South Dakota Contractor's Excise Tax (2026): 2% on the Whole Remodel
How South Dakota taxes the whole remodel, labor included, and three jobs worked at 2% plus 4.2% on materials.
Not tax advice. General information from each state's revenue department, checked Oct 29, 2026. Rates shown are the state rate; city and county tax is extra where it applies. The facts of your job and contract can change the answer; for a specific job, ask a tax professional in your state.
The rule in South Dakota
Whole job taxed
You pay a 2% excise tax on the full job price, labor and materials, plus sales tax on what you buy.
4.2%
4.2% sales tax plus local, back to 4.5% on July 1, 2027; 2% contractor's excise tax
Itemizing or time and materials
Itemizing doesn't remove labor.
None for homes
Source: SD DOR Contractor's Excise Tax Guide (DOR guide, July 2026)
“This includes repair or remodeling of existing real property”
Three jobs, worked
| Job | Customer | You pay |
|---|---|---|
| Bathroom $12,000 job, $5,000 materials | $240 | $210 |
| Kitchen $40,000 job, $15,000 materials | $800 | $630 |
| Addition $90,000 job, $35,000 materials | $1,800 | $1,470 |
On the kitchen: 2% on the full $40,000, labor included. That's the contractor's excise tax, on you. You also pay $630 sales tax on materials.
Also check
- You may show the excise tax as a line on the invoice, but it stays part of your gross receipts.
- The state sales tax rate goes back to 4.5% on July 1, 2027.
South Dakota sales tax questions
Do contractors charge sales tax on labor in South Dakota?
No sales tax. You owe a 2% excise tax on the full job price, labor included. You may show it as a line on the bill.
What rate applies to a remodel in South Dakota?
4.2% sales tax plus local, back to 4.5% on July 1, 2027; 2% contractor's excise tax.
Do contractors pay tax on materials in South Dakota?
Yes, sales tax on what you buy, on top of the excise tax.
Compare other states
How we checked
We read each state's sales tax rule for construction contractors on the revenue department or legislature site, and its 2026 state rate. Two independent research passes covered all 50 states and DC, and a third reviewer checked the result. Where a state's own page would not load, the row names the copy we read. Last checked .
This guide explains the general rule for remodeling an owner-occupied home. It is not tax advice.