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South Dakota Taxes Remain Regressive, Taxing Lowest 20% More Than National Average

Sure, South Dakota has low taxes… if you’re rich. The Institute on Taxation and Economic Policy reports in the seventh edition of its “Who Pays?” analysis of state tax systems that South Dakota continues to have among the most regressive taxes in the nation:

Ten states — Florida, Washington, Tennessee, Pennsylvania, Nevada, South Dakota, Texas, Illinois, Arkansas, and Louisiana — are particularly regressive, with upside-down tax systems that ask the most of those with the least. These states tax their poorest residents — those in the bottom 20 percent of the income scale — at rates averaging three times higher than those charged to the wealthy. Middle-income families in these states pay an average rate more than twice as high a share of their income than the wealthiest families. Florida, which has the most regressive state tax system in the nation, fares worst by these two measures, with low-income families paying almost 5 times more than the wealthy and middle-income families paying more than 3 times more [ITEP, “Who Pays? 7th Edition: The 10 Most Regressive State and Local Tax Systems,” January 2024].

In South Dakota, middle-income earners pay 3.0 times the rate that the wealthiest 1% do; the lowest quintile pay 4.4 times the elite rate:

ITEP, Jan 2024.
ITEP, Jan 2024.

Nationwide, state and local taxes are regressive, but not by the same ratios as in South Dakota. The bottom 80% of wage earners pay around 1.4 to 1.6 times the rate that their wealthiest neighbors pay in state and local taxes:

ITEP, Jan 2024.
ITEP, Jan 2024.

Notice that South Dakota taxes its lowest-income residents a hair more than the national average. South Dakota taxes the great middle 30% less than the national average, but South Dakota taxes its well-off one-percenters 64% less than the national average.

It wouldn’t be hard to shift those percentages, provide more tax relief to the folks who need relief the most, down at the bottom of the income ladder, and still leave South Dakota’s richest folks paying no more than the national average for their percentile of 7.2%.

Or we could consider joining the rare few states (six plus D.C., by ITEP’s criteria) with progressive tax systems, which sensibly put greater burdens on greater wealth. Minnesota ranks #2 for progressivity:

ITEP, Jan 2024.
ITEP, Jan 2024.

…and look at all the money they have to do good things like feeding kids.

But making South Dakota’s tax system progressive and relieving the poorest South Dakotans of their undue tax burdens would require bold vision and policy reform, and contrary to the Governor’s claim of challenging the status quo, pushing innovation, and looking for out-of-the-box solutions, the Governor’s Top-Ten podium preening thinly inflated to a State of the State Address contained nothing of the sort, leaving South Dakota’s regressive tax status quo unchallenged and not even looking into the box next door for solutions.


  1. sx123 2024-01-11

    Get rid of unethical grocery tax at least.

    On a national level, with the price inflation the last few years, they’re gonna have to eliminate income and fica taxes under a certain income level and either put on large VAT taxes for big purchases or raise upper level income taxes.

    Can’t sqeeze blood from a stone. Major dereliction of duty: They are making life no fun for millions of people with the current setup.

  2. Jenny 2024-01-11

    SD taxpayers, unless you’re a well-to-do friend of the governor(s), get some of the lowest wages in the nation for all their hard work, I guess.

    MNs extremely popular paid sick leave law for all workers goes into effect this year. The DFL fought long and hard for ten years for this and finally got it passed with a majority in the Senate. It’s so nice to have politicians here in MN that actually care about the workers. Caring and compassion for the working class – try that in Pierre instead of sweetheart crony last name nepotism.
    Also the North Star Promise free tuition program goes starts this Fall. Good things happening in MN!

  3. John 2024-01-11

    South Dakota continues kneecapping its future. Lousy, regressive policies discourage workers, families, and students — the demographic a state needs for growth.
    Doubt it? Glance at S Korea. Today the S Korean population of those aged 70 and over outnumbers those aged 20 and younger. In a couple generations the S Korean population will collapse from its present over 51 million to 38 million. It will have not the population based needed to support oldsters who cannot work and need social services. That is a likely future for South Dakota. In South Dakota – “Adults older than 65 years are projected to surpass 20% of the state’s population by 2030, and children are expected to drop below 20% of the state’s population by that time.” That’s in 6 years.

    The SD state demographer laid it bare for the SD House State Affairs Committee. SD population continues its fast aging. Schools this year are short 600 students — that is larger than too many SD school districts. House Majority Leader Will Mortenson, R-Pierre, – – “We’re just flat out short on people,” Mortenson said during the meeting. Employers are unable to find workers, state schools and colleges are unable to fill desks., and the old, infirm numbers increase while the state shutters senior care facilities.

    The pathetic thing is that Mortenson and his governor scream for policies that DISCOURAGE families: sales tax on food, barring the federal funds to help families feed school-age kids over the summer, the anti-personal freedom women’s healthcare agenda, and the failure to consolidate government in modern frontier depopulating counties, and failing to consolidate schools and colleges.

  4. O 2024-01-11

    Unfortunately, many who are coming to SD are coming for “freedom,” the so-called political immigrants who seek SD’s way of doing things. That only serves to double-down on the political pathway that has lead to the regressive and counter-productive policies toward the working class. For as much as I rail about we silly South Dakotans who will not even vote in our best interests are, it seems there are also those who will emigrate against their best interests to come to be exploited.

    When it comes to budgeting, SD embraces the income drives the budget needs — rather than the needs drive the income budget. That puts those with means in the driver’s seat.

  5. All Mammal 2024-01-11

    Tax the poor to feed the rich. We need to say no. I want my measly taxes to do work for those who are struggling more than me. And if I were rich, I would say the same thing. I don’t stick around SD to boost my own station in life and get to look down on the poorer. That might be the deal with the upper echelons who don’t seem to mind surrounding themselves with sickly bodies scraping by. Heck, we are all poor white trash compared to the nice states. Even the fugacious residents currently occupying Pierre.

  6. jkl 2024-01-11

    I praise the gods that those less fortunate than me are paying my way!! PRAISE GODS🙏🙏🙏🙏🙏

  7. All Mammal 2024-01-11

    You’re a male appendage.

  8. jerry 2024-01-11

    Nothing says South Dakota “Freedom” like a scenic drive in a blizzard. Yes, do come here to South Dakota, build a house and then go south for the long winter. Don’t forget to pay your property taxes and the heat bill for that McMansion, while you bask in the sun of Mexico. Ask yourself, why in the hell did you leave to come here?

  9. Buckobear 2024-01-11

    Our state motto explains it all: “Under GOP the people are ruled.”

  10. Arlo Blundt 2024-01-11

    In the mind of the Republican South Dakotans with Some Acquired Wealth the poor among us are just pesky. They have something to complain about all the time. Low wages, lack of opportunity, kid’s are hungry….it’s always something. It’s just a good thing the risk takers in our society have a few inaccessible to the poor places where they can kick back, have a decent steak, and drink some top shelf booze. Rub shoulders with people of a like persuasion. A just reward for putting up with the poor.

  11. grudznick 2024-01-11

    We do love our tax freedom here, with no income tax. And you pay what you consume. It is an A++ on the tax freedom scale. We are the freest in this area.

  12. Truth Seeker 2024-01-12

    Let’s see the dollar amounts, percentages alone don’t tell the full story. SD relies heavily on property taxes to fund government which impacts the wealthiest people at a higher level than those in the lower income brackets.

  13. Donald Pay 2024-01-12

    Grudz loves the tax system that allows him to freeload off the confiscation of what wealth the poor have to shovel over to the state. Grudz always like to say, “There is no free lunch.” Oh, yes there is, and he’s always willing to eat it off the money the less wealthy feed him.

  14. Cory Allen Heidelberger Post author | 2024-01-12

    Um, the percentages do tell the story. Whatever the dollars are, the state is requiring lower-income people to surrender a far larger share of their money than it requires of much better off South Dakotans.

    The percentages tell the story better than the dollar figures. Taking 11.4% of a poor man’s paycheck has a lot more impact on a poor man’s liberty and financial stability than taking 2.6% of a rich man’s stock windfalls, even if the poor man’s percentage tallies out a lower dollar figure than the rich man’s tax bill.

    Think of it this way: take $100,000 from a millionaire, and he has to do without a second Mercedes. Take $1,000 from a construction worker, and he can’t make rent and gets evicted.

  15. O 2024-01-12

    To use the wealth=freedom rhetoric of our GOP friends, SD is the place to come for freedom — as long as your already had plenty of it. If you lack freedom, don’t come here looking for it. As grudznick clearly articulates, “we” are the wealthy, the free, in SD; “they” had better look elsewhere for the ladder up.

  16. jkl 2024-01-13

    CAH- Yes the poor have to pay for others. THAT IS HE WAY THE GODS INTENDED!! PRAISE THE GODS!! Sarcasm is lost on some.

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