South Dakota Hourly Paycheck Calculator
If you’re running a business in South Dakota, you know there’s more to payroll than just writing paychecks to employees. There are taxes, forms, and rules to keep track of. Whether you’re hiring your first employee or already have dozens, take a look at our guide to South Dakota payroll taxes and rules to get up to speed.
South Dakota payroll taxes
No state income tax in South Dakota
South Dakota is one of nine states that doesn’t tax personal income. That’s one less thing you’ll need to think about when processing payroll.
South Dakota unemployment tax
South Dakota’s unemployment tax is called the reemployment assistance tax and the employer pays it. Generally, if you have employees, you’ll need to pay this tax. New employers will pay rates between 1.55%–6.55% for the first three years. Construction companies will pay higher rates than non-construction companies.
After three years of employment and reporting wages to the South Dakota Department of Labor and Regulation, you’ll be assigned a rate primarily based on your historical payroll amounts and the dollar amount of claims paid to your former workers. This is called your experience rating, and rates for 2022 range from 0.0% to 9.45%.
Tax is paid on each employee’s wages, up to the wage base. For 2022, the wage base is $15,000.
Each quarter you’ll need to pay the tax you owe and file a report using Form 21, Employer’s Reemployment Assistance Quarterly Report. If you prefer, you can pay and file online using the Department of Labor and Regulation’s portal. You must file your quarterly report even if you had no wages or no tax due.
You can check out South Dakota’s helpful handbook for more information on reemployment assistance tax.
Other South Dakota paycheck rules
Be sure to keep these South Dakota paycheck rules in mind.
- New hires: All new hires or rehired employees need to be reported to the South Dakota New Hire Reporting Center within 20 days of their first day.
- Minimum wage: Effective January 1, 2022, the minimum wage in South Dakota is $9.95 per hour. South Dakota adjusts its minimum wage annually to account for increases in the cost of living.
- Final paychecks: Generally, you must give final paychecks no later than the next regularly scheduled pay date. This applies to both employees who resign or are terminated.
- Overtime: South Dakota has no state law concerning overtime pay, so the federal rules provided under the Fair Labor Standards Act apply. These rules generally require hourly employees to be paid at least one and a half times their regular hourly rate when they work more than 40 hours a week.
- Workers’ Compensation: Requirements to obtain Workers’ Compensation vary by state, this table outlines some of these requirements. If you determine that your company is required to purchase Workers’ Compensation insurance in your state, learn how to sign up for this insurance with Gusto. Sometimes, companies get a request for a workers’ comp audit—head to this article and click the workers’ comp audit reports dropdown for more information.
Federal payroll taxes in South Dakota
Although South Dakota is home to few state payroll taxes, you’ll need to pay and collect federal payroll taxes.
There are four federal payroll taxes to be aware of.
|Federal Payroll Taxes for 2022|
|Federal unemployment (FUTA)||Federal income tax (FIT)||Social Security & Medicare (FICA)|
Employer-paid federal payroll taxes
Federal unemployment tax (FUTA)
Like the state, the federal government also has an unemployment tax. It’s called FUTA and it’s an annual tax employers pay on the first $7,000 of each employee’s wages. The FUTA rate for 2022 is 6%, but many employers only have to pay 0.6% each year.
Employers also pay Social Security and Medicare taxes, which we’ll discuss a little later.
Employee-paid federal payroll taxes
Federal income tax (FIT)
Since the U.S. uses a pay-as-you-go tax system, most workers have federal income tax taken out of their paychecks.
Employees should fill out Form W-4, Employee’s Withholding Certificate, when they start working for you. With this form, employees indicate their tax filing status and number of dependents, among other things. With this information and their earnings, you’ll use federal tax tables to calculate how much to withhold. If you don’t want to flip through pages of tax tables, use payroll software. It will make the calculations for you.
Additional Medicare tax
Some employees will have to pay the Additional Medicare tax depending on their tax filing status and their earnings. You’ll need to withhold this tax from employees who earn more than $200,000 per year. For 2022, the rate is 0.9% of the wages over $200,000.
Jointly-paid federal payroll taxes
Social Security and Medicare taxes (FICA)
The Federal Insurance Contributions Act, or FICA tax, is made up of the Medicare tax and the Social Security tax. In 2022, the Social Security tax requires employers and employees to each contribute 6.2% of wages up to $147,000. The Medicare tax requires each to contribute 1.45% of all wages. See the IRS webpage for details, like maximum thresholds.
- Medicare tax: The employer and employee each pay 1.45% of all wages in 2022.
- Social Security tax: The employer and employee each pay 6.2% on the first $147,000 of wages in 2022.
Paying federal payroll taxes
Depending on how much tax is owed, you’ll have to pay either monthly or semi-weekly. The only exception is for FUTA, which is generally paid annually.
FIT, FICA, and the Additional Medicare tax are reported on Form 941, Employer’s Quarterly Federal Tax Return. As the name implies, this report is filed each quarter and reconciles the amount of tax due with the amount of tax you previously paid.
FUTA is reported on Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return. Usually, employers file this once a year, but there are situations where quarterly payment and filing are required.