One of the few states in the union that taxes all retail sales, leases, and rents of tangible personal property (items) as well as specific services is South Dakota. South Dakota currently levies a state sales tax of 4.5 percent. However, additional local taxes may be required depending on the area, raising the overall rate to 6.5%.
So, what exactly is subject to South Dakota’s sales tax? Sales tax is often applied to all tangible personal items, including clothing, electronics, furniture, and automobiles. Additional services that are taxable include those related to construction, personal services like haircuts, and entertainment-related services like movie tickets and golf course dues.
South Dakota is one of the states that taxes internet purchases when it comes to sales taxes. In actuality, South Dakota was the first state to pass legislation mandating the collection and submission of sales tax by out-of-state online merchants on purchases made by South Dakota residents. The Supreme Court’s 2018 ruling in South Dakota v. Wayfair, Inc., which invalidated the need for a physical presence to collect sales taxes, prompted the enactment of this statute.
The five states that do not currently collect online sales tax are Oregon, Alaska, Delaware, Montana, and New Hampshire. It’s crucial to remember that these states may still charge sales tax on in-person retail transactions.
If you own a business or sell goods, you might be wondering how to handle South Dakota’s sales tax. To assist businesses with their sales tax duties, the South Dakota Department of Revenue offers a variety of materials and tools. Businesses can apply online for a South Dakota sales tax permit, file and pay sales tax returns, and check up the appropriate sales tax rate using the department’s sales tax rate lookup tool.
Last but not least, is shipping taxed in South Dakota? Yes, to answer briefly. The South Dakota Department of Revenue states that “all charges for shipping and handling are subject to sales tax when the item(s) being shipped are subject to sales tax.” Charges for packaging, crating, and delivery are included.
In conclusion, the majority of tangible personal goods as well as some services are subject to a sales tax in South Dakota. The state levies additional taxes on internet purchases and mandates that out-of-state vendors collect and pay sales tax on purchases made by South Dakota residents. Businesses can quickly apply for a sales tax permit, file sales tax returns online, and make payments. And when the item being transported is subject to sales tax in South Dakota, then yes, shipping costs are taxed.
I’m sorry, but it’s not fully true to say that South Dakota is a tax haven. South Dakota does have a sales tax, while not having a state income tax. In addition, several categories of property, including cars and real estate, are taxed on a yearly basis. Therefore, South Dakota is not inherently a tax haven even though it may be more tax-friendly than other states in some areas.