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Motor Fuel Excise Taxes

What is Taxed?

Who Needs a Motor Fuel License?

Motor Fuel Tax Rates

Motor Fuel Excise Taxes

South Dakota’s 8,000-mile networks of highways and airport runways are essential to the state’s economy and its citizen’s quality of life Fuel taxes are used to fund the maintenance and construction of South Dakota's highways, bridges, and airport runways which are a vital part of the state's infrastructure.

What is Taxed?

Motor Fuel involves the collection of fuel excise tax on motor fuel, special fuel, aviation fuel and alternative fuel when they are used to propel a motor vehicle.

Who Needs a Motor Fuel License?

Any individual in the business of buying, selling, storing, or transporting fuel in South Dakota. An individual may need to hold one or more fuel tax licenses depending on the kind of business conducted. Each license type grants certain privileges and carries specific responsibilities. Learn more in the Motor Fuel Guide (PDF).

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License Types

There are several motor fuel licenses:

• Biodiesel Producer: A person who engages in the business of producing biodiesel for sale, use, or distribution.
• Blender: Person engaged in the activity of making Biodiesel blends.
• Bulk Plant Operator: Person who has responsibility and physical control over the operation of a bulk plant.
• Compressed Natural Gas (CNG) Vendor: Person engaged in the business of selling compressed natural gas for use in the engine fuel supply tanks of motor vehicles and is regulated by the Public Utilities Commission.
• Ethanol Broker: Person engaged in the business of marketing ethyl alcohol produced by ethanol producers located in South Dakota.
• Ethanol Producer: Person engaged in the business of producing ethyl alcohol for sale, use, or distribution.
• Highway Contractor: Person engaged in the activity of highway construction work in South Dakota. The term does not include any person who only owns and operates motor vehicles within the right-of-way hauling gravel or concrete and does not own or operate off-road machinery in the highway construction work
• Importer/Exporter: Person who purchases or owns motor fuel or special fuel in another state or country and transports or delivers or causes the fuel to be transported or delivered into South Dakota by any means other than a pipeline.
• Liquid Petroleum Gas (LPG) User: Person using liquid petroleum gas in the engine fuel supply tank of a motor vehicle and wishes to purchase liquid petroleum gas in bulk. The gas must be delivered into a storage tank that has a delivery hose attached to tank. The gas is purchased on an unpaid tax basis in South Dakota.
• Liquid Natural Gas (LNG) Vendor: Person engaged in the business of selling liquid natural gas for use in the engine fuel supply tanks of motor vehicles.
• Marketer: Person engaged in business as a wholesale distributor or retail dealer.
• Supplier: Person that owns motor fuel or special fuel in the pipeline and terminal distribution system in South Dakota or makes sales or authorizes the removal of this fuel from the terminal at the rack. They are also the person who owns fuel in the pipeline immediately before it is withdrawn at the terminal rack.
• Tribal Marketer: Person engaged in the wholesale or retail sale of motor fuel or special fuel on Indian reservations and/or in Indian country that have tax agreements with the State of South Dakota and the Department of Revenue.
• Terminal Operator: Person who by ownership or contractual agreement is charged with the responsibility and physical control over the operation of the terminal.
• Transporter: Person engaged in the activity of interstate or intrastate movement of fuel within South Dakota by transport truck, rail car, or by any other means in quantities of over 4,200 gallons.

Motor Fuel Tax Rates

The following are the motor fuel tax rates. Motor fuel tax is collected at the pipeline terminal and the supplier pays the tax to the state prior to a customer's purchase. A customer's price at the pump includes federal and state taxes.

Find out if you need to apply for a motor fuel license through our online Tax License Application.

State law requires that motor fuel returns be filed electronically unless license holder has received authorization by the Department to file paper returns. If you are not able to file electronically or wish to file paper returns, please complete the Electronic Filing Waiver.