South Dakota capital gains tax (2026)
Midwest · No state capital gains tax · combined top long-term 23.8%
In South Dakota, capital gains are not taxed at the state level. No state individual income tax, so capital gains are not taxed at the state level. You still owe federal capital gains tax: 0/15/20% on long-term gains (top 23.8% with the 3.8% NIIT) and ordinary rates up to 37% on short-term gains. This is general information, not tax advice.
Source: Tax Foundation, 2026 state income tax rates. Data as of June 2026.
How South Dakota taxes capital gains
No state individual income tax, so capital gains are not taxed at the state level.
| Component | Rate |
|---|---|
| Federal long-term rate (top) | 20% |
| Net Investment Income Tax (NIIT) | 3.8% |
| Federal subtotal (top long-term) | 23.8% |
| South Dakota effective top long-term rate | 0% (no state tax) |
| Combined top long-term rate | 23.8% |
Source: Tax Foundation, 2026 state income tax rates. Data as of June 2026.
The federal subtotal of 23.8% applies only to top-bracket long-term gains; lower-income filers pay 0% or 15% federally. The South Dakota figure is the effective top long-term rate.
Worked example
On a $100,000 long-term gain for a top-bracket investor in South Dakota, there is no state tax. Federally, 20% ($20,000) plus the 3.8% NIIT ($3,800) on income over the threshold gives about $23,800 - an effective rate near 23.8%. A lower-income filer could pay 15% or even 0% federally.
Estimate only. Use the calculator with your own numbers.
How South Dakota ranks
| Measure | South Dakota | Rank (1 = highest) |
|---|---|---|
| Combined top long-term rate | 23.8% | #48 of 51 |
| State effective top long-term rate | 0% |
States with a similar capital gains burden
| State | State treatment | Combined top long-term rate |
|---|---|---|
| South Dakota (this state) | No state capital gains tax | 23.8% |
| Alaska | No state capital gains tax | 23.8% |
| Florida | No state capital gains tax | 23.8% |
| Nevada | No state capital gains tax | 23.8% |
| New Hampshire | No state capital gains tax | 23.8% |
| Oklahoma | 100% exclusion | 23.8% |
Frequently asked questions
Does South Dakota tax capital gains?
No. South Dakota No state individual income tax, so capital gains are not taxed at the state level. Your gains are still subject to federal capital gains tax (0/15/20% for long-term, up to 37% for short-term) plus the 3.8% NIIT for higher earners.
What is the capital gains tax rate in South Dakota in 2026?
South Dakota levies no state capital gains tax, so on long-term gains you face only the federal rate of up to 23.8% (20% plus the 3.8% NIIT). Short-term gains are taxed federally as ordinary income.
How does South Dakota compare with other states on capital gains?
On the illustrative combined top long-term rate, South Dakota ranks #48 of 51 (1 = highest). It is among the lowest-tax states for investors because it has no state capital-gains tax. See the rankings for the full picture.
Are short-term capital gains taxed differently in South Dakota?
South Dakota taxes neither short-term nor long-term gains at the state level. Federally, short-term gains (held a year or less) are taxed as ordinary income at up to 37%, versus the 0/15/20% long-term rates.
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Sources & accuracy
South Dakota treatment from Tax Foundation, 2026 state income tax rates and the state revenue department (find South Dakota's tax authority). Federal figures from the IRS. Data as of June 2026 for the 2026 tax year. Rates change and special rules have conditions - this is general information, not tax advice. Verify with the official source or a tax professional. See our methodology and disclaimer.
Last updated: 2026-06-21