US South Dakota sales tax returns to 4.5% July 2027

South Dakota restores 4.5% sales tax rate from July 2027

South Dakota will return its state sales tax rate to 4.5% from 1 July 2027, ending the temporary four-year reduction introduced in 2023 to ease inflation pressures.

The temporary cut reduced the state rate from 4.5% to 4.2% between 1 July 2023 and 30 June 2027. The original reduction was approved by Governor Kristi Noem after both legislative chambers backed the measure as part of wider consumer relief efforts.

Controversial property funding bill underlines end of tax cut

Under Senate Bill 245, signed in 2026, the restored 0.3% increase will now be directed into a dedicated property tax reduction fund rather than the state’s general budget.

The change means businesses must ensure their ERP, ecommerce, marketplace and tax engine systems are updated precisely for transactions occurring on or after 1 July 2027. Authorities have cautioned against implementing the higher rate before the effective date.

South Dakota’s combined indirect tax burden may be significantly higher than the headline state rate. Counties may impose an additional 0.5% local sales tax, while municipalities can add temporary 1% city taxes. This can push combined rates above 8% in some jurisdictions.

Remote sellers and ecommerce platforms with South Dakota nexus should review their obligations ahead of the increase, particularly where local district taxes also apply. Businesses should also monitor local rate adjustments and ensure tax determination logic reflects the correct effective dates and jurisdictional combinations.

South Dakota voted in 2023 to end the sales tax transaction exemption threshold from July of that year. The state was also behind the economic nexus Supreme Court ruling in 2018 which enables states to levy sales tax on sellers from out-of-state.

US Sales Tax rates and selling thresholds