South Dakota is renowned for its stunning natural surroundings, thriving tourism sector, and light tax load. The state’s friendly tax laws consistently place it among the top 10 states in the nation. It’s crucial to remember that South Dakota does not have zero taxes. This article will examine South Dakota’s tax structure and provide answers to some frequently asked questions. South Dakota is tax-free, right?
No, South Dakota does not have no taxes. Despite the absence of an income tax, the state does impose additional taxes on both citizens and corporations, including a sales tax and a property tax. While local taxes can raise the rate as high as 6.5%, the state sales tax rate is 4.5%. Additionally, many South Dakota counties and towns may levy extra taxes on particular goods or services. How are taxes applied to internet purchases?
The discussion surrounding the online sales tax has South Dakota at the forefront. A state law was implemented in 2016 requiring online merchants to collect sales tax from customers who reside in South Dakota, even if the merchant does not have a physical location there. After being contested in court, this statute ultimately reached the Supreme Court, which sustained it in its historic 2018 South Dakota v. Wayfair decision. As a result, even if they don’t have a physical presence in the state, online retailers must now collect sales tax in states where they conduct a particular volume of business or transactions.
Currently, Alaska, Delaware, Montana, New Hampshire, and Oregon are the only five states without a state sales tax. It’s crucial to remember that some local governments in these states may still charge sales tax on particular goods or services. What are the 7 states that don’t charge taxes?
Seven states — Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming — do not impose an income tax. It’s crucial to keep in mind that these states might still impose additional taxes, including sales tax or real estate taxes.
Because they are not required by law to do so, some websites might not collect sales tax. In the past, states where retailers had a physical presence, such a store or warehouse, were the only ones where they had to collect sales tax. The Wayfair ruling by the Supreme Court, which allowed states to require retailers to collect sales tax even if they do not have a physical presence in the state, changed this. Despite this ruling, certain websites may not charge sales tax because not all shops have changed their systems to meet the new rules.
In conclusion, South Dakota has a relatively modest tax burden compared to other states, but not being completely tax-free. Sales tax, property tax, and other taxes that are owed by citizens and businesses are all included in the state’s tax structure. Additionally, the state has been in the forefront of the discussion around the online sales tax, and its 2016 statute ultimately resulted in the South Dakota v. Wayfair ruling by the Supreme Court. As a result, even if they don’t have a physical presence in the state, online retailers must now collect sales tax in states where they conduct a particular volume of business or transactions.
Yes, you might need to pay sales tax on your Amazon purchases if you’re from South Dakota and make them. The seller might not be compelled to charge sales tax if they do not have a physical presence in South Dakota, nevertheless. In this situation, it would be your responsibility to notify the state of and make payment for the use tax on those purchases. It is always advised to seek particular advice on your tax obligations from the South Dakota Department of Revenue or a tax expert.