South Dakota state sales tax goes back to 4.5% in 2027

What is new is SB 245, signed by Governor Larry Rhoden on March 12, 2026, which locks in that revenue for a homeowner property tax reduction fund rather than letting it flow into the general budget. The rate is going up regardless.

If you have South Dakota nexus, July 1, 2027 is the date to have in your calendar.

What changed

• Current rate: 4.2% state sales tax, in effect since July 1, 2023.
• New rate: 4.5% state sales tax, effective July 1, 2027.
• Why: The 4.2% rate was always temporary. In 2023, South Dakota reduced the rate from 4.5% to 4.2% with a scheduled sunset of July 2027. SB 245 does not create the rate increase — it captures the revenue from the pre-scheduled increase for property tax relief.
• Signed: Governor Larry Rhoden signed SB 245 on March 12, 2026.
• Local rates: South Dakota has also passed legislation allowing counties to levy an optional 0.5% local sales tax and cities to add a temporary 1% sales tax for capital projects. Combined rates could reach 8% or higher in some areas of the state. Confirm local rates for specific delivery addresses before July 2027.

For a full breakdown of South Dakota’s sales tax rules and nexus thresholds, see our South Dakota sales tax guide.

Who this affects

• Remote sellers with South Dakota economic nexus. If you exceed South Dakota’s nexus threshold and are registered to collect, your state rate calculation needs to update from 4.2% to 4.5% effective July 1, 2027.
• Ecommerce sellers using platform integrations or APIs for South Dakota tax calculations. Confirm your rate tables will reflect the updated state rate on July 1, 2027.
• Sellers shipping to South Dakota cities or counties that adopt new optional local taxes. The state rate increase is confirmed. Local rate additions are optional and vary by jurisdiction. Monitor local rate changes as July 2027 approaches.
• CPAs and tax advisors with South Dakota filing clients. Note the July 1, 2027 effective date and build it into your client rate review schedule.

What sellers should do right now

• Flag July 1, 2027 in your compliance calendar. The rate change is confirmed and the effective date is fixed. Build a reminder to verify your South Dakota rate setup before that date.
• Do not update your rate tables yet. The current 4.2% rate remains in effect until June 30, 2027. Updating early would result in overcollection.
• Monitor South Dakota local rate decisions. Counties and cities now have the option to add local sales taxes on top of the state rate. Watch for local adoption announcements as the July 2027 deadline approaches.
• Confirm your South Dakota nexus status. If you are not sure whether you meet South Dakota’s economic nexus threshold, review your sales into the state for the current and prior calendar year.

If you use TaxCloud: TaxCloud will automatically update South Dakota’s state sales tax rate to 4.5% on July 1, 2027. No manual changes are needed. TaxCloud also monitors local rate changes across all South Dakota jurisdictions as they are adopted.