2026 tax year · South Dakota
Marketplace seller taxes in South Dakota
Etsy, eBay, Shopify and the rest report your gross and withhold nothing. The gap between that and what you are taxed on is your costs, in South Dakota that gap is worth $5,937 in tax.
Take a driver who grossed $45,000 over 18,000 business miles. After mileage at 74.3 cents and the rest of the stack, worked through on the marketplace seller page $26,775 comes off and $18,225 is left as taxable profit. That profit is what South Dakota and the IRS charge against.
What that leaves you owing in South Dakota
| Self-employment tax | $2,575 |
| Federal income tax | $67 |
| South Dakota income tax | $0, no state income tax |
| Total tax | $2,642 |
| Effective rate on gross | 5.9% |
Earning more in South Dakota
A single filer taking the standard deduction, this work as the only income, the calculator above handles the other filing statuses. Miles rise with earnings, so the deduction rises too, and the effective rate on gross climbs more slowly than it would for someone whose income grew without expenses attached:
| Volume | Gross | Mileage off | Taxable profit | South Dakota tax | Total tax | Rate on gross |
|---|---|---|---|---|---|---|
| Part-time | $15,000 | $0 | $15,000 | $0 | $2,119 | 14.1% |
| Steady side income | $45,000 | $0 | $45,000 | $0 | $8,579 | 19.1% |
| Full-time | $72,000 | $0 | $72,000 | $0 | $14,803 | 20.6% |
South Dakota specifics that change the number
South Dakota pairs its missing income tax with one of the lowest state sales tax rates, 4.2%, and no broad business income tax on top. A business with physical presence in the state needs a sales tax license from the first sale; remote sellers only after $100,000 of sales into the state.
Selling into and out of South Dakota
Income tax follows you: South Dakota taxes your profit wherever the buyer was. Sales tax does not. Marketplace facilitator laws make the platform collect and remit sales tax on your behalf in most states, which is why a seller can have customers in all fifty and still file only one income tax return. Selling off-platform is where that stops being true.
On $18,225 of profit, what the states around South Dakota would charge:
| State | Its tax | vs South Dakota |
|---|---|---|
| North Dakota | $0 | same |
| Wyoming | No income tax | same |
| Montana | $199 | +$199 |
| Nebraska | $596 | +$596 |
| Iowa | $693 | +$693 |
| Minnesota | $975 | +$975 |
- North Dakota works out the same as South Dakota on this income.
- Wyoming works out the same as South Dakota on this income.
- Montana would take $199 more, $199 against South Dakota's $0.
- Nebraska would take $596 more, $596 against South Dakota's $0.
- Iowa would take $693 more, $693 against South Dakota's $0.
- Minnesota would take $975 more, $975 against South Dakota's $0.
Marketplace seller tax questions in South Dakota
How much should a South Dakota seller set aside?
About 5.9% of gross on the $45,000 example, $2,642 across self-employment tax, federal income tax and nothing to South Dakota. In practice that means moving about $59 of every $1,000 payout into a separate account the day it lands, and sending roughly $661 to the IRS each quarter, no platform withholds any of this for you. Set aside from each payout rather than finding it in April.
Does the $45,000 on my 1099-NEC match what South Dakota taxes?
No. South Dakota taxes profit, not gross. After $26,775 of deductions the taxable figure is $18,225, so there is no South Dakota tax either way. But the federal side drops by $5,937. The form reports what the platform paid out, it knows nothing about your costs, and no one subtracts them for you. On this example 60% of the gross never becomes taxable income, but only for the seller who kept the records to prove it.