South Dakota: Sales Tax Handbook
What purchases are exempt from the South Dakota sales tax?
While the South Dakota sales tax of 4.2% applies to most transactions, there are certain items that may be exempt from taxation. This page discusses various sales tax exemptions in South Dakota.
Sales Tax Exemptions in South Dakota
In South Dakota, certain items may be exempt from the sales tax to all consumers, not just tax-exempt purchasers.
Several examples of items that exempt from South Dakota sales tax are prescription medications, farm machinery, advertising services, replacement parts, and livestock.
Many states have special, lowered sales tax rates for certain types of staple goods - such as groceries, clothing and medicines. Restaurant meals may also have a special sales tax rate. Here are the special category rates for South Dakota:
Clothing
4.2%
Groceries
4.2%
Prepared Food
4.2%
Prescription Drugs
4.2%
OTC Drugs
4.2%
These categories may have some further qualifications before the special rate applies, such as a price cap on clothing items. Groceries are generally defined as "unprepared food", while pre-prepared food may be subject to the restaurant food tax rate.
Candy and soda may be included or excluded from any preferential tax rate depending on whether or not the state considers them to be a "grocery":
Candy IS considered a grocery in South Dakota
Soda IS considered a grocery in South Dakota
Are services, shipping, installation, etc taxable in South Dakota?
The taxability of transactions involving services, shipping, and installation of tangible goods can be slightly complicated with various laws applying to slightly different situations. To learn more about how these transactions, and other more complicated situations, are subject to the South Dakota sales tax see the South Dakota sales taxability FAQ page.
Other tax-exempt items in South Dakota
This table lists a number of additional categories of goods and services that are exempt from South Dakota's sales tax. For a list that also shows taxable items, see the list of taxable and nontaxable items in South Dakota.
| Category | Exemption Status |
|---|---|
| Manufacturing and Machinery | |
| Raw Materials | EXEMPT |
| Medical Goods and Services | |
| Medical Devices | EXEMPT * |
| Medical Services | EXEMPT |
| Occasional Sales | |
| General Occasional Sales | EXEMPT |
| Motor Vehicles | EXEMPT * |
| Optional Maintenance Contracts | |
| Parts Purchased for Use in Performing Service Under Optional Maintenance Contracts | EXEMPT |
| Pollution Control Equipment | |
| General Pollution Control Equipment | EXEMPT |
| Trade-Ins | |
| General Trade-Ins | EXEMPT |
* See notes in category taxability page for details
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