income tax return. Taxpayers remain subject to all applicable federal income tax obligations administered by the Internal Revenue Service.
Source: South Dakota Department of Revenue – Individual Taxes
Constitutional supermajority requirement for new taxes
The South Dakota Constitution requires a two-thirds vote of both legislative chambers, or majority approval by voters through a ballot initiative, to enact any new tax. This supermajority requirement, set forth in Article XI, Sections 13 and 14, applies to the creation of a personal income tax or any other new tax. The constitutional barrier makes legislative imposition of an income tax significantly more difficult than in states requiring only a simple majority.
Source: S.D. Const. art. XI, §§ 13–14
No state income tax withholding requirement
South Dakota does not require employers to withhold state income tax from employee wages because the state imposes no state personal income tax. No state withholding certificate or equivalent form exists. South Dakota has no reciprocal income tax agreements with other states, as such agreements apply only where both states impose an income tax.
Source: South Dakota Department of Revenue – Individual Taxes
Nonresident and part-year resident treatment
South Dakota does not impose a personal income tax on nonresidents or part-year residents. Because the state has no individual income tax of any kind, it does not distinguish among residents, part-year residents, or nonresidents for income tax purposes. Individuals who earn income while physically present in South Dakota—whether as nonresidents performing work in the state or part-year residents during a portion of the tax year—owe no South Dakota income tax on that income.
South Dakota does not require nonresidents to file a state income tax return, regardless of the amount or type of income earned in the state. The state similarly does not require part-year residents who move into or out of South Dakota during the tax year to file a part-year resident income tax return or to apportion income between South Dakota and other states. No South Dakota withholding, estimated payment, or return-filing obligation arises from earning income in South Dakota.
Nonresidents and former South Dakota residents remain subject to income tax obligations in their home states or destination states. A nonresident who earns income while physically working in South Dakota may owe income tax to their state of residence on that income under the home state's worldwide income taxation rules. A former South Dakota resident who establishes residency in another state may incur income tax filing and payment obligations in the new state of residence from the date residency is established. South Dakota does not participate in reciprocal income tax agreements because such agreements apply only where both states impose an income tax.
Source: South Dakota Department of Revenue – Individual Taxes
Other states may still tax you despite South Dakota residency
Establishing residency or domicile in South Dakota does not automatically end an individual's income tax obligations in other states. Because South Dakota imposes no personal income tax, individuals who move to South Dakota or claim it as their domicile face no South Dakota tax liability. However, other states—particularly those from which the individual moved—may continue to assert tax jurisdiction under their own residency, domicile, or statutory-presence rules.
Domicile-based taxation in former states
Many states tax individuals based on domicile, which is generally defined as the place a person considers their permanent home and intends to return to. Domicile does not change simply by obtaining a South Dakota driver's license, registering to vote, or using a South Dakota mailing address. A former state of domicile will continue to treat an individual as a resident—and tax their worldwide income—until the individual demonstrates with clear and convincing evidence that they have abandoned the prior domicile and established a new one elsewhere.
California provides a detailed example. California Revenue and Taxation Code § 17014(a) defines a "resident" to include every individual who is in California for other than a temporary or transitory purpose, and every individual domiciled in California who is outside the state for a temporary or transitory purpose. An individual who is a resident of California continues to be a resident even though temporarily absent from the state. The statute does not define "temporary or transitory purpose," but California regulations (18 Cal. Code Regs. § 17014, not available on a primary-authority .gov or .us host as of May 29, 2026) have historically interpreted this phrase to mean that an individual domiciled in California who leaves the state for other than temporary or transitory purposes ceases to be a California resident for tax purposes, while an individual who comes to California for an indefinite period—such as for employment in a position that may last permanently or indefinitely, or who has retired and moved to California with no definite intention of leaving—is in California for other than temporary or transitory purposes and is a resident taxable on entire net income, even if the individual retains domicile in another state.
Source: Cal. Rev. & Tax. Code § 17014
Statutory residency in New York
New York imposes tax on individuals who meet a statutory-presence test even if they are not domiciled in New York. The New York Department of Taxation and Finance defines a New York State resident to include an individual who maintains a permanent place of abode in New York State for substantially all of the taxable year and spends 184 days or more in New York State during the taxable year, whether or not the individual is domiciled in New York State for any portion of the taxable year. Any part of a day counts as a day for this purpose, and the individual does not need to be present at the permanent place of abode for the day to count as a day in New York. A permanent place of abode is generally a building or structure where a person can live, that the person permanently maintains, and that is suitable for year-round use; it does not matter whether the person owns it or not.
An individual who establishes South Dakota domicile but continues to own or lease a residence in New York and spends significant time there may be treated as a statutory resident of New York and taxed on their worldwide income by New York, despite their South Dakota domicile. Similar statutory-residency frameworks apply for New York City and Yonkers local income taxes.
Source: New York State Department of Taxation and Finance, Income tax definitions
Nonresident source-based taxation
Even if an individual successfully establishes South Dakota domicile and avoids statutory residency in other states, they remain subject to nonresident income tax in states where they earn income. Most states tax nonresidents on income derived from sources within the state, including wages for work performed in the state, income from a business or profession carried on in the state, and rental income from in-state real property. South Dakota residency provides no exemption from these source-based taxes.
Practitioner considerations
Individuals moving to South Dakota from states with income taxes should understand that the burden of proving a change of domicile rests on the taxpayer. States such as California and New York conduct residency audits. While the specific factors examined vary by state, commonly evaluated elements include: the amount of time spent in each location; the location of family, social, and business ties; property ownership and the primary residence maintained; the location of banks, physicians, dentists, and other service providers; vehicle registration; driver's license; voter registration; and filing of a final part-year resident return in the former state. Taxpayers are generally expected to substantiate their locations and ties through contemporaneous records.
South Dakota's lack of income tax makes it an attractive domicile state, but it does not function as a safe harbor against audit or continued tax obligations in other states. Practitioners advising clients on domicile changes should evaluate the client's specific ties to the former state and the residency rules applicable in that state.