Self-employed taxes and LLC costs in South Dakota, 2026
South Dakota charges a self-employed resident nothing on income, so the only recurring state bill for a small LLC is the $55 annual report.
Total tax on this income in 2026
$17,800
Put aside 21% of each payment · $4,450 per quarter
| Self-employment tax (15.3%) | $12,010 |
| Federal income tax | $5,790 |
| South Dakota income tax | $0 |
| QBI deduction used | $12,579 |
| Effective rate on all income | 20.9% |
With an S corp election and a $34,000 salary, about $3,599 less tax (check it).
Computed by Radif Partners from IRS and South Dakota agency documents read on October 15, 2026 · How we calculate
A South Dakota freelancer owes no state income tax in 2026, and an LLC adds only two filings: $150 for the articles of organization when filed online, then $55 for each annual report. The first year costs $205, five years $425 and ten years $700, with no franchise tax and no minimum tax on top. What remains is federal: on $75,000 of profit, a single filer pays about $15,495 of federal income tax and self-employment tax, roughly 21 % of profit to set aside, or $3,874 per quarterly payment. Because there is no state return, the S corporation election changes only federal and payroll taxes; at $120,000 of profit and a $50,000 salary it saves about $5,157 after $2,000 of payroll costs and $180 of state unemployment tax. Forming the LLC here does not change where a nonresident owes income tax.
South Dakota at a glance, 2026
| LLC filing fee | $150 |
| Annual Report | $55 a year |
| Income tax | none on wages or business income |
| S corporation election | followed by the state |
| Tax on $75,000 of profit (single) | $15,495 in all, $0 to South Dakota |
What South Dakota leaves out is the story here. There is no tax on wages or business income, no corporate income tax for ordinary companies and no franchise tax on LLCs. The Secretary of State's fee schedule lists $150 for articles filed online and $165 on paper, then $55 a year. Nothing else from the state reaches a one-owner LLC that has no employees.
State fees over the years
South Dakota LLC, 5 years
$425
| Formation | $150 |
| Per year after | $55 |
Your tax bill is the federal one
With no state return, the quarterly estimates you send are federal only. For a married couple filing jointly with $180,000 of business profit, the total comes to about $38,632, of which $25,433 is self-employment tax, the 15.3% Social Security and Medicare charge on 92.35% of profit. That charge is the largest single line for most freelancers below the Social Security wage base of $184,500, and it is the reason the S corporation question comes up at all.
When the S corp adds a South Dakota payroll account
Electing S status means paying yourself a salary, and a salary means registering with the state's Reemployment Assistance program. A new employer outside construction pays 1.2 % on the first $15,000 of each employee's wages, plus an investment fee of 0.55% listed by the Department of Labor and Regulation. On one owner salary that is a small sum, and the LLC vs S corp calculator includes it when you pick South Dakota.
A new choice for the annual report date
Under the current statute, the first report is due before the first day of the second month of the year after formation, then on that same date each year. From January 1, 2027, SDCL 59-11-25 as amended lets each company choose between its anniversary month and January 31 every year. Owners who run several entities can line them all up on one date, which makes missed filings less likely.
Comparing with the neighbors
South Dakota shares the no-income-tax status with Wyoming, and both keep LLC upkeep in the double digits each year. North Dakota next door does tax income, at low rates. For a remote worker deciding where to base a business, the gap is mostly the state income tax, since federal tax and self-employment tax are identical everywhere. Residency is a question of where you live and work, not where the LLC is registered: forming an LLC here while living in another state does not move your income out of that state's reach.