Does South Dakota charge sales tax on services?
by March 19, 2024
The majority of U.S. states require merchants to charge sales tax on tangible personal property (TPP), otherwise known as physical goods. Many states also implement sales and use tax on digital goods and SaaS. Because the economy has shifted over time from a manufacturing economy to a service economy, states are now looking to generate revenue by taxing services.
Here’s what merchants need to know about taxing services in the state of South Dakota, which has a state sales tax rate of 4.2%.
Does South Dakota charge sales tax on services?
Services are taxable by default in South Dakota. Examples of taxable services include:
- Personal services such as haircuts or massages
- Repair services to a tangible good
However, there are multiple exemptions for services in South Dakota. Examples of services that are exempt from sales tax in South Dakota include:
- Health services
- Educational services
- Social services
- Agricultural services
- Forestry services
- Services provided by certain membership organizations
- Financial services performed by institutions registered under bank franchise
- Commissions paid by an insurance company to an agent for the sale of a policy
- Stock and commodity broker service; services of brokers and agents licensed under Title 47
- Trucking
- Travel agent services
- Construction services
A full list of exempt services can be found here.
Please keep in mind that this is a guideline, and you should consult with a sales tax professional to determine if the services your business provides should be subject to state sales tax. For an in-depth look at South Dakota sales tax, TaxJar’s guide to sales tax in South Dakota and the South Dakota Department of Revenue has more details.
