PiggySelf-Employment Tax in South Dakota (2026)
South Dakota has no state income tax, which is the reason a lot of freelancers move there. It is also the reason a lot of them get a nasty surprise in April: self-employment tax is federal, and no state can exempt you from it. Whatever you save on state income tax, the 15.3% still applies in full.
The federal part is the same everywhere
Self-employment tax replaces the payroll taxes an employer would otherwise split with you. As a freelancer you pay both halves: 12.4% for Social Security, on earnings up to the $184,500 wage base, and 2.9% for Medicare with no cap. Together that is 15.3%, charged on 92.35% of your net profit rather than all of it.
At $100,000 of net profit that comes to $14,129.55 in South Dakota — exactly as it would in any other state. Moving does not change this number.
What South Dakota adds: nothing on income
There is no state income tax on freelance profit in South Dakota, so the state line of your tax planning is simply zero. That does not remove the need to set money aside — it removes one of three obligations, and the federal ones are the larger two. Freelancers who move to a no-income-tax state and stop putting money aside are the ones who get caught out.
What the two look like together
| Net profit | Federal SE tax | South Dakota income tax* | SE tax as % of profit | Combined |
|---|---|---|---|---|
| $40,000 | $5,651.82 | $0.00 | 14.1% | $5,651.82 |
| $75,000 | $10,597.16 | $0.00 | 14.1% | $10,597.16 |
| $120,000 | $16,955.46 | $0.00 | 14.1% | $16,955.46 |
* No state income tax applies to freelance profit.
Quarterly payments
If you expect to owe $1,000 or more in federal tax for the year, the IRS expects estimated payments four times a year rather than one bill in April. Missing them triggers an underpayment penalty even if you settle in full at filing. The safe harbor rule is the way out: pay 90% of this year's liability or 100% of last year's, and the penalty does not apply.
Frequently asked questions
Do I pay self-employment tax if I live in South Dakota?
Yes. Self-employment tax is federal. South Dakota not having a state income tax makes no difference to it — you still owe 15.3% on 92.35% of your net profit once that profit reaches $400 for the year.
So what do I actually owe as a freelancer in South Dakota?
Federal self-employment tax plus federal income tax. There is no state income tax line. That usually means a lower total bill than in most states, but the self-employment portion is unchanged.
Do I still need to make quarterly payments in South Dakota?
Yes, to the IRS. If you expect to owe $1,000 or more in federal tax for the year, quarterly estimated payments apply the same as anywhere else. You just have no state estimated payment to make alongside them.
Work out your own numbers
- Self-Employment Tax Calculator — the federal 15.3%, exactly.
- Quarterly Tax Calculator — enter your state rate for a combined figure.
- Safe Harbor Calculator — the minimum to pay to avoid a penalty.
- Home Office Deduction — every deduction cuts SE tax too.
- All states compared — the full table.