South Dakota sales tax for online sellers: nexus, permit and filing

What is the South Dakota sales tax rate?

The state rate is 4.2%, reduced from 4.5% on July 1, 2023. The reduction is set to end on June 30, 2027, when the rate returns to 4.5% unless the law changes. Most cities add a municipal tax of up to 2%, so combined rates run from 4.2% to 6.2%. South Dakota taxes most services and digital products as well as goods, including groceries.

When does an online seller have to collect in South Dakota?

You must collect if you have a physical presence in South Dakota, such as staff, an office or inventory, or if your gross sales into South Dakota are more than $100,000 in the previous or current calendar year. The separate test of 200 transactions was removed from July 1, 2023. The Department of Revenue says the $100,000 applies to all remote sellers, including those selling through a marketplace, so marketplace sales count towards it.

How nexus works in general is covered in physical vs economic nexus and economic nexus explained.

What if you sell on Amazon, eBay or Etsy?

South Dakota requires marketplace facilitators to collect and remit sales tax on the sales they facilitate, so you do not collect on those orders. Your own website and other direct channels remain your responsibility. See marketplace facilitator laws.

How do you register?

Register online with the South Dakota Department of Revenue for a sales tax license. There is no fee. South Dakota is a member of the Streamlined Sales Tax agreement, so you can also register through the Streamlined system. See Streamlined Sales Tax registration.

What are the steps once you have nexus?

1. Confirm nexus

   Check your presence and your sales into South Dakota against its threshold.

2. Register before collecting

   With the South Dakota tax agency, as set out above.

3. Set up your store

   Charge the correct combined rate for each delivery address and product.

4. File and pay

   On the schedule South Dakota assigns, including zero returns where required.

How are returns filed?

Returns are filed online and are due by the 20th of the month after the period. The Department assigns the filing frequency from the tax you collect. One return covers the state and municipal taxes.

See how to file a sales tax return.

Why is South Dakota important in sales tax history?

In 2016 South Dakota passed a law requiring out-of-state sellers to collect its sales tax once they passed $100,000 of sales or 200 transactions, even with no physical presence. The Supreme Court upheld it in South Dakota v. Wayfair in 2018, and every state with a sales tax then adopted a similar rule. South Dakota itself dropped the transaction part in 2023, as many states have since.

What should sellers do about the 2027 rate change?

If the reduction ends as scheduled, the state rate rises from 4.2% to 4.5% on July 1, 2027. Stores that calculate tax from current rate tables will pick this up automatically, but fixed rates entered by hand will need updating on that date. Check the Department's announcements in spring 2027.

What else should sellers know?

• Sellers outside the US: the same rules apply wherever the business is based. See selling on Amazon US as a non-resident.
• Late registration: tax you should have collected becomes your own debt. See voluntary disclosure agreements and collected but not remitted.
• Records: keep sales by delivery address, tax collected and any certificates. See exemption certificates and sales tax audits.
• Stopping: returns stay due until the account is closed. See filing frequency and cancelling a sales tax permit.
• Store settings: switch on collection only once you are registered. See Shopify sales tax setup.

This guide is general information. It is not tax or legal advice for your situation.