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Updated: January 1, 2024
To outsiders, South Dakota is all about that giant sculpture carved on the side of a mountain. To insiders, there’s a whole lot more to the state than Mount Rushmore. You kind of feel bad for people who have never tasted kolache, chislic, or kuchen. But what definitely makes you pull your hair out as a small business owner is having to deal with payroll taxes.
We definitely want you to hold onto your hair. That’s why we designed a nifty payroll calculator with you in mind. All you have to do is enter wage and W-4 information for each of your employees into the calculator. Before you know it, you’ll have all the state and federal payroll taxes calculated. Remember, even though South Dakota doesn’t charge a state income tax, you still have to pay unemployment insurance. More on that later.
Federal payroll taxes for South Dakota employers
While a 0% state income tax is saving you from some calculations, you are still responsible for withholding and paying federal payroll taxes. Luckily, our South Dakota payroll calculator is here to assist with calculating your federal withholding and any additional contributions your business is responsible for.
Here’s a quick overview of what you need to know when you’re calculating federal payroll taxes. If you would like to see each step in detail, you can click here to read our step-by-step federal income tax guide.
- Calculate employee gross wages:
- For all your hourly employees, multiply their hours worked by the pay rate. And don’t forget to increase the rate for any overtime hours worked!
- For all your employees on salary, divide each employee’s annual salary by the number of pay periods you have.
- Be sure to add in commissions, bonuses, and tips. They are added to gross wages as well.
- Subtract pre-tax withholdings (if any):
- If your employee contributes to a Flexible Spending Account (FSA), 401(k) retirement savings account, or any other eligible pre-tax withholding accounts, subtract the amount from their gross pay prior to applying payroll taxes.
- Deduct federal income tax:
- Federal income tax ranges from 0% to 37%. This is the biggest tax of them all. We won’t get into the nitty-gritty in this guide, but you can find all the IRS withholding information you need here.
- Deduct and match FICA taxes:
- Social Security Tax: You will need to withhold 6.2% of each employee’s taxable wages up until they have reached a total earning of $168,600 for 2024. As an employer, it is your responsibility to match this tax.
- Medicare Tax: You will also need to withhold 1.45% of each employee’s taxable wages up until they have reached a total earning of $200,000 for 2022. You will need to match this tax as well. For employees who earn salaries above $200,000, withhold what’s called the Additional Medicare Tax, which is 0.9%. Only the employee is responsible for paying the Additional Medicare Tax.
- Pay FUTA unemployment tax:
- Subtract post-tax deductions (if any):
- Not many of your employees will have post-tax deductions, but you may be asked to deduct court-ordered wage garnishments, child support, post-tax contributions to savings accounts, elective benefits, etc.
2024 South Dakota (SD) state payroll taxes
You already know that the State of South Dakota charges a 0% income tax. And even better, no cities within the state charge a local income tax. It’s definitely nice to have one less thing to worry about.
South Dakota state unemployment insurance (SUI)
As an employer in South Dakota, you are responsible for paying unemployment insurance to the state. In 2023, the rate ranges from 0% all the way up to 9.5% on the first $15,000 in wages paid to each employee in a calendar year.
If you’re a new employer, you will pay 1.2%. New construction employers will have to pay 6%.
Remember, be sure to pay your SUI in full and on time so you can be eligible for the FUTA tax credit!
Cut those paychecks
That’s it! You’ve checked “payroll taxes” off your to-do list so you can focus on growing your business. Once each employee’s net pay is calculated (taking deductions and withholdings into consideration), you’re in the clear.
All you have to worry about is getting your employees paid on time as well as setting aside whatever you owe in FICA and UI taxes. The numbers can add up quickly if you don’t pay close attention to them!
You will need to use Form 941 to file federal taxes quarterly, and Form 940 to report your annual FUTA tax. You can pay taxes online using the EFTPS payment system. More details about employment tax due dates can be found here.
Do you have employees nearby too? These might be helpful.
Additional South Dakota payroll tax resources:
If all that wasn’t enough, here are a couple more links that can help you become the payroll expert your small business needs you to be!
South Dakota Department of Labor & Regulation | Unemployment Insurance Contact (605) 626-2322 | Register Your Business | Unemployment Insurance Information
More South Dakota payroll calculators for employers
Employers can use the South Dakota payroll calculator at the top of this page to quickly calculate their employees’ gross pay, net pay, and deductions in a few clicks. But sometimes, a business needs to do a little more math before paying its staff. For example, do customers leave tips for your employees? Remember that you are responsible for withholding taxes from your workers’ paychecks based on the tips they receive. Furthermore, if an employee leaves for another company, you’ll need to calculate their final pay. So, if you need a little more help with the number-crunching, check out some of the calculators below.