South Dakota (SD) levies a 4.5% state sales tax, making it essential for businesses to understand collection and remittance obligations. As of 2026, the LLC filing fee is $150 with no annual franchise tax.
Economic Nexus in South Dakota
Remote sellers must collect South Dakota sales tax if they exceed $100,000 in annual sales or 200 transactions within the state. This threshold has been in effect since 2016-11-01. Marketplace facilitators like Amazon and Etsy are also required to collect and remit tax on behalf of third-party sellers. The South Dakota Department of Revenue enforces these provisions and provides registration guidance at https://dor.sd.gov.
LLC Formation in South Dakota (2026)
Forming an LLC in South Dakota costs $150 for the initial filing. There is no annual franchise tax, keeping ongoing costs low. The annual report fee is $50. South Dakota has no state income tax, making it attractive for LLC owners seeking tax efficiency.
The process involves filing Articles of Organization with the Secretary of State, obtaining a federal EIN, and registering for applicable state tax accounts. You will also need a sales tax permit from the South Dakota Department of Revenue.
Key Tax Rules
• South Dakota has a 4.5% state sales tax rate.
• Local taxes can add up to 2%.
• South Dakota has no state income tax.
• The state's Wayfair case established economic nexus nationwide: $100,000 in sales or 200 transactions.
Sales Tax Exemptions
The following categories are generally exempt from sales tax in South Dakota: prescription drugs, agricultural equipment. Businesses should maintain proper documentation for exempt transactions.