South Dakota State Taxes: What You’ll Owe in the 2026 Tax Season

Are Social Security benefits taxed?

As the state has no income tax, Social Security is not taxed in South Dakota.

How is property taxed?

The average statewide rate was 1 percent of a home’s assessed value in 2024, the most current year available from the Tax Foundation. However, actual rates vary by county, with the lowest rate being 0.2 percent in Buffalo County and the highest at 1.23 percent in Potter County. The lowest median taxes paid was $200 or less in Oglala Lakota County, and the highest was $3,990 in Lincoln County.

What about sales and other taxes?

• Sales tax: The average state and local combined sales tax is 6.11 percent, according to the latest data from the Tax Foundation. The state sales tax is 4.2 percent, while the average local rate is 1.91 percent. Exemptions include purchases with food stamps, lottery sales and prescribed medical devices and medication. More information on sales tax exemptions can be found here.
• Gas and diesel: The state taxes 28 cents per gallon for gasoline and diesel fuel.
• Vehicle tax: Vehicle purchases come with a 4 percent state excise tax. In addition, the state charges annual registration fees.
• Alcohol: Spirits, wine and beer are subject to state and local sales tax. In addition, wholesalers and distributors must pay taxes that can be passed on to consumers.
• Lottery: South Dakota does not tax lottery winnings, although the state withholds 24 percent for federal taxes on winnings of more than $5,000.

Will my heirs or estate have to pay inheritance and estate tax?

The state has no inheritance or estate tax.

Are there any tax breaks for older residents?

• Sales and property tax refund for senior and disabled citizens: This program provides annual refunds on sales or property taxes; residents can only receive one or the other, whichever is higher. To qualify for a sales tax refund, residents must have lived in South Dakota for all of the calendar year. They also must be 65 years or older at the beginning of the year or be disabled at any time of the year. They must live alone, have a maximum annual income of $17,215 or live in a household with a combined maximum income of $23,265. To qualify for the property tax refund, residents must meet all those requirements. In addition, they must have owned the house they live in for at least 3 years or have been a resident of South Dakota for at least 5 years. The amount of the benefit varies, depending on income and how many qualified people apply for the funds.
• Assessment freeze for the elderly and disabled: This program decreases the assessed value of a property. To be eligible, residents must be 65 years or older or meet the Social Security Act definition for being disabled. They also must have been an owner living in a single-family home and a resident of the state for five years. Residents also must have resided in the house for at least 200 days in the prior calendar year. Widowed spouses who have not remarried may still qualify. The income limits to be eligible are $56,595 for a single person and $66,885 for households with multiple people (including all residents’ income). Property valued at $514,500 or more is not eligible for the tax program unless the resident has received the program benefits in a previous year. To apply, residents must contact their county treasurer.
• Property tax homestead exemption: This program defers property tax payments until the property is sold. The taxes are a lien on the property and must be paid, with interest (10 percent per year), before the property can be transferred. To be eligible, residents must be at least 70 years old or a surviving spouse. They must meet income requirements: less than $18,470 for a single person and less than $23,087 in total income from all occupants of a multi-person household. The home must be assessed at $170,000 or less.

Are military retirement pensions taxed?

South Dakota has no income tax, so military retirement pensions are not taxed.

What is the deadline for filing taxes in 2026?

The federal deadline for filing 2025 taxes was April 15, 2026. The IRS offers an extension until Oct. 15, but estimated taxes must have been paid by the April filing date, and the request for extension has to be made by April 15 to avoid penalties. No filings are due in South Dakota.

More AARP Financial Resources

• AARP Retirement Calculator Determine if you are saving enough to retire when — and how — you want.
• AARP Social Security Calculator Figure out when to claim and how to maximize your Social Security benefits.
• AARP Tax Tools Explore resources to help you calculate and prepare taxes.