The 2025 picture for South Dakota residents
South Dakota has no state income tax, so the 2025 tax picture for its residents was entirely federal: ordinary rates up to 37%, capital gains up to 23.8%, and federal Medicare taxes. That was the structural advantage that drove tech-employee relocations into South Dakota throughout the decade.
2025 AMT exemption
The 2025 federal AMT exemption was $88,100 for single filers. The exemption phased out at 25 cents per dollar of AMTI above $626,350, fully eliminating the exemption for higher earners. That is why ISO exercises in South Dakota during 2025 produced AMT bills that surprised people running first-order mental math.
South Dakota layer in 2025
South Dakota did not impose a separate state AMT in 2025, so federal AMT was the only layer. State ordinary tax still applied to any disqualifying disposition income recognized in the same year.
Frequently asked
- What supplemental-wage withholding rate applied to RSU income in South Dakota in 2025?
- The federal supplemental-wage withholding rate was 22% on the first $1,000,000 of supplemental wages per calendar year, rising to 37% above that. South Dakota does not impose a state income tax on wages, so no state withholding applied.
- Did South Dakota recognize federal QSBS exclusion in 2025?
- South Dakota has no state income tax, so QSBS eligibility affects only federal tax. Federal Section 1202 treatment applied in 2025 identically for South Dakota residents.
- What was the top federal ordinary bracket in 2025, and how did it apply to South Dakota residents?
- The 37% federal ordinary bracket started around $626,350 of taxable income for single filers in 2025. South Dakota added nothing at the state level, producing a combined top marginal rate of approximately 37%.