South Dakota continues to have one of the lowest overall tax burdens in the country. The Tax Foundation ranks the state No. 2 in its State Tax Competitiveness Index, thanks largely to South Dakota’s lack of an income tax and the absence of estate, inheritance, and corporate income taxes. The state also ranks No. 1 nationally for both corporate and individual tax categories.
But another analysis paints a different picture. The Institute on Taxation and Economic Policy regularly lists South Dakota among the most regressive tax systems, meaning lower-income households pay a larger share of their income in state and local taxes than wealthier residents.
