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South Dakota Wage and Payroll Tax Facts

February 02, 2024

Having to comply with unique state taxes and wage laws can make processing payroll doubly daunting. Here’s everything you need to know about these rates and laws for the state of South Dakota.

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South Dakota uses a moderately higher minimum wage rate than the one required by the federal government in the Fair Labor Standards Act (FLSA). Most of that increase is reflected in the state's Tipped Minimum Wage Rate, which is more than double the rate of its federal counterpart. 
 
When it comes to processing payroll, South Dakota-based organizations must handle the following taxes in addition to those required by the federal government:

The below information was last updated January 30, 2024. It is not intended as legal or tax advice.

South Dakota Minimum Wage Rates

Wage Type

South Dakota Rates

Federal Rates

Minimum Wage

 $11.20

$7.25

Tipped Minimum Wage

 $5.60

$2.13

Actual Tip Credit

 $5.60

$5.12

South Dakota State Income Tax (SIT) Rates

South Dakota is one of the few states that doesn't impose or collect a personal income tax.

South Dakota State Unemployment Insurance (SUI) Rates

SUI provides unemployment benefits to eligible workers who are unemployed through no fault of their own (as determined by state law) and meet the state’s eligibility requirements.

South Dakota SUI Tax Details

Taxable Wage Base

$15,000

Employee Subject to Tax

No

Rates for Experienced Employers

0.00% - 9.83%

Rates for New Employers
1.75% for the first year (includes 0.55% investment fee below)

Effective Period

Calendar Year

Voluntary Contributions Allowed

Yes; prior to December 31 for the following year
Administrative Fee
  • Experienced Employers: Varies
  • New Employers: 0.02%
Investment Fee*
  • Experienced Employers: 0.00% - 0.53%
  • New Employers: 0.55%

*Includes a 0.01% Obligation Assessment and 0.10% Training Investment Assessment.

South Dakota State Disability Insurance (SDI) Rates

SDI benefits are funded by employees through mandatory payroll deductions from each paycheck. South Dakota, however, doesn't require employers to collect an SDI tax.

Miscellaneous South Dakota Tax Information

Reciprocal Agreement(s)

Reciprocal agreements are when workers who live and work in different states are only required to pay taxes to the state where they live. South Dakota currently has no reciprocal agreements with any other states.

This doesn’t mean, however, that interstate workers living in South Dakota pay double. It’s federally illegal for two states to tax the same income. In most cases, the employee’s work state will credit or refund them at tax time based on the taxes they owe their home state. If the tax rates differ, the employee must cover the difference.

Paid Sick Leave (PSL) Taxes

The state of South Dakota doesn’t require employers to collect PSL taxes, nor does the state have a program providing such leave to employees.

Paid Family and Medical Leave (PFML) Taxes

The state of South Dakota doesn’t require employers to collect PFML taxes, nor does the state have a program providing such leave to employees.

South Dakota Employer Registration

The Department of Labor and Regulation can help with your state-based employer registration, including best practices, account numbers, and unemployment information.

Registration Details

Department of Labor and Regulation

Phone

 (605) 626-2312

Online Registration

 DLR General Login Page
Registration Form Employer's Registration Application (Form 1)

Registration Instructions

 Online and paper registration options are available. Account numbers will be issued in 5-7 days.

Employer Self-Service Login

 DLR General Login Page

Additional South Dakota Payroll Tax Resources

 

This information is provided as a courtesy and may be updated at any time. It is not intended as legal or tax guidance. If you have questions or concerns, we encourage you to seek the advice of a qualified CPA, tax attorney, or advisor.

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