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use tax

Use tax is a tax imposed by state taxing authorities on the purchase of goods outside the taxpayer’s state of residence when sales tax is not collected on the transaction. Use taxes are generally designed to discourage the purchase of goods that are not subject to sales tax.

In South Dakota, use tax complements the state sales tax and is designed to ensure that the state collects tax revenue on purchases made by its residents from out-of-state sellers where sales tax has not been charged. This typically applies to items purchased online, through mail-order catalogs, or from other states during travel, and then used, stored, or consumed in South Dakota. The state's use tax rate is the same as the sales tax rate, which is 4.5% as of the knowledge cutoff in 2023. South Dakota residents are required to report and pay use tax on their state income tax return or through a separate use tax return if they have made purchases from out-of-state sellers that did not collect South Dakota sales tax. The obligation to pay use tax helps to level the playing field between in-state businesses that have to collect sales tax and out-of-state sellers that do not, ensuring fair competition and consistent tax collection for the state.

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Taxes

use tax

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Taxes

use tax

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