How to Handle the South Dakota Vehicle Sales Tax
Understand South Dakota's 4% vehicle excise tax and the official process for titling and registration to ensure a smooth transfer of ownership.
When purchasing a vehicle in South Dakota, buyers are subject to a one-time motor vehicle excise tax. This is a 4% tax levied on the purchase price of most cars, trucks, and motorcycles at the moment the vehicle is titled and registered in the state. This is not a conventional sales tax applied at the dealership but an excise tax administered by the county treasurer’s office. This tax applies to vehicles acquired for use on the streets and highways of South Dakota that are required to be registered under state law.
Calculating the South Dakota Vehicle Excise Tax
The vehicle excise tax is based on the purchase price, which is defined as the total consideration received by the seller. A trade-in allowance can lower the tax obligation. When a buyer trades in a previously owned vehicle to a licensed dealer, the value of the trade-in is subtracted from the new vehicle’s purchase price, and the 4% tax is then calculated on this reduced amount.
For instance, if a vehicle is purchased for $30,000 and the buyer receives a $10,000 allowance for their trade-in, the excise tax is calculated on the remaining $20,000, resulting in a tax of $800. Conversely, manufacturer rebates or cash incentives do not reduce the taxable amount. If a bill of sale is not provided, the county treasurer will assess the tax based on the vehicle’s retail value as listed in a nationally recognized dealer’s guide.
Exemptions from the Vehicle Excise Tax
Several situations provide an exemption from the 4% motor vehicle excise tax. One of the most common involves the transfer of a vehicle between immediate family members, including spouses, parents and children, or siblings, where no money or other consideration is exchanged. An exemption also applies to vehicles that are inherited or transferred between former spouses as part of a divorce decree or settlement.
For new residents moving into South Dakota, a credit may be available for taxes paid in another state. If a new resident has already paid a sales or excise tax on their vehicle to their previous state of residence, South Dakota may allow a credit for that amount. This provision prevents double taxation, though the owner must provide proof of the tax paid to the other jurisdiction.
Required Documentation for Payment and Titling
The first document needed is the vehicle’s original title. The seller must properly sign the title over to the buyer, and any liens listed on the title must be officially released by the lienholder. A bill of sale is also required and serves as the primary proof of the purchase price for tax calculation purposes. It must contain the full names and addresses of both the buyer and the seller, the vehicle identification number (VIN), the date of the sale, and the agreed-upon purchase price.
The final document is the Application for Motor Vehicle Title & Registration. This official state form, often designated as MV-608, can be downloaded from the South Dakota Department of Revenue’s website. The buyer must fill out all required fields, which include owner information, a detailed vehicle description, lienholder information if the vehicle is financed, and the purchase price.
The Tax Payment and Vehicle Registration Process
The buyer must visit their local County Treasurer’s office to finalize the transaction. This step is time-sensitive, as the law requires the vehicle to be titled and the excise tax paid within 45 days of the purchase date. Failure to meet this deadline will result in the assessment of late fees and other penalties.
At the treasurer’s office, the clerk will review the submitted documents, including the signed title, bill of sale, and the application form. The clerk verifies the purchase price and calculates the 4% excise tax due, along with any other applicable title and registration fees. The buyer will then pay the total amount owed.
The county treasurer’s office will process the application, and the state will issue a new South Dakota title in the buyer’s name, which is mailed to the owner or lienholder. The buyer will leave the office with new license plates and the official vehicle registration, legally permitting the vehicle to be operated on public roads.