South Dakota is often touted as a low tax state. It is, for some families. Not so much for others.
What makes the difference? See the latest analysis. http://www.itep.org/pdf/whopaysreport.pdf
Family income drives the overall percentage of income paid in state and local taxes in South Dakota.
The 11.3% of income these South Dakota families pay for state and local taxes is over six times higher than the 1.8% rate paid by top earning families (>$468,000/year). Low income families also pay a higher tax rate than middle income households, who pay 7.7% of their income in state and local taxes.
Low income South Dakota families pay the highest percentage of their income toward state and local taxes among all SD’s regional states.
The 60% of South Dakotans making between $21-94,000 pay higher state and local taxes than their counterparts in North Dakota, Wyoming and Montana but lower than Minnesota, Iowa and Nebraska.
Compared to regional states, high income families in South Dakota see lower rates of household income going for state and local taxes.
Once family incomes exceed $94,000 (top 20% of households), South Dakota’s state and local tax advantage over its neighboring states does start kicking in. The higher the income among these top earning families, the lower the SD tax rate.