Retiring in South Dakota: how your income is taxed
South Dakota is very tax-friendly for retirees. On a typical retirement income it ranks tied for #1 of 51 with 18 other states for the lowest state income tax.
The rules in South Dakota
South Dakota has no state income tax on wages or retirement income, so Social Security, pensions and retirement-account withdrawals are not taxed by the state.
Calculate your South Dakota retirement taxes
State income tax in South Dakota: $0 a year
In South Dakota, the 401(k)/IRA amount counts as IRA withdrawals, which don't qualify for the pension exclusion. Enter withdrawals from employer plans such as a 401(k) or 403(b) as pension.
In South Dakota you'd pay about $0 in state income tax and $4,336 in federal income tax on $70,000 of retirement income, keeping $65,664 (6.2% total).
South Dakota ranks tied for #1 of 51 with 18 other states for the lowest state tax on this income. 19 states charge no state income tax on this income.
What retirees pay in South Dakota
| Retirement income | State tax (single) | State tax (married) | Federal tax (single) |
|---|---|---|---|
| $24,000 Social Security, $12,000 401(k)/IRA | $0 | $0 | $0 |
| $30,000 Social Security, $20,000 pension, $20,000 401(k)/IRA | $0 | $0 | $4,336 |
| $40,000 Social Security, $40,000 pension, $50,000 401(k)/IRA, $10,000 other income | $0 | $0 | $19,812 |
Age 67 or older, 2026 rules including the federal senior deduction. For married couples, income is the household total and both spouses are 67 or older. State estimates apply South Dakota's main exclusions and may differ for income-tested credits.
Moving to South Dakota in retirement?
Compare the tax on your Social Security, pension and 401(k)/IRA income, and typical living costs, with the state you'd leave. These are the states most households moving to South Dakota come from (IRS migration data, 2022–2023).
- Minnesota to South Dakota
- Iowa to South Dakota
- California to South Dakota
- Colorado to South Dakota
- Nebraska to South Dakota
- Texas to South Dakota
Frequently asked questions
Does South Dakota tax Social Security?
Not taxed. South Dakota has no state income tax.
Does South Dakota tax pensions?
Not taxed. South Dakota has no state income tax.
Does South Dakota tax 401(k) and IRA withdrawals?
Not taxed. South Dakota has no state income tax.
Is South Dakota a good state to retire for taxes?
For a single retiree with $30,000 Social Security, $20,000 pension, $20,000 401(k)/IRA, South Dakota charges about $0 in state income tax, ranking tied for #1 of 51 with 18 other states (lowest tax first).
Related
Sources: dor.sd.gov, taxfoundation.org. Rules reviewed .