South Dakota has earned a reputation for its excellent business tax climate. In fact, the Mount Rushmore State came in second place (behind Wyoming) on the Tax Foundation’s 2025 State Tax Competitiveness Index.
The main reason? The state’s minimal taxes. Business owners in South Dakota have no corporate income tax, personal income tax, personal property tax, business inventory tax, or inheritance and estate taxes. State sales tax is also fairly low, at 4.2%.
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Does South Dakota have business tax incentives and credits?
No, South Dakota doesn’t offer any business tax incentives or tax credits. Because the state doesn’t impose any business taxes, they don’t need to offer programs to offset those taxes.
What about local business tax credits in South Dakota?
South Dakota may not have state-run business tax incentives, but many cities and counties offer their own business tax programs. Sioux Falls, for example, offers businesses a local sales tax refund on purchases used to furnish their business facilities.
Explore the economic development section of your city’s website to learn about your options.
Business financing in South Dakota
Another advantage of doing business in South Dakota is the state’s variety of financing programs—from long-term loans to workforce training reimbursements. Gusto’s guide to South Dakota business grants and loans gives you all the details.
While you’re gathering resources, bookmark these blog posts for practical advice on running a business in the Mount Rushmore State:
