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Sunday, Apr. 12, 2026

Does SD have one of the lowest tax rates in the country?

Michael Klinski, South Dakota News Watch
yes

South Dakota has one of the lowest overall state tax burdens in the country, largely because it does not tax individual income and lacks several major statewide taxes.

The Tax Foundation ranks South Dakota No. 2 in the State Tax Competitiveness Index when factoring in corporate, individual, sales, property and unemployment insurance taxes. Wyoming is No. 1 overall.

South Dakota is ranked No. 1 in corporate taxes and No. 1 in individual taxes. The state’s lack of an income tax helps keep overall state and local tax burdens among the lowest in the nation.

However, the Institute on Taxation and Economic Policy regularly ranks South Dakota among the states with the most regressive tax systems, meaning lower-income households pay a larger share of their income in state and local taxes than higher-income households.

South Dakota does not have an estate tax, inheritance tax or corporate income tax.

This fact brief is responsive to conversations such as this one.

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