South Dakota Income Tax 2026

South Dakota does not levy a state income tax on wages in 2026. Your paycheck is reduced only by federal income tax, Social Security and Medicare - so you keep more than in most states. South Dakota imposes NO state individual income tax on any form of personal income, including wages, salaries, interest, dividends, capital gains, or retirement income (Social Security, pensions, 401(k)/IRA distributions are all untaxed). There is no personal income tax return to file with the state, and therefore no state standard deduction, personal exemption, or tax brackets. No local or municipal income taxes are levied by counties or cities. State revenue is raised primarily through sales/use tax (state rate 4.2% through tax year 2026, scheduled by 2023 SB 30 to revert to 4.5% on 2027-07-01) plus property taxes. South Dakota ranks 2nd on the Tax Foundation 2026 State Tax Competitiveness Index largely due to the absence of an income tax and estate/inheritance tax. This no-income-tax status is long-standing and unchanged for tax year 2026.