South Dakota employers must handle several payroll tax obligations: SUI contributions (0.00%–9.35% on the first $15,000 per employee), plus all federal payroll taxes (FICA at 7.65%, FUTA at 0.6% on the first $7,000). South Dakota does not have a state income tax on wages. New employers pay an SUI rate of 1.2%.
Table of Contents
Overview: South Dakota Payroll Tax Landscape
Running payroll in South Dakota means managing federal tax obligations and state unemployment insurance. Here is the complete picture of what South Dakota employers owe:
| Tax | Who Pays | Rate | Wage Base |
|---|---|---|---|
| South Dakota SUI | Employer | 0.00%–9.35% | $15,000 |
| Social Security (FICA) | Split 50/50 | 6.2% each | $176,100 |
| Medicare (FICA) | Split 50/50 | 1.45% each | No limit |
| FUTA | Employer | 0.6% (after credit) | $7,000 |
South Dakota Has No State Income Tax
South Dakota is one of the states that does not levy a state income tax on wages. This means you do not need to withhold state income tax from employee paychecks, and there is no state income tax return for employees to file.
However, this does not mean your payroll obligations are simple. You still must handle federal income tax withholding, FICA taxes, FUTA, and — critically — South Dakota State Unemployment Insurance (SUI) contributions.
💼 From the Payroll Desk
South Dakota’s inflation-indexed minimum wage changes every year, and employers who set it and forget it get caught. Check the Department of Labor’s announcement each fall for the new January 1 rate — it’s not always a big increase, but missing any increase is a violation.
State Unemployment Insurance (SUI)
South Dakota SUI is an employer-paid tax on the first $15,000 of each employee’s wages per year. New employers pay 1.2%. Experienced employers are rated between 0.00%–9.35% based on their claims history.
SUI is administered by the South Dakota Department of Labor and Regulation. You must register for an SUI account when you hire your first employee and file quarterly wage reports.
For a detailed breakdown, see our South Dakota SUI Rates 2026 guide.
Federal Payroll Taxes
On top of South Dakota state obligations, every employer must handle federal payroll taxes:
- FICA (Social Security + Medicare): 7.65% employer share, 7.65% employee share. Social Security applies to the first $176,100; Medicare has no cap.
- FUTA: 0.6% employer-only tax on the first $7,000 per employee (after state SUI credit).
- Federal Income Tax Withholding: Based on employee W-4 and IRS tables. Employer withholds but does not pay.
For a complete breakdown, see our Federal Payroll Tax Basics guide.
Filing Schedules and Deadlines
Key deadlines for South Dakota employers:
- Federal 941: Quarterly — due by the last day of the month after each quarter
- Federal 940 (FUTA): Annual — due January 31
- South Dakota SUI: Quarterly wage reports — due by the last day of the month after each quarter
- W-2s: Due to employees by January 31, filed with SSA by January 31
Penalties for Late Filing and Payment
Late or missed payroll tax payments result in penalties at both the federal and state level:
- IRS: Failure-to-deposit penalties range from 2% to 15% depending on how late
- South Dakota: State penalties vary but typically include interest on unpaid balances plus fixed or percentage-based penalty fees
- Trust fund penalty: The IRS can hold business owners personally liable for unpaid withholding taxes (the “Trust Fund Recovery Penalty”)
Frequently Asked Questions
What payroll taxes do South Dakota employers pay?
South Dakota employers pay federal payroll taxes (FICA, FUTA) and state unemployment insurance (SUI) on the first $15,000 of wages per employee. South Dakota has no state income tax.
What is the South Dakota SUI wage base for 2026?
The South Dakota SUI wage base for 2026 is $15,000. Employers pay SUI on the first $15,000 of each employee's wages per year.
What is the new employer SUI rate in South Dakota?
New employers in South Dakota typically pay an SUI rate of 1.2%. Experienced employer rates range from 0.00%–9.35% based on claims history.
When are South Dakota payroll taxes due?
South Dakota SUI taxes are typically filed quarterly. Federal payroll tax deposits follow the IRS monthly or semi-weekly schedule. Check with the South Dakota Department of Revenue for current due dates.
Does South Dakota have local payroll taxes?
South Dakota does not have local income taxes in addition to the state-level requirements.
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Legal & Tax Disclaimer
This article is for general informational purposes only and does not constitute legal, tax, or professional advice. Employment laws, tax regulations, and compliance requirements change frequently. The information on this page reflects our understanding as of February 2026 and may not reflect recent changes in federal or South Dakota state law.
Do not act or refrain from acting based solely on the information in this article. Always consult a qualified attorney, CPA, or HR professional familiar with South Dakota law before making payroll or compliance decisions for your business.