Department of Revenue updates tax system for decrease in state tax rate

PIERRE, S.D.(Press Release) – On July 1, 2023, South Dakota’s tax rate will decrease from 4.5 percent to 4.2 percent. Governor Kristi Noem and the Department of Revenue are working diligently to account for the three-tenth percent sales tax decrease created by House Bill 1137.

“We are excited to provide this tax relief for the people of South Dakota and will work to deliver a permanent tax cut in the future,” said Governor Noem. “South Dakotans will be paying lower taxes when many other states are raising theirs. I appreciate the Department of Revenue for working diligently to implement this relief.”

The state tax rates affected by the changes are:

  • Sales and use tax;
  • Excise tax on farm machinery and farm attachment units;
  • Amusement device tax; and,
  • Motor vehicle gross receipts tax.

“It is our intent to make this transition as easy as possible for those reporting taxes,” said Department of Revenue Secretary Michael Houdyshell. “Our team is currently updating our forms, publications, and software, and communicating with stakeholders to answer questions about the new sales and use tax rate.”

HB 1137 includes a sunset clause which repeals the rate reduction effective June 30, 2027.