Our Dash of SALT Blog provides the most recent developments and changes in state and local tax regulations. Here are the latest updates for South Dakota.
December 17, 2024
South Dakota Governor Proposal to Eliminate E-filing Incentive and Grocery Tax
Authored by: Breea Boylan, MSA, CPA and Courtney Easterday, MSA
South Dakota Governor Kristi Noem’s budget lays out proposals for the remainder of fiscal year 2025 and fiscal year 2026. The Governor proposed to eliminate the incentive for businesses to electronically file sales tax returns as the electronic filing process has become the general business practice, and thus the incentive is no longer necessary. The Governor also proposes a permanent elimination on the groceries sales tax.
If you have questions about state sales tax compliance and taxability, please reach out to a member of the Withum SALT Team.
March 27, 2024
South Dakota Imposes Sales Tax on Digital Goods
Authored by: Bonnie Susmano, JD, MBA and Katerine Velasquez
On February 1, 2024, South Dakota Governor Noem signed HB 1019, which modifies the State’s Sales and Use Tax code to include “any products transferred electronically” to a list of items defined as a seller selling, renting, or leasing in South Dakota. The state previously included services in the definition of a seller and added delivering electronically to the definition, which provides clarification to taxpayers that South Dakota imposes a sales tax on digital goods.
If you have questions about how states tax digital goods and services, please reach out to a member of the Withum SALT Team.
December 7, 2023
States Eliminate Transaction Count in Economic Nexus Test
Authored by:Brandon Spinella and Jonathan Weinberg, JD, LLM, Principal
Several states have eliminated the requirement for remote sellers to register, collect, and remit sales tax after hitting the transaction count threshold. In 2023, California, Colorado, Iowa, Louisiana, Maine, Massachusetts, North Dakota, South Dakota, Washington, and Wisconsin eliminated their transaction count thresholds. As such, these states’ sole standard for economic nexus is the dollar threshold.
Removing the transaction count threshold has largely been done in response to complaints from the business community that tracking the number of transactions in a state is too burdensome. If you have questions about whether your business has sales tax nexus in a state, please reach out to a member of the Withum SALT Team.
March 24, 2023
South Dakota Governor Signs Sales Tax Reduction Bill
Authored by: Brandon Mejia and Courtney Easterday, MS
On March 20, 2023, South Dakota Governor Kristi Noem signed House Bill 1137 which temporarily reduces the State’s sales tax rate. Beginning on July 1, 2023 and expiring on June 30, 2027, the sales tax rate will be reduced from 4.5% to 4.2%. Taxpayers making sales to South Dakota customers should update their rate tables accordingly.
If you have questions about the tax rate your business is obligated to charge customers, please reach out to a member of the Withum SALT Team.
March 7, 2023
South Dakota – Amendment to Remote Seller Threshold
Authored by: Breea Boylan, MSA, CPA and Katie Szymanski, CPA
The Legislature of the State of South Dakota has enacted Senate Bill 30. This Senate Bill amends the economic nexus threshold for remote sellers to $100,000 of sales in the state. Previously, a remote seller without a physical presence in South Dakota needed sales of $100,000 or 200 or more separate transactions into South Dakota in the previous or current calendar year to create nexus. Senate Bill 30 eliminates the 200 transactions threshold.
If you have questions about whether your business is obligated to collect sales and use tax, please reach out to a member of the Withum SALT Team.
December 9, 2022
South Dakota Proposes Eliminating Sales Tax on Groceries
Authored by: Breea Boylan, MSA and Courtney Easterday, MS
On December 2, 2022, South Dakota Governor Kristi Noem released her proposed budget for the upcoming fiscal year. The Budget includes a proposal to eliminate state sales tax on groceries.
October 21, 2022
South Dakota Updates for Sales and Use Tax on Political Campaign Purchases
Authored by: Katerine Velasquez, Jensel Feliciano, and Courtney Easterday, MS
In October 2022, the South Dakota Department of Revenue updated its guidance related to political campaigns. Monetary donations and campaign contributions are not subject to sales tax unless the donation is in exchange for products or services. Internet services purchased by a political campaign, including but not limited to internet activation, access, disconnection, reconnection, upgrades or email, social media posts, and advertising are exempt from sales tax. Political campaigns are required to pay sales tax on internet-related services which include webinars, conferencing, live chats, technical support, streaming video or audio, and campaign manager services. Sales tax is due on items donated to a campaign.
March 4, 2022
South Dakota May Legalize Recreational Cannabis
On February 23rd, 2022, South Dakota took a step forward in potentially legalizing recreational cannabis after the state senate approved legalizing and taxing the cannabis by the slimmest of margins. The final vote was 18-17 in favor of passing the bipartisan legalization legislation (S.B. 3). Senators also approved an excise tax of 15% on sales of recreational cannabis in a separate bill (S.B. 25). Both bills now move to the South Dakota House of Representatives for consideration.
March 4, 2022
South Dakota Senate Thwarts Effort to Cut State Sales Tax to 4%
On February 23rd, 2022, the South Dakota House of Representatives passed H.B. 1327 which would reduce the state’s sales tax from 4.5% to 4%. On February 25th, the South Dakota Senate defeated the bill, and as such there will not be any reduction to the South Dakota sales tax rate. This Senate vote came after the governor advocated for budgetary restraints due to ongoing economic challenges. Furthermore, South Dakota does not impose a Corporate or Individual income tax, so the sales tax is one of the state’s only sources of revenue. The rejection by South Dakota comes after several states, including New York and Connecticut, decided to move forward with plans to reduce sales taxes.
Disclaimer: Please note this is the information that is readily available at this time, it is subject to change so please consult your Withum tax advisor.
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The State and Local Tax (SALT) laws vary from state to state and are constantly changing. Reach out to Withum’s SALT Team for guidance on how to navigate your state’s local tax laws.
