South Dakota: Sales Tax Handbook
What purchases are taxable in South Dakota?
The taxability of various transactions (like services and shipping) can vary from state to state, as do policies on subjects such as whether excise taxes or installation fees included in the purchase price are also subject sales tax. This reference is here to help answer your questions about what is and is not subject to the South Dakota sales tax.
Contents1.) Taxability of Goods and Services
- General South Dakota taxability guidelines
- Are services subject to sales tax?
- Is shipping & handling subject to sales tax?
- Are drop shipped items taxable?
Section 1: Taxability of Goods and Services
What transactions are generally subject to sales tax in South Dakota?
In the state of South Dakota, sales tax is legally required to be collected from all tangible, physical products being sold to a consumer. Several examples of of items that exempt from South Dakota sales tax are prescription medications, farm machinery, advertising services, replacement parts, and livestock.
This means that an individual in the state of South Dakota who sells school supplies and books would be required to charge sales tax, but an individual who owns a store which sells prescription medication is not required to charge sales tax on all of its products.
Are services subject to sales tax in South Dakota?
The state of South Dakota does in fact usually collect sales taxes on the vast majority of services performed. An example of services which are not taxed would be a professional service provider which is related to health.
This means that a health service provider would not be required to collect sales tax, while a carpenter may be required to collect sales tax.
You can find a table describing the taxability of common types of services later on this page.Top
Are shipping & handling subject to sales tax in South Dakota?
In the state of South Dakota, the laws regarding tax on shipping and handling costs are relatively simple. Essentially, if the item being shipped is taxable, and if you charge for the shipping as part of the order, then the shipping charge is considered to be taxable. If the item is not taxable, then the shipping is not seen as being taxable either.Top
Are drop shipments subject to sales tax in South Dakota?
"Drop shipping" refers to the common business practice in which a vendor, often in a different state, makes a sale of a product which is shipped to the end-user by a third party supplier hired by the initial vendor. In South Dakota, drop shipments are generally subject to state sales taxes.
Section 2: Taxability of Various Items in South Dakota
This table shows the taxability of various goods and services in South Dakota. If you are interested in the sales tax on vehicle sales, see the car sales tax page instead. Scroll to view the full table, and click any category for more details.
|Products on Amazon.com||EXEMPT|
|Food and Meals|
|Leases and Rentals|
|Motor Vehicles||TAXABLE *|
|Tangible Media Property||TAXABLE|
|Manufacturing and Machinery|
|Utilities & Fuel||TAXABLE|
|Medical Goods and Services|
|Medical Devices||EXEMPT *|
|Newspapers and Magazines|
|General Occasional Sales||EXEMPT|
|Motor Vehicles||EXEMPT *|
|Optional Maintenance Contracts|
|General Optional Maintenance Contracts||TAXABLE|
|Parts Purchased for Use in Performing Service Under Optional Maintenance Contracts||EXEMPT|
|Pollution Control Equipment|
|General Pollution Control Equipment||EXEMPT|
|Transportation Services||TAXABLE *|
|Software and Digital Products|
|Canned Software - Delivered on Tangible Media||TAXABLE|
|Canned Software - Downloaded||TAXABLE|
|Custom Software - Delivered on Tangible Media||TAXABLE|
|Custom Software - Downloaded||TAXABLE|
|Customization of Canned Software||TAXABLE|
|Vending Machine Sales|
* See notes in category taxability page for details
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