3 min read

Your Ultimate Guide to South Dakota Payroll

US Payroll


Jemima Owen-Jones


July 31, 2023

Last Update

June 28, 2024

Table of Contents

Paying unemployment insurance

Personal income tax

Workers’ compensation

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Key takeaways
  1. In the state of South Dakota, employers must pay unemployment insurance.
  2. South Dakota does not have any personal income tax.
  3. Employers do not need to purchase workers’ compensation in South Dakota. However, it is still highly encouraged.

Employers must navigate various regulations and requirements to ensure proper payroll withholding in each US state. This guide introduces what employers must pay and withhold from payroll in South Dakota.

Paying unemployment insurance

On top of withholding federal taxes such as Medicare and Social Security taxes, you are also responsible for withholding and paying certain South Dakota state taxes from your employee’s payroll. These taxes together are referred to as employer payroll taxes or payroll withholding. One of the taxes you must pay is unemployment insurance (UI).

Unemployment insurance is a national program administered by the US Department of Labor and is sometimes referred to as a reemployment assistance tax. The program provides temporary payments to people who are unemployed through no fault of their own. The employer pays the reemployment assistance tax via the online portal.

For more information on paying your unemployment insurance, refer to the South Dakota Department of Labor and Regulation

Personal income tax

South Dakota has no personal income tax; therefore, you do not have to withhold any personal income tax after hiring your first employee in the state.

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Workers’ compensation

Unlike most other states, you do not need to purchase workers’ compensation in South Dakota. However, it is still highly encouraged that you purchase workers’ compensation coverage to limit your liability. For more information on workers’ compensation coverage in South Dakota, visit the state’s official website

Simplify US payroll tax compliance with Deel

While this guide provides essential information on South Dakota payroll taxes, payroll compliance, and state requirements extend beyond what is covered above. To streamline the process and ensure full compliance, companies can turn to Deel. 

Deel offers a comprehensive solution for managing US and international payroll, including payments, taxes, worker classification, and more. Speak with an expert today to see how you can streamline your US payroll processes and ensure compliance with state regulations.

Disclaimer: This article is provided for general informational purposes and should not be treated as legal or tax advice. Consult a professional before proceeding.

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