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South Dakota Consumer Tax Laws

Tax laws and codes can seem daunting and complex. But it's helpful if you think of state taxation as two basic types of consumer tax laws: those for state revenue, and those aiming to discourage certain behaviors.

All states collect some variety of consumer taxes, such as liquor and gambling taxes, to help pay for schools, infrastructure needs, and other shared state resources. Most states, including South Dakota, also levy sales tax on retail transactions.

South Dakota State Retail Sales Tax Laws

Retail sales tax is the state of South Dakota's principal tax source. Businesses making retail sales in South Dakota collect sales tax from their customers on tangible personal property items and some services. South Dakota's general sales tax rate is 4 percent.

Do I Owe a Use Tax in South Dakota?

Maybe. If you purchase items or services through a catalog, over the Internet, or make exempt purchases while visiting in another state, you may owe South Dakota use tax.

You owe use tax to South Dakota:

  • If you didn’t pay sales tax when you purchased the items;
    OR
  • The sales tax you paid to another state wasn’t as much as what
    you would have paid in South Dakota (the difference in the two
    amounts is how much use tax is owed).

Purpose of Consumer Taxes Generally

Some consumer taxes are meant to help pay for local services like the police and fire department. For those services that benefit everybody, the state usually uses a universally applied tax like a sales tax, to gain revenue. Some other taxes come in the form of excise taxes.

Excise taxes are directed at a certain product or service. For example, gasoline taxes are generally used to pay for road maintenance and repairs. The idea is that the more gasoline you purchase, the more you drive, and the more damage your car causes to the road. It would be unfair for non-drivers to have to pay to maintain roads that they do not use. Other excise taxes are meant to discourage unwanted behavior such as with the cigarette taxes.

The highlights of South Dakota's consumer tax laws are listed in the following chart. See FindLaw's Tax Law section for more articles and resources. Check with your local municipality for county and city taxes.

Sales Tax 4 percent §10-45-2. Depending on local municipalities, the total tax rate can be as high as 6 percent.
Cigarette Tax $1.54 per pack §§10-50-3; 10-50-10
Gasoline Tax per Gallon 28¢ §10-47B-4. Depending on local municipalities, the total tax rate can be as high as 6%.
Use Tax Same general rates as sales tax §10-46-2
Liquor Tax Beer is $0.27 per gallon, Wine is $4.68 per gallon, Liquor is $4.68 per gallon. An additional 2 percent wholesale tax applies to the sale of wine or spirits in South Dakota. The South Dakota liquor tax applies to all hard alcohol (alcoholic beverages other then beer and wine), and is already included in the purchase price by the retailer. §§35-5-3; 35-5-6.1
Gambling Tax 8 percent of adjusted gross proceeds; May be decreased or increased by Commission on Gaming from 5-15 percent §42-7B-28

Note: South Dakota state consumer tax laws are constantly changing -- contact a South Dakota tax attorney or conduct your own legal research to verify the state law(s) you are researching.

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