South Dakota Tax on Capital Gains

South Dakota does not tax capital gains at the state level because it has no state personal income tax.

For most residents, that means you will not owe South Dakota tax when you sell investments, stocks, real estate, or other assets for a profit.

Does South Dakota Have a Capital Gains Tax?

No. South Dakota is one of the few states with no personal income tax. Since there is no state income tax, there is no separate state capital gains tax for individuals.

This applies to many common asset sales, including:

• Stocks
• Mutual funds
• ETFs
• Land
• Rental property
• Business interests
• Collectibles

Federal capital gains tax rules may still apply.

Short-Term vs Long-Term Capital Gains

South Dakota does not tax either type of gain at the state level:

• Short-term capital gains: assets held one year or less
• Long-term capital gains: assets held more than one year

You may still owe federal taxes depending on your total income and how long you owned the asset.

Example: You sell stock for a $20,000 profit while living in South Dakota.
South Dakota state tax = $0
Federal tax may still apply.

Capital Gains on Home Sales

South Dakota does not impose state tax on capital gains from selling a home.

However, federal home sale rules still matter:

• Up to $250,000 gain may be excluded for single filers
• Up to $500,000 gain may be excluded for married filing jointly

If your gain exceeds the federal exclusion, federal tax may apply, but South Dakota still would not tax the gain.

Why South Dakota Is Considered Tax-Friendly

South Dakota is often viewed as a tax-friendly state because it has:

• No state income tax
• No state capital gains tax
• No inheritance tax
• No estate tax

This can make the state attractive for retirees, investors, and business owners.

Electronic Filing Recommendation 💻

• File your federal return electronically for faster processing
• Keep records of purchase price, sale price, and dates of ownership
• Review federal capital gains rates before selling large assets
• Save documents related to home sales and investment transactions

Summary

South Dakota does not tax capital gains because it has no state personal income tax.

Residents may still owe federal capital gains tax, but there is no South Dakota state tax on investment or property gains.