South Dakota · LLC tax election
South Dakota LLC: S corp or C corp?
South Dakota takes no cut of your business income, whatever box you check on the federal form.
See South Dakota at a glanceShort answer
A South Dakota LLC has no state income tax to plan around: the state imposes no corporate income tax and no personal income tax. So the choice is purely federal. A C corporation pays a flat 21% federal tax, while an S election can trim the 15.3% self-employment tax on profit above your salary.
Last checked .South Dakota at a glance
| Question | South Dakota |
|---|---|
| S election recognized? | No state income tax, so the election changes nothing at the state level1 |
| Separate state form and deadline | No separate state form2 |
| Tax the S corp itself pays | None at the entity level3 |
| C corp rate and minimum | 0% flat4 |
| Personal income tax | No tax on wages or pass-through income5 |
What is different about South Dakota?
Almost every guide to S corps and C corps spends most of its time on state rules. South Dakota gives you almost nothing to cover. The Department of Revenue states plainly that South Dakota does not impose a corporate income tax, and the state's own fiscal materials describe it as having no personal income tax. So there is no state S election form, no state C corp rate, and no state tax on the salary or distributions you pay yourself. Your S versus C decision is the same one you would make if the state did not exist: a federal question about payroll tax, a reasonable salary, and what you plan to do with the profit.
Does South Dakota recognize a federal S corp election?
South Dakota has no S corporation income tax because it has no corporate income tax. Your LLC taxed as an S corp files its federal return and nothing separate for state income tax. There is no state S election form, no entity-level S corp tax and no state tax on the income passed through to you. Nothing in the S election changes any other South Dakota tax your business may face.
Does my LLC need a separate South Dakota election or form?
South Dakota has no state S election form because it does not impose a corporate income tax.2
What does South Dakota tax an S corp or LLC at the entity level?
- South Dakota does not tax an S corporation's income at the entity level because it imposes no corporate income tax.3
Is a South Dakota LLC taxed as a C corp ever better?
A South Dakota C corp pays no state corporate income tax, because South Dakota does not impose one. There is no rate, no minimum and no franchise tax on income to report. The C corp pays federal corporate tax only. When you pay dividends, the state does not tax them as personal income either. Pick C corp status here for federal reasons, such as retaining earnings in the company, never to dodge or reach a state rate.
Run your South Dakota numbers
With no state income tax, nothing at the state level eats into an S election. The calculation is federal only: the self-employment tax you save against the cost of running payroll and filing an S corp return. That makes the break-even point in South Dakota the same as the federal one. Run the numbers on your profit, not on any state rule.
Result
How much would a South Dakota LLC owner save as an S corp?
| Taxed as | At $80,000 profit | At $150,000 profit |
|---|---|---|
| Default LLC | $11,304self-employment tax $11,304 | $21,194self-employment tax $21,194 |
| S corp | $9,344payroll tax $7,344 + South Dakota S corp tax $0 + $2,000 payroll and prep | $15,770payroll tax $13,770 + South Dakota S corp tax $0 + $2,000 payroll and prep |
| C corp | $16,064payroll tax $7,344 + South Dakota tax $0 + federal $6,720 + $2,000 payroll and prep | $28,370payroll tax $13,770 + South Dakota tax $0 + federal $12,600 + $2,000 payroll and prep |
Assumes a 60% salary7 and a single filer. Income tax is left out. C corp dividends are taxed again. We could not confirm on an official South Dakota source whether a default LLC pays an entity-level tax, so none is shown.
When is the Form 2553 deadline for a South Dakota LLC, and what if I miss it?
Late relief: federal steps, deadline guide.
What to do next
How to start one, or have us form it from $123.75.
Registered agent $74.25/yr, annual report.
LLC vs S corp guide, election deadline, Form 2553 filed for $165.
More on South Dakota: How to start a South Dakota LLC · How to start a South Dakota corporation · South Dakota LLC cost · South Dakota annual report · Annual report late fees by state
File the S-Corp Election for your South Dakota LLC
We file Form 2553 for a flat $165.
Get the S-Corp ElectionCommon questions
Does South Dakota have a corporate income tax?
No. The South Dakota Department of Revenue says the state does not impose a corporate income tax. C corporations and S corporations owe no state tax on their income.
Does South Dakota tax S corp income?
No state income tax applies to S corporation income, since South Dakota has no corporate income tax and its fiscal materials list no personal income tax. Your federal return is where S corp income is taxed.
Do I need a state S election form in South Dakota?
No. Because South Dakota has no corporate income tax, it has no state S election form. You make the federal S election with the IRS and nothing further for income tax.
Is there any reason to choose a C corp in South Dakota?
Not for state tax reasons. South Dakota taxes neither C corp nor S corp income, so a C corp choice would rest on federal rules, such as keeping profit inside the company.
Sources 8 links, checked Nov 6, 2026
- South Dakota has no corporate income tax, so there is no state S election to follow; the choice is federal only. dor.sd.gov, checked Nov 6, 2026
- South Dakota has no state S election form because it does not impose a corporate income tax. dor.sd.gov, checked Nov 6, 2026
- South Dakota does not tax an S corporation's income at the entity level because it imposes no corporate income tax. dor.sd.gov, checked Nov 6, 2026
- South Dakota does not impose a corporate income tax, so a C corporation pays no state income tax. dor.sd.gov, checked Nov 6, 2026
- South Dakota's state agency materials describe the state as having no personal income tax. bfm.sd.gov, checked Nov 6, 2026
- IRS: Form 1120 instructions, C corp rate irs.gov, checked Nov 6, 2026
- IRS: S corp reasonable compensation irs.gov, checked Nov 6, 2026
- IRS: Form 2553 instructions irs.gov, checked Nov 6, 2026
Last verified Nov 6, 2026.
This page explains the rules; it is not tax advice. Run your numbers with a CPA or enrolled agent before you elect.
Last verified Nov 6, 2026.