South Dakota (US) Reduces State Sales Tax Rate and Amends Economic Nexus Threshold

South Dakota has updated its tax rules effective July 1, 2023, which include a reduction in its state sales tax rate and a change to the economic nexus threshold used to determine whether remote sellers are required to charge South Dakota sales tax.

1. Effective July 1, 2023, House Bill 1137 temporarily lowers South Dakota’s sales and use tax rate from 4.5% to 4.2%. This change will apply to sales taxes, excise taxes on farm machinery, farm attachment units, motor vehicle gross receipts, and amusement device taxes. The tax rate reduction is set to expire on June 30, 2027, as per the law’s sunset clause.
2. Second, the state is updating its economic nexus threshold criteria for remote sellers making sales in South Dakota. Previously, the South Dakota economic nexus threshold was set at $100,000 in gross sales or 200 or more separate transactions in the state in the previous or current calendar year. However, starting July 1, 2023, the registration criteria no longer includes the 200 or more transactions threshold as per Senate Bill 30.

How Fonoa Can Help

If you have direct sales or facilitate sales to the United States as a marketplace, it is essential to keep track of sales and use tax rate changes and track whether you exceed nexus thresholds in the states where you have sales.

As a tax technology company, Fonoa can help businesses navigate the complex world of sales and use tax. Get in touch to discover how we can help you meet the challenges and take the complexity out of tax.