Get your tax IDs in South Dakota

An EIN, if you need one, takes minutes online. South Dakota then adds a sales tax license if you sell taxable products or services. There is no state income-tax account. Hiring adds reemployment assistance and new-hire reports.

What’s different in South Dakota

• No state income tax. South Dakota does not impose a corporate income tax¹. South Dakota does not impose a state income tax².
• Sales tax covers services, not only goods. The state rate is 4.2%³. A business with a location here needs a license even when the remote-seller dollar test does not apply.
• City tax is on the same return. Municipal tax is 1% to 2% where the city imposes it⁵, and one return reports both the state tax and the municipal tax⁶.
• The published rate changes in 2027. Today’s page says 4.2%³. The statute shows four and one-half percent beginning July 1, 2027⁸.
• Unemployment tax is called reemployment assistance. Every new business registers. The tax starts when you meet a wage or a weeks test.

Do this

1. Get an EIN from the IRS if you need one. It is free and, if approved, issued immediately¹⁶ online. A sole proprietor with no employees can often use a Social Security number for federal tax. The state sales application asks for a tax ID when the business has one. Don’t pay a website to apply for the EIN.
2. Apply for a sales tax license if you sell taxable products or services in South Dakota. Use the tax license application. Any business with a physical presence in South Dakota needs a sales tax license. The dollar threshold does not apply to it. A business with no South Dakota location registers when its gross sales into the state exceeded $100,000³ in the previous or current calendar year.
3. The license has no fee. The department’s license requirements tax fact says there is no fee¹⁰ for a sales or contractor’s excise tax license, and that a license card is issued once the license is approved.
4. Look up the city rate for the place of the sale. State tax is 4.2%³. Municipal tax is 1% to 2% where the city imposes it. The Department of Revenue administers municipal sales, use, and gross receipts taxes. A business licensed in South Dakota also collects municipal sales or use tax, and municipal gross receipts tax, where those taxes apply. Cities may impose or change a municipal tax only on January 1 and July 1⁶. A 2026 law lets each county add a county tax of up to 0.5%, collected on the state sales tax return, at the same time as the state tax. A new county tax can take effect only on January 1 or July 1¹¹. The department’s county guide does not list which counties have adopted one.* Check the department’s newest tax guide for the county of the sale. Use the latest municipal tax guide, posted on the department’s municipal tax page, rather than a rate you remember. Eating places, lodging, alcohol, and admissions can also owe municipal gross receipts tax of 1% on top of municipal sales tax. Certain lodging and amusement sales owe tourism tax of 1.5%⁵.
5. File the return on the schedule the department assigns. The department tells you how often to file. The return is due the 20th of the following month, whatever filing schedule the department assigns. Payment is due with the return, on the 20th, when you file on paper, or on or before the 25th when you pay electronically. If the due date is a Saturday, Sunday, or legal holiday, it moves to the next business day. File and pay in EPath. A credit card adds a convenience fee of 2.45%⁵. A return that is still missing 30 days after the due month costs 10% of the tax, at least $10, even when no tax is due. Interest is 1% a month, at least $5⁴ the first month.
6. If you do construction, get a contractor’s excise tax license instead of collecting sales tax on that work. The license is for anyone who contracts for construction services, or who builds, installs, or repairs a fixture to real property. The rate is 2%. Returns are due the 20th of the following month, whatever filing schedule the department assigns, with electronic payments due on or before the 25th when you pay electronically⁴. A bid can use a factor of 2.041% so the tax is inside the price. The return itself uses 2%⁹. Details are on Licenses and permits.
7. Register for reemployment assistance when you start the business, and report new hires when you have them. The tests and the rates are below. The hiring guide covers the federal side.

Rates and what is not taxed

State sales and use tax is 4.2%, from the sales tax page. The sales tax applies to taxable products and to services, unless a service is exempt³. In the January 2026 guide, health, educational, social, and agricultural services are on the exemption list, and construction services are taxed under the contractor's excise tax instead. SNAP purchases are not subject to sales tax⁵. The guide does not print a lower rate for groceries. Read the exemption list before you collect tax on a service.

The 2023 announcement says the 2023 rate cut is repealed effective June 30, 2027⁷. SDCL 10-45-2, as published, shows today’s rate of 4.2%³ and the later four and one-half percent beginning July 1, 2027⁸. Check the statute and the sales tax page before July 2027. A later bill could change the date.

A spring 2025 Department of Revenue newsletter says the tax collection allowance credit for filing and paying electronically is suspended from July 1, 2025, until June 30, 2028¹².

There is no state income-tax return for the owner or for a C corporation. The state has no corporate, unitary, or personal income tax⁵. An S corporation election is still the federal Form 2553¹⁷. Whether it helps is a federal question. Ask a CPA. This page does not pick it.

A business with a South Dakota location that sells into other states may owe tax in those states. The sales guide says each state’s remote-seller rules are different. This page covers South Dakota only.

Reemployment assistance and new hires

The department says the statements on its reemployment assistance site are general information and do not have the effect of law¹³. The figures below are what that site prints.

All new and acquired businesses register, including when the entity or the ownership changes. Register on the state’s employer login. Online registration returns the account number and rate immediately if you are subject to the tax. It takes about two to three weeks when you register by mail, fax, email, or in person¹⁴.

You owe the tax if you meet one test in the current or preceding year. The ordinary tests are $1,500 of wages in a quarter, or one or more workers in 20 different weeks. Other tests cover a business already under federal unemployment tax, a purchase of a covered business, farm wages, domestic work of $1,000 in a quarter, and a 501(c)(3) with four or more workers in 20 different weeks¹⁴.

For 2026 the wage base is $15,000. In year 1, a non-construction employer pays 1.2% plus an investment fee of 0.55%. Construction pays 6% plus the same 0.55%. The new-employer table says the administrative fee is not applied to a new employer in the year-1 through year-3 table. In years 2 and 3 the table shows 1% for non-construction and 3% for construction, plus the 0.55% investment fee. The year-2 and year-3 rates in the table apply when the account balance is positive¹³. The table does not print the year-2 rate when the balance is not positive.* Use the rate notice. An experience-rated employer, after those years, also pays 0.08% in 2026 and after¹⁴.

Quarterly reports are due the last day of the month after the quarter ends. For example, the fourth quarter is due January 31. The other quarterly deadlines are April 30 for the first quarter, July 31 for the second, and October 31 for the third¹³.

New hires: within 20 days of the first day of work. The report covers full-time, part-time, temporary, and seasonal employees, students, adults and minors, and family members. A rehire is a person who was not paid for the past 30 days, including someone returning from leave or layoff. An intentional miss can be $25 for each violation, or as much as $500¹⁵ if the employer and the employee agree to skip the report. The reporting page does not name independent contractors.* If you are not sure someone is an employee, check with the department or a legal professional. Report through the state employer login; the new-hire instructions explain the options.

What you get back

An EIN from the IRS if you applied, a sales tax license if the department approves one, and a reemployment assistance account if you registered and you are subject to the tax. Write down the filing schedule the department assigns. There is no state income-tax certificate to wait for. The annual report to the Secretary of State is a separate calendar: Stay compliant.