The Internet Tax Freedom Act of 1998 temporarily stopped states and local governments from imposing new taxes on Internet access and multiple or discriminatory taxes on electronic commerce.
The Act had a grandfather clause allowing states that already taxed Internet access to continue enforcing those taxes. South Dakota was included in the grandfather clause.
In 2016, Congress made the Act permanent and only extended the grandfather clause to June 30, 2020. Starting July 1, 2020, Internet access will no longer be subject to state and municipal sales tax in South Dakota.
For more information, please read the Internet Tax Freedom Act (ITFA) Tax Fact.