Quick South Dakota Tax Stats
| Tax Type | Rate / Info |
|---|---|
| Income Tax | 0% (no state income tax on wages, investments, or capital gains) |
| Sales Tax | 4.5% statewide base; up to ~6.5% combined with local taxes |
| Jock Tax | No state income tax; athletes still owe tax in other states where they play away games |
| Cost of Living (Range) | $60,000 – $125,000 annual for single-person moderate-to-high lifestyle |
| Average Home Price | ~$320,000 (3-bed/2-bath home in Sioux Falls / Rapid City metro) |
Income Tax in South Dakota
South Dakota is one of the few U.S. states with zero state income tax on wages, salary, bonuses, or investment earnings.
This makes it very attractive for high-income individuals, including professional athletes, who are focused on maximizing net earnings and long-term wealth accumulation.
Athletes in no income tax states have the opportunity to build their net worth exponentially compared to other states even with low income tax rates, due to the percentage of income being saved, as well as not losing money to lifestyle and depreciating assets.
For athletes, this translates into:
- Maximum net retention: Earnings from contracts, signing bonuses, and endorsements are not reduced at the state level.
- Wealth acceleration: No capital gains tax or dividend tax at the state level means investment returns compound more efficiently.
- Residency strategy value: Establishing domicile in a zero income tax environment supports greater net cash flow over a career.
Example
A MLB player earning $22 million annually in salary and endorsement payouts while domiciled in South Dakota avoids a potential state income tax bill of $2–$4 million that they might face in states with low rates like Wisconsin or Ohio.
Over multiple seasons, those savings can be deployed into diversified investments and long-term wealth strategies.
With no tax drag on labor or investment income at the state level, South Dakota permits athletes to capture more of their gross compensation as net wealth.
Sales Tax
South Dakota imposes a 4.5% statewide sales tax.
Local governments may add surtaxes that bring combined rates toward ~6.5% in some cities and counties.
Athletes and high-income residents can manage spending impact by:
- Timing large purchases in areas with minimal local surtaxes.
- Budgeting high-ticket discretionary purchases with tax impact in mind.
Example
Purchasing a $100,000 high-end vehicle in Sioux Falls with a 6.5% combined tax rate would entail ~$6,500 in sales tax, lower than in states with higher combined sales tax burdens.
The relatively low sales tax environment complements the lack of income tax, reducing consumption leakage on properties and large purchases.
Jock Tax
While South Dakota imposes no state income tax, professional athletes still encounter jock tax obligations in states that levy personal income tax.
This means:
- Home game gross income earned while residing in South Dakota is tax-free at the state level.
- Away game earnings are apportioned and taxed by the jurisdictions where games are played, if those states have income tax.
Example
An NBA forward domiciled in South Dakota will avoid any state tax on wages in his home state, but still owe California or New York jock tax on income attributed to games in those states.
Recognizing where jock tax applies and where it doesn’t is critical for tax planning and residency optimization.
Cost of Living
Cost of living in South Dakota tends to be lower than major coastal and high-tax metropolitan markets:
- Sioux Falls / Rapid City: A professional athlete lifestyle budget (housing, services, transportation) might range $85k–$125k annually.
- Smaller cities and towns often have even lower cost of living.
Housing
- A typical 3-bed/2-bath home in Sioux Falls or Rapid City sits ~$320,000.
- Luxury neighborhoods or larger acreage properties can be higher, but overall housing costs remain below national high-tax markets.
With no state income tax to offset, even moderate housing costs can feel relatively affordable for athletes planning long-term domicile and investment in real estate.
Residency Rules
Athletes establishing residency in South Dakota benefit from:
- Zero state tax on compensation, capital gains, and dividends.
- No state level tax on investment returns.
- A simple, tax-efficient base for wealth preservation.
Residency documentation generally includes:
- South Dakota driver’s license/state ID
- Voter registration
- Primary residence proof (lease/mortgage/utility)
- Evidence of physical presence
Example
A college athlete with ties to the Midwest could establish South Dakota residency prior to turning pro to optimize net contract income, especially when balancing travel and multi-state competition obligations.
Why South Dakota is Athlete-Friendly
- No income tax on wages and investments = maximum wealth retention
- Relatively low sales tax reduces tax leakage on large purchases
- Competitive housing costs relative to gross income potential
- Simplified tax policy enhances long-term wealth planning
- Strong residency planning environment for high-net individuals
South Dakota’s tax regime, with no personal income tax and low consumption tax, creates a favorable environment for athletes seeking to balance career earnings with long-term financial goals.
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Related No Income Tax States
- Washington State Athlete Taxes
- Nevada State Athlete Taxes
- Wyoming State Athlete Taxes
- Texas State Athlete Taxes
- Alaska State Athlete Taxes
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- Inside the House v. NCAA Settlement and Its Impact on College Sports
Credits
Sources: South Dakota Department of Revenue, State Tax Rates 2025, Zillow / Redfin Housing Data, APSM Proprietary Analysis
Disclaimer: This article contains general financial information for educational purposes and does not constitute professional advice.
Apostle Sports Media 