Although South Dakota has no income tax, we require individual's and businesses to pay sales tax on products and services. Certain transactions may be exempt from sales and use tax given the proper documentation is maintained.
It can be challenging to understand tax information. here at the Department of Revenue, we've published an easy-to-read guide specifically geared towards understanding sales tax in South Dakota. For more information regarding sales tax exemptions, please visit pages 11-13.
Below are the 4 reasons a transaction may be exempt from paying South Dakota Sales Tax:
1. The purchaser is a tax exempt entity.
If the entity purchasing the product or service is listed below, please have them complete an Exemption Certificate.
- United States government agencies
- State of South Dakota
- Indian tribes
- Public or municipal corporations of the State of South Dakota
- Municipal or volunteer fire or ambulance departments
- Public schools, including K-12, universities and technical institutes that are supported by the State of South Dakota or public or municipal corporations of South Dakota.
- Non-profit hospitals
- Relief agencies
- SD religious and private schools
2. The product or service is specifically exempt from sales tax.
For a complete list of products and services that meet these requirements, please visit our Exemption Certificate Tax Fact.
3. The purchaser submits a claim for exemption
In some instances, purchasers may issue a completed exemption certificate at the time of purchase. By filling out the Exemption Certificate Form, a purchaser may claim exemption for the following:
- Products or services intended to be resold
- Products or services used for an exempt purpose
- Document that the purchaser is an exempt entity
Note: If you are a business with a Use Tax (UT) or a Contractor's Excise Tax (ET) permit, you cannot buy products or services for resale. This is considered intent to evade payment of tax, those found guilty of this offense would be subject to a Class 1 misdemeanor.
4. The product is delivered to a point outside of the State of South Dakota
Questions regarding tax exemptions for businesses? Visit our Sales & Use Tax page for more information.