How South Dakota taxes a paycheck
South Dakota has never had a personal income tax and has no corporate income tax either, which is why the state hosts a large trust and credit card industry. No city or county levies an income tax. The state is funded mainly by a 4.2% sales tax (cut from 4.5% in 2023, with local additions of up to 2%), property tax at the local level, and taxes on video lottery, tourism and banking.
The calculator therefore shows federal income tax under the 2026 brackets after the $16,100 standard deduction, and FICA at 7.65% up to the $184,500 wage base, and nothing else. South Dakota has no employee-funded disability or paid leave premium.
How much taxes are taken out of paychecks in South Dakota?
On a $60,000 salary in 2026, a single filer in South Dakota pays about $5,020 in federal income tax and $4,590 in Social Security and Medicare, a total of $9,610, and nothing to the state. Net pay is about $50,390 a year, $1,938 every two weeks.
That figure is identical in Alaska, Florida, Nevada, New Hampshire, Tennessee, Texas, Washington and Wyoming, and, on a $60,000 salary, in North Dakota too because of its zero bracket.
South Dakota compared with its neighbours
South Dakota borders Wyoming, which also taxes no wages, and North Dakota, which taxes nothing on a $60,000 single salary and 1.95% to 2.5% above $48,475 of taxable income. Minnesota, Iowa and Nebraska all tax wages: about $2,560, $1,630 and $1,850 respectively on $60,000, and Montana about $2,060.
Sioux Falls, on the Minnesota and Iowa lines, is where the difference is felt: a $60,000 earner there keeps about $2,560 a year that a resident of nearby Luverne, Minnesota does not. The guide to states with no income tax covers what South Dakota charges instead.
Does South Dakota have state income tax?
No. South Dakota has no state income tax on wages or any other personal income, and no corporate income tax, so a South Dakota paycheck has only federal income tax, Social Security and Medicare withheld. South Dakota funds itself through a 4.2% sales tax with local additions of up to 2%, property taxes set at the county and school district level, and taxes on its banking, trust and video lottery industries.
South Dakota residents file no state income tax return at all; the federal Form 1040 is the only annual income tax filing, and there is no state schedule to attach to it. South Dakota's lack of an income tax dates from statehood and is not in its constitution, but no legislature has proposed one in decades. Residents who work in Minnesota, Iowa or Nebraska owe those states' tax on the wages earned there with no home-state credit, which affects commuters from Sioux Falls and the Black Hills.