South Dakota 1099 taxes: a 2026 guide for the self-employed
Keeper StaffKeeper is a delightfully smart tax filing software that's especially useful for people with 1099 contracting and freelance income. Our blog breaks down IRS guidance with real-world examples and analysis by tax professionals — empowering taxpayers to save money and take control of their finances.
Krislyn ChanKrislyn is Chief Growth Officer at Keeper. At Keeper, she strives to make expert-level tax strategies that used to require a traditional CPA accessible to all. Prior to Keeper, she was at Curology, where she helped bring custom, prescription-grade skincare out of the dermatologist's office to millions of faces.
Key takeaways
- 1099 income in South Dakota is subject to two income taxes, both federal: 15.3% self-employment tax and 10% to 37% income tax. South Dakota has no state income tax.
- Set aside 20–25% of your profit in a high-yield savings account, so the money earns interest until your tax payments are due. For a single filer with no other income, total tax runs from 18.6% of profit at $40,000 to 26.7% at $200,000.
- Most services are subject to sales tax. Unlike most states, South Dakota taxes services like consulting, computer work, accounting, and engineering at 4.2%, plus 1% to 2% in most cities.
- You need a sales tax license, and it’s free. If you sell a taxable service in South Dakota, register with the Department of Revenue before you start charging sales tax.
- Quarterly income tax payments go only to the IRS. Federal quarterly payments are due April 15, June 15, and September 15, 2026, and January 15, 2027.
How much tax do 1099 workers pay in South Dakota?
These tables show estimated 2026 tax on self-employment profit, the amount left after business expenses. They assume this is your only income, you take the standard deduction, and you have no kids or tax credits.
Single filer, 2026
| 1099 profit | Total tax | % of profit | Self-employment tax | Federal income tax |
|---|---|---|---|---|
| $40,000 | $7,427 | 18.6% | $5,652 | $1,775 |
| $60,000 | $12,037 | 20.1% | $8,478 | $3,559 |
| $80,000 | $16,647 | 20.8% | $11,304 | $5,344 |
| $100,000 | $22,365 | 22.4% | $14,130 | $8,235 |
| $150,000 | $37,608 | 25.1% | $21,194 | $16,413 |
| $200,000 | $53,431 | 26.7% | $28,234 | $25,196 |
Married filing jointly, one self-employed spouse, 2026
| 1099 profit | Total tax | % of profit | Self-employment tax | Federal income tax |
|---|---|---|---|---|
| $40,000 | $6,050 | 15.1% | $5,652 | $398 |
| $60,000 | $10,363 | 17.3% | $8,478 | $1,885 |
| $80,000 | $14,854 | 18.6% | $11,304 | $3,550 |
| $100,000 | $19,464 | 19.5% | $14,130 | $5,335 |
| $150,000 | $30,990 | 20.7% | $21,194 | $9,795 |
| $200,000 | $44,706 | 22.4% | $28,234 | $16,472 |
How South Dakota taxes 1099 income
South Dakota doesn’t have a personal income tax. If you’re a freelancer, independent contractor, gig worker, or solo business owner in South Dakota, your net profit (1099 income minus business expenses) is taxed two ways, both federal:
- Federal self-employment tax: 15.3% on 92.35% of your profit. That’s 12.4% for Social Security, on earnings up to $184,500 in 2026, plus 2.9% for Medicare with no cap. It replaces the payroll taxes an employer would split with you. Estimate it with the self-employment tax calculator.
- Federal income tax: 10% to 37% on your taxable income, after the $16,100 standard deduction ($32,200 married filing jointly), half of your self-employment tax, and the 20% qualified business income (QBI) deduction.
With no income tax, South Dakota is one of the lower-tax states for self-employed people. At $80,000 of profit, a single filer pays $16,647, about $2,613 less than in California and the same as in Texas.
South Dakota sales tax on services
South Dakota taxes all services unless state law exempts them, which makes it one of the few states where many self-employed people charge sales tax on their work.
- Taxable services include business consulting, computer services and software support, accounting, engineering, architecture, inspections, landscaping and lawn care, cleaning, and snow removal.
- Exempt services include health care, education, social services, agricultural and forestry services, financial services from banks, insurance commissions, stock and commodity brokers, trucking, and travel agents.
- The rate is 4.2% plus 1% to 2% of city sales tax where your customer receives the service. The state rate is scheduled to go back to 4.5% on July 1, 2027.
- Get a license first. A sales tax license from the South Dakota Department of Revenue is free, and you need one before you sell a taxable service.
Sales tax you collect from customers doesn’t add to your profit: you pass it on to the state with your sales tax return. Price your work with it in mind, since customers see it on top of your rate.
Contractor’s excise tax for construction work
Construction work, like painting, carpentry, concrete, and remodeling, isn’t subject to sales tax. Instead, prime contractors pay a 2% contractor’s excise tax on their gross receipts, and every contractor needs a contractor’s excise tax license, which is also free. Some jobs on real property, like lawn care, landscape design, and most cleaning, fall under sales tax instead.
Example: tax on $80,000 of 1099 income in South Dakota
Here’s the math for a single self-employed person in South Dakota with $80,000 of profit and no other income.
| Step | Amount |
|---|---|
| Self-employment tax: $80,000 × 92.35% × 15.3% | $11,304 |
| $80,000 minus half of self-employment tax | $74,348 |
| Income the IRS taxes: $74,348 minus the $16,100 standard deduction and $11,650 QBI deduction | $46,599 |
| Federal income tax | $5,344 |
| South Dakota income tax | $0 |
| Total 2026 tax | $16,647 (20.8%) |
Self-employment tax is about two-thirds of the bill. Every dollar you write off as a business expense lowers both federal taxes, since they’re based on your profit after expenses.
What tax write-offs can I claim?
How to lower your South Dakota 1099 tax bill
At $80,000 of profit, every $1,000 of business expenses you deduct cuts about $231 from your total tax. Common write-offs for self-employed people in South Dakota include:
- Your phone and internet, for the share you use for work
- Car expenses, using a set rate per mile or your actual costs (compare the two)
- A home office, if you use part of your home regularly and only for work (estimate yours)
- Software, equipment, and supplies you buy for your business
- Health insurance premiums you pay as a self-employed person
- Retirement contributions to a SEP-IRA or Solo 401(k)
Most of these are small purchases spread across a year of bank and card statements, which is where they get missed. See the full list of tax write-offs for self-employed people.
Track and claim every eligible deduction with Keeper
Keeper scans your accounts for write-offs and files your return — with tax pros reviewing every one.
Try it freeQuarterly estimated taxes in South Dakota
South Dakota has no income tax, so your quarterly income tax payments go only to the IRS. You generally need to pay if you expect to owe $1,000 or more for 2026 after withholding and credits.
| Payment | Covers income earned | Due date |
|---|---|---|
| 1st | January 1 to March 31, 2026 | April 15, 2026 |
| 2nd | April 1 to May 31, 2026 | June 15, 2026 |
| 3rd | June 1 to August 31, 2026 | September 15, 2026 |
| 4th | September 1 to December 31, 2026 | January 15, 2027 |
- To avoid an underpayment penalty, pay at least the smaller of 90% of your 2026 tax or 100% of your 2025 tax.
- Higher earners: if your 2025 income was over $150,000 ($75,000 married filing separately), the prior-year amount rises to 110%.
Get your federal payment amounts with the South Dakota quarterly tax calculator.
Should you form an LLC or S corp in South Dakota?
You don’t need one to work as an independent contractor. If you work for yourself without forming a business, you report 1099 income on Schedule C, part of your regular tax return, and pay the taxes above.
- LLCs cost $150 to form online and $55 a year for the annual report filed online ($15 more on paper). South Dakota has no state income or franchise tax on LLCs.
- S corps can make sense once your profit is around $80,000, when the self-employment tax savings get significant. You pay yourself a reasonable salary and take the rest as profit payouts (distributions) that aren’t subject to self-employment tax.
Run the numbers for your income to see what you’d save.
6 sources
- Sales and use tax guide, July 2026 (South Dakota Department of Revenue) · dor.sd.gov
- Contractor's excise tax guide, July 2026 · dor.sd.gov
- License requirements for sales, use, and contractor’s excise tax · dor.sd.gov
- Filing fees (South Dakota Secretary of State) · sdsos.gov
- IRS releases tax inflation adjustments for tax year 2026 · irs.gov
- Contribution and benefit base · ssa.gov
This article is for informational purposes only and isn’t tax, legal, or financial advice. Tax rules change and depend on your situation, so talk to a tax professional about yours.
