Payroll tax in South Dakota: What employers need to know [2024]

Payroll taxes are an essential part of running any business, but the mix of federal and state guidelines can be daunting for employers. In addition to managing federal income tax withholding and FICA taxes (like Medicare and Social Security), South Dakota employers are responsible for remitting and filing state unemployment insurance tax.

While South Dakota’s payroll tax system is more straightforward than states like California, employers must still understand its intricacies to avoid potential penalties.

Whether you’re operating a small business or running a global enterprise, you’ll need to know about the different types of payroll taxes, tax rates, and filing and payment deadlines. We’ll cover all that and more below. 

The 3 South Dakota payroll taxes

In the Mount Rushmore State, the South Dakota Department of Labor & Regulation manages the administration of payroll taxes. Payroll tax responsibility begins as soon as an employer pays more than $1,500 to an employee within a calendar quarter. 

While some states have multiple types of payroll taxes, South Dakota only has one: the unemployment insurance (or reemployment assistance) tax. However, employers are still responsible for remitting federal income tax withholdings and FICA taxes. Let’s take a look at each one in more detail. 

Reemployment assistance tax

In South Dakota, the reemployment assistance tax helps maintain the state's unemployment insurance program. The program ensures eligible workers can receive financial aid during periods of unemployment. Employers are responsible for paying this tax.

Here's a summary of the reemployment assistance tax rates:

Keep in mind that after the first three years of employment, each employer’s tax rate varies annually based on wages reported and their number of reemployment assistance claims. For a full breakdown of annual contribution rates, check out the DLR reemployment assistance tax page.

Federal Insurance Contributions Act (FICA) taxes

Employers in South Dakota, as in the rest of the US, must withhold FICA taxes from their employees' paychecks. These taxes are used for Social Security and Medicare contributions.

Federal income tax withholding

South Dakota employers must also withhold federal income tax from their employees' wages. The withholding amount varies based on the employee's earnings, filing status, and the information provided on their W-4 form. Employers must refer to the IRS withholding tables and the W-4 to accurately calculate the federal income tax.

Managing payroll taxes can be intimidating for employers in South Dakota, especially when it comes to compliance with state and federal tax regulations. Rippling’s payroll software offers a comprehensive solution that simplifies this process. It automatically calculates the correct amount of tax withholdings, ensuring the timely and accurate submission of tax forms and payments to the correct agencies.

Rippling’s software is designed to keep up with the latest tax laws at the federal and state levels, helping you stay in compliance. Businesses looking for an even more integrated solution should consider Rippling’s PEO service. It handles the registration and maintenance of state tax accounts, automating a larger portion of the payroll tax process and freeing up valuable time and resources.

Payroll tax due dates in South Dakota

Knowing when payroll taxes are due in South Dakota is key to avoiding penalties. Reemployment assistance tax payments are usually due quarterly, with the following deadlines: 

• First quarter (January-March): due April 30
• Second quarter (April-June): due July 31
• Third quarter (July-September): due October 31
• Fourth quarter (October-December): due January 31

The due dates for FICA and federal income taxes vary depending on the employer’s total tax liability; they could be as frequent as semi-weekly for larger employers. 

Remember, late tax payments can result in significant penalties. The IRS penalty for late federal taxes starts at 2% of the unpaid tax for those made one to five days late and increases incrementally. Interest is also charged on the unpaid amount. State payroll taxes are also subject to penalties, but the specific percentage varies.

How to submit payroll taxes in South Dakota

Having covered the types of payroll taxes and their due dates, let’s review the available payment methods in South Dakota.

Enroll in the electronic tax filing system

Employers can enroll in the state's electronic tax filing system for a streamlined and secure way to manage payroll taxes. This system allows you to:

• Make tax payments
• File and adjust tax returns
• Register new accounts or manage existing ones
• Report new hires

You can find detailed instructions and assistance for enrolling and managing your payroll tax account on the South Dakota Department of Labor & Regulation website.

Federal employment taxes, which include FICA and personal income taxes, must be paid via electronic funds transfer using the US Department of the Treasury EFTPS website. Businesses can use the site to enroll in the system, and once they receive their credentials, make payments on any tax due to the IRS. Note that taxes are due by their due dates regardless of the site’s availability. If you experience technical difficulties with the EFTPS website, you can make a payment by phone by calling 1-800-555-3453.

Electronic Funds Transfer (EFT)

Another convenient method is using Electronic Funds Transfer (EFT). This option enables employers to directly transfer funds from their bank account to the state tax account. The South Dakota Department of Revenue provides guidelines and instructions for setting up EFT payments.

Submit by mail

For employers who prefer traditional methods, South Dakota allows reemployment assistance quarterly reports and tax payments to be mailed to:

South Dakota Department of Labor and Regulation
Reemployment Assistance (RA) Tax Division
PO Box 4730
Aberdeen, SD 57402-4730

You can find forms and further instructions on the South Dakota Department of Revenue website.

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Rippling’s full-service payroll software

If you're seeking a more hands-off approach, Rippling’s payroll software is your solution. Rippling simplifies the entire payroll tax process. It automates tax calculations, form submissions, and payments—all in compliance with federal and state laws, including those specific to South Dakota. 

FAQs about South Dakota payroll taxes

Are there local tax laws in South Dakota?

Municipalities in South Dakota can impose municipal sales, use, and gross receipts taxes. But there are no local income taxes in the state.

Can your tax returns be audited in South Dakota?

Yes. The state’s Department of Revenue can audit tax returns.

Are nonprofit organizations subject to payroll taxes in South Dakota?

Nonprofit organizations in South Dakota generally need to pay standard payroll taxes, such as unemployment insurance and FICA taxes. Certain nonprofits, like religious or charitable organizations, may have specific exemptions or reduced rates. 

Do South Dakota employers need to pay unemployment insurance tax?

Most employers in South Dakota must pay unemployment insurance tax—also known as reemployment assistance tax—which funds unemployment benefits.

Is workers’ compensation insurance mandatory in South Dakota?

In South Dakota, workers' compensation insurance isn’t mandatory for most employers. This insurance covers employees for work-related injuries or illnesses. 

How does South Dakota’s minimum wage affect payroll taxes?

The minimum wage in South Dakota influences payroll taxes by setting the baseline for wages taxed. Changes in the minimum wage can affect an employer's total payroll tax liability.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.