South Dakota — Personal Income Tax

South Dakota does not impose a state personal income tax. As of tax year 2026, South Dakota is generally counted among nine states with no broad-based individual income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. This count is supported by the South Dakota Department of Revenue, whose official publications continue to group the state among those with no corporate, unitary, or personal income tax.

Key caveats regarding the "no income tax" states:

• New Hampshire: Historically taxed interest and dividends only, but that tax is fully repealed for taxable periods beginning after December 31, 2024; as of 2026, New Hampshire has no income tax of any kind on individuals.
• Washington: Does not tax wage or salary income, but does impose a capital gains tax (effective 2022) above a high threshold. For most individuals earning wages, Washington imposes no individual income tax. Washington and New Hampshire are sometimes differentiated in lists due to these features, but they do not impose a broad-based personal income tax.

Because no personal income tax exists, South Dakota residents and individuals earning South Dakota-source income are not required to file a state income tax return. Federal income tax obligations remain in place.

Note: The South Dakota Department of Revenue confirms: "South Dakota does not have a corporate, unitary, or personal income tax." This language appears in the 2026 Sales and Use Tax Guide and on the Department's Individuals Tax page.

Source: South Dakota Department of Revenue, 2026 Sales and Use Tax Guide, p. 2 Source: South Dakota Department of Revenue – Individuals Taxes Source: New Hampshire Department of Revenue Administration – Interest & Dividends Tax

Review status: Not yet human confirmed.

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

The South Dakota Constitution authorizes the Legislature to impose taxes on incomes and occupations. The Constitution permits such income taxes to be graduated and progressive, and allows reasonable exemptions. Despite this express constitutional authority, South Dakota has never enacted a personal income tax statute.

Source: S.D. Const. art. XI, § 2

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.

The South Dakota Department of Revenue explicitly confirms: "South Dakota does not have a corporate, unitary, or personal income tax." Because no individual income tax exists, there is no legal basis for employer withholding of state income tax on wages.

Source: South Dakota Department of Revenue, 2026 Sales and Use Tax Guide, p. 2

Review status: Not yet human confirmed.

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.

The Department of Revenue confirms: "South Dakota does not have a corporate, unitary, or personal income tax." As a result, 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.

South Dakota does not participate in reciprocal income tax agreements because such agreements apply only where both states impose an income tax.

Nonresidents and former South Dakota residents remain subject to income tax obligations in their home states or destination states, as described more fully in the section on other state tax obligations.

Source: South Dakota Department of Revenue, 2026 Sales and Use Tax Guide, p. 2

Review status: Not yet human confirmed.

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

Source: New York State Department of Taxation and Finance, Frequently Asked Questions about Filing Requirements, Residency, and Telecommuting

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.

South Dakota does not impose a personal income tax, and there is no statutory or constitutional prohibition against enacting one. The governing authority is Article XI, Section 2 of the South Dakota Constitution, which explicitly empowers the Legislature to impose taxes upon incomes and occupations: "The Legislature is empowered to impose taxes upon incomes and occupations, and taxes upon incomes may be graduated and progressive and reasonable exemptions may be provided."

This clause means the Legislature may enact a personal income tax by statute, but has chosen not to do so. No provision in South Dakota law or constitution prohibits the imposition of such a tax; the absence of a personal income tax is based solely on legislative inaction and policy choice, not a statutory ban or constitutional prohibition. As of June 2026, there is no primary authority in the South Dakota Codified Laws or state constitution that forbids enacting a personal income tax.

Source: South Dakota Constitution, art. XI, § 2

Review status: Not yet human confirmed.

South Dakota imposes no pass-through entity (PTE) tax, no composite or partnership income tax return requirement, and no state withholding obligations for partnerships or S corporations earning income from sources within South Dakota. These mechanisms—common in states with a personal income tax—are not present, because South Dakota imposes neither a personal nor corporate income tax as of tax year 2026.

Statutory framework and chapter-specific context Chapters 10-40 (income tax), 10-43 (bank franchise), and 10-45 (sales and use tax) of the South Dakota Codified Laws define the scope of South Dakota's taxation. There is no chapter or section authorizing a tax on income of individuals, pass-through entities, or their owners. A review of SDCL Title 10 confirms the absence of any statutory reference to composite returns, withholding on distributive shares, or pass-through-level income taxation affecting partnerships or S corporations for personal income tax purposes.

Department of Revenue guidance The Department of Revenue's own comprehensive guidance for individuals and businesses states: "South Dakota does not have a corporate, unitary, or personal income tax." There is no mention in Department publications, forms, or administrative rules of any pass-through entity tax, composite or group personal income tax return, or withholding requirement targeting owners or partners.

No alternative pass-through or withholding regime Because no personal income tax exists, partnerships and S corporations are not subject to registration, return filing, or state-level withholding requirements relating to owner income in South Dakota. Taxpayers must still comply with all relevant federal requirements, but South Dakota imposes no substitute state-level collection or information regime for pass-through owners—resident or nonresident.

As of June 2026, there is no statutory or published administrative authority in South Dakota establishing a PTE-level tax, composite return obligation, or state withholding for partnerships or S corporations. This absence is confirmed both by SDCL (Title 10, including Chapter 43 and the absence of any "income" tax chapters) and Department guidance.

Source: South Dakota Department of Revenue, 2026 Sales and Use Tax Guide, p. 2 Source: South Dakota Codified Laws, Title 10 (see esp. absence of personal income tax chapters)

Review status: Not yet human confirmed.

South Dakota does not impose personal income tax on residents working within the state—including those working remotely for out-of-state (e.g., New York) employers. However, New York State's "convenience of the employer" rule may cause remote work earnings of a South Dakota resident to be taxed by New York if the arrangement is for the taxpayer's own convenience and not driven by employer necessity.

New York's Convenience of the Employer Test New York taxes nonresidents, such as South Dakota residents, on wages earned for services performed for New York employers if those services are either (a) performed within New York State or (b) performed outside New York State for the employee's convenience (not employer necessity). If a South Dakota resident's home office does not meet New York's strict "bona fide employer office" standards, days worked at home are considered New York workdays for allocation and tax purposes. The Department of Taxation and Finance's IT-203-I instructions enumerate the criteria for a bona fide employer office, including requirement of a dedicated workspace, employer payment of expenses, and in some cases periodic reviews by the employer. Most home offices do not qualify unless substantial tests are met.

Filing and allocation mechanics A South Dakota resident subject to this rule generally must file New York Form IT-203 (Nonresident and Part-Year Resident Income Tax Return) and allocate wage income as directed by New York law and regulations. Wages reportable as New York source income will typically be shown on Form W-2 from the New York employer. South Dakota does not offer a credit for taxes paid to New York, as there is no personal income tax system to which such a credit could apply.

South Dakota legal context There is no South Dakota requirement to report or pay state income tax on remote wage income, owing to the absence of a personal income tax statute or structure in South Dakota law. The South Dakota Department of Revenue confirms no individual income tax applies to any residents' wage income from any source.

Source: New York State Department of Taxation and Finance, Nonresident and Part-Year Resident Income Tax Instructions (IT-203-I) 2025, "Income Allocation – Nonresidents: Wage and Salary Income" Source: South Dakota Department of Revenue – Individuals Taxes

Not yet human confirmed. The South Dakota tax authority link and URL have been fixed to reflect the current 2026 primary DoR location. Human confirmation of both NY and SD positions on edge application of the convenience rule is recommended for cases with complex facts.

South Dakota does not tax retirement income from any source, including private retirement plans, pensions, IRAs, or Social Security. This is a direct consequence of the state's lack of a personal income tax of any kind. The South Dakota Department of Revenue confirms that individuals in South Dakota pay no state income tax, specifying in its public guidance that neither Social Security benefits nor retirement or pension income are subject to state taxation.

The Department's Individual Income Tax FAQ explicitly states that South Dakota does not tax Social Security income, distributions from retirement accounts, or pension payments, because there is no individual income tax system in the state. As a result, retirees and recipients of Social Security or private retirement benefits are not required to file a South Dakota income tax return or report such income to the state. No provisions in the FAQ or Department guidance indicate any requirement for reporting, collection, or payment of state income tax on any form of retirement or Social Security income for residents.

The absence of a personal income tax statute—and the Department's plain statement confirming no individual income tax—means there is no state income tax liability on retirement income, regardless of its source, for South Dakota residents. Federal tax obligations may still apply to various retirement distributions based on federal law, but these are entirely outside the scope of South Dakota state taxation.

Source: South Dakota Department of Revenue – Individual Income Tax FAQ

Practitioners often ask whether there has ever been a serious public attempt to impose a personal income tax in South Dakota. The only notable statewide effort was the 1990 ballot measure known as Constitutional Amendment C, which would have authorized both a personal and corporate income tax and provided corresponding property tax relief.

1990 Constitutional Amendment C

• Proposed amendment to authorize an income tax on individuals and corporations, with an offsetting reduction in property taxes.
• Ballot title: "An amendment to the Constitution of the State of South Dakota relating to the imposition of an income tax."
• Outcome: Defeated by voters; the official tally was 114,215 in favor, 119,037 against—a narrow margin.

A review of the South Dakota Secretary of State’s official ballot question archives, covering measures placed before voters from 1990 through 2024, shows that no further attempt to impose a personal income tax (by constitutional amendment or initiative) advanced to the statewide ballot in that period. The 1990 Amendment C remains the only direct statewide personal income tax proposal presented to South Dakota voters. Absence of evidence in these published election archives should not be read as a guarantee that no legislative proposals or informal efforts occurred, only that no formal ballot measure on this topic reached the public for a vote through 2024.

Constitutional implications

• Article XI, Section 2 of the South Dakota Constitution permits the Legislature to impose taxes on incomes, but, following the later addition of Article XI, Sections 13 and 14, any new tax—including a personal income tax—now requires a two-thirds vote of both chambers, or popular approval via initiative.

Source: South Dakota Secretary of State, 1990–2024 Ballot Questions Archive Source: S.D. Const. art. XI, §§ 2, 13–14