Hiring a remote employee in South Dakota
Your company is in another state and one employee lives and works from home in South Dakota. Which state's taxes apply, unemployment, paid leave and South Dakota's employer rules, each with its official source.
South Dakota at a glance
- Income tax
- No income tax on wages
- Unemployment
- $15,000 wage base, 1.75% new employer
- Paid leave
- None
- New hire report
- Within 20 days
Which state's taxes apply
- Work state
- South Dakota has no income tax on wages, so nothing is withheld for South Dakota.Source: South Dakota Department of Revenue, Individual Taxes (opens in a new tab), checked October 5, 2026
- Convenience rules
- If your company is in Delaware, New York or Pennsylvania, the employee is assigned to an office there and works there on some days, that state taxes the days worked from home in South Dakota for the employee's convenience.Source: Delaware Division of Revenue, 2025 Form PIT-NON Instructions, Non-Resident Individual Income Tax Return (PDF) (opens in a new tab), checked October 6, 2026; NYS DTF, TSB-M-06(5)I, New York Tax Treatment of Nonresidents and Part-Year Residents: Application of the Convenience of the Employer Test to Telecommuters and Others (May 15, 2006, PDF) (opens in a new tab), checked October 6, 2026; PA Department of Revenue, PA Personal Income Tax Guide, Gross Compensation (opens in a new tab), checked October 6, 2026
Where to withhold: two states
Pick your company's state, the state where the employee lives and works from home, and the days a year the employee works at your office. The answer reads each state's rules from the data on these pages.
Income tax withholding
No state income tax withholding: neither state taxes these wages.
No New York withholding: the employee does no work in New York.
Unemployment
South Dakota: the employee works from home there, so the work is localized in South Dakota.
Simplified: resident credits, dollar tests, local taxes and a move during the year are not worked out here. Each state's rule and its source are on its page.
Unemployment
The employee works from home in South Dakota, so the work is localized in South Dakota: pay South Dakota unemployment tax, not your company state's.
- Agency
- South Dakota Department of Labor and Regulation, Reemployment Assistance DivisionSource: South Dakota DLR, Reemployment Assistance Tax, Employer Registration (opens in a new tab), checked October 5, 2026
- Wage base
- $15,000 Fixed by lawSource: South Dakota DLR, Reemployment Assistance Employer FAQ ('What is the Reemployment Assistance taxable wage base?') (opens in a new tab), checked October 5, 2026
- New employer rate
- 1.75% 1.75% in year 1 (1.20% RA tax plus 0.55% investment fee); 1.55% in years 2 and 3 with a positive account balance. Construction: 6.55% in year 1, 3.55% in years 2 and 3. Surcharges included Construction 6.55%Source: South Dakota DLR, Reemployment Assistance Employer FAQ ('What is my tax rate?', New Employer Tax Rates) (opens in a new tab), checked October 5, 2026
Open the account: South Dakota payroll tax registration
Paid leave
South Dakota has no paid leave program funded through payroll.
South Dakota employer rules
Employment law applies where the employee works, so these follow the employee into South Dakota.
- Final pay
- Fired: Next regular payday Quit: Next regular paydaySource: South Dakota DLR, Termination of Employment (opens in a new tab), checked October 5, 2026
- Pay frequency
- At least once each calendar month, on regular paydays designated in advance, unless otherwise provided by law.Source: SDCL §60-11-9, Monthly wage payments required--Agreed pay day--Form of payment (opens in a new tab), checked October 6, 2026
- Pay notice
- No written pay-rate notice at hire or on a change. Wages are paid at least monthly, or on regular paydays the employer sets in advance (SDCL 60-11-9).Source: SDCL chapter 60-11, Wages, hours and conditions of employment (opens in a new tab), checked October 5, 2026
- New hire reporting
- Within 20 days of the start date.Source: South Dakota DLR, New Hire Reporting, Reporting Requirements (opens in a new tab), checked October 5, 2026
- E-Verify
- No state E-Verify mandate. A 2026 bill (HB 1209) to require it for employers with more than 50 employees failed on March 11, 2026.Source: South Dakota Legislature, 2026 House Bill 1209 (E-Verify), bill text and action log (opens in a new tab), checked October 5, 2026
- Sick leave
- No state sick leave law.Source: South Dakota DLR, South Dakota Labor and Employment Laws: What You Need to Know (REV 01/2026, PDF) (opens in a new tab), checked October 5, 2026
When the employee moves
Re-check the work state and the registrations before the next payroll: a move changes which state's withholding, unemployment, paid leave and employer rules apply.
Registering your business in South Dakota, and whether one remote employee creates tax nexus for your company, are separate questions this page does not cover.
More on South Dakota
WORKLIO HCM
Payroll for employees who work from home in another state
We help open state accounts when you hire somewhere new, and our registration service can register your employer tax accounts for you. Worklio HCM calculates, deposits and files your payroll taxes in every state and locality, and when an agency notice arrives, you upload it and our tax team resolves it.
Remote employees in other states
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Delaware
- District of Columbia
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Rhode Island
- South Carolina
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Washington
- West Virginia
- Wisconsin
- Wyoming
Sources
The agency page or document behind each fact, as checked.
- South Dakota Department of Revenue, Individual Taxes (opens in a new tab), checked October 5, 2026
- Delaware Division of Revenue, 2025 Form PIT-NON Instructions, Non-Resident Individual Income Tax Return (PDF) (opens in a new tab), checked October 6, 2026
- NYS DTF, TSB-M-06(5)I, New York Tax Treatment of Nonresidents and Part-Year Residents: Application of the Convenience of the Employer Test to Telecommuters and Others (May 15, 2006, PDF) (opens in a new tab), checked October 6, 2026
- PA Department of Revenue, PA Personal Income Tax Guide, Gross Compensation (opens in a new tab), checked October 6, 2026
- South Dakota DLR, Reemployment Assistance Tax, Employer Registration (opens in a new tab), checked October 5, 2026
- South Dakota DLR, Reemployment Assistance Employer FAQ ('What is the Reemployment Assistance taxable wage base?') (opens in a new tab), checked October 5, 2026
- South Dakota DLR, Termination of Employment (opens in a new tab), checked October 5, 2026
- SDCL §60-11-9, Monthly wage payments required--Agreed pay day--Form of payment (opens in a new tab), checked October 6, 2026
- SDCL chapter 60-11, Wages, hours and conditions of employment (opens in a new tab), checked October 5, 2026
- South Dakota DLR, New Hire Reporting, Reporting Requirements (opens in a new tab), checked October 5, 2026
- South Dakota Legislature, 2026 House Bill 1209 (E-Verify), bill text and action log (opens in a new tab), checked October 5, 2026
- South Dakota DLR, South Dakota Labor and Employment Laws: What You Need to Know (REV 01/2026, PDF) (opens in a new tab), checked October 5, 2026
General information, not legal or tax advice. Rules change; confirm current requirements with the relevant agency or your advisor. You remain responsible for your employment taxes and for each state's rules.