Does South Dakota Have an Inheritance or Estate Tax?
Figures verified October 17, 2026 against Tax Foundation 2026 state table · Update log
- State estate tax: No
- Inheritance tax: No
- Federal: only above $15 million
Short answer
No. South Dakota has no estate tax and no inheritance tax, so heirs owe no South Dakota tax on what they inherit. Federal estate tax applies only to estates over $15 million (2026). If the person who died lived in, or owned real estate in, one of the 5 inheritance-tax states, that state's tax can still apply.
What to do, and by when
No South Dakota estate or inheritance tax return
| Who files | Which form | Deadline |
|---|---|---|
| The executor, only if the estate is over $15 million or to keep the unused exemption for a surviving spouse | Federal Form 706 | 9 months after the date of death (an automatic 6-month extension to file is available on Form 4768) |
| The executor | Final Form 1040 for the person who died | April 15 of the year after death |
Quick facts: South Dakota (2026)
| Estate Tax | No |
|---|---|
| Inheritance Tax | No |
| Federal Exemption (2026) | $15 million |
| Tax Authority | South Dakota Department of Revenue |
| Verified | 2026-10-17 |
What executors file, and when
No South Dakota estate or inheritance tax return is needed. The executor's tax filings are federal: the person's final income tax return (Form 1040, due April 15 of the year after death), an estate income tax return (Form 1041) if the estate earns $600 or more, and Form 706 only if the estate is over $15 million or the surviving spouse wants to keep the unused exemption (portability).
What heirs may still owe
- Another state's tax. Inheritance tax follows where the person who died lived (and where their real estate is), not where the heir lives. See Pennsylvania, New Jersey, Kentucky, Maryland and Nebraska.
- Income tax on inherited retirement accounts. Withdrawals from an inherited traditional IRA or 401(k) are taxable income, and most non-spouse heirs must empty the account within 10 years.
- Capital gains when you sell. Inherited property gets a new cost basis equal to its value at death, so you are taxed only on growth after that date.
- Federal estate tax, paid by the estate, only above $15 million.
Federal estate tax
For deaths in 2026, the federal estate tax applies only to estates over $15,000,000 per person, at rates up to 40%. The exemption was set by the July 4, 2025 tax law (Public Law 119-21, often called the "One Big Beautiful Bill Act"; the IRS now calls it the Working Families Tax Cuts law), is permanent, and is indexed for inflation starting in 2027. A surviving spouse can add the unused exemption of the first spouse to die (portability) by filing Form 706. See the federal estate tax guide.
Frequently asked questions
Do I have to pay inheritance tax in South Dakota?
No. South Dakota has no inheritance tax, so heirs do not pay state tax on what they receive from a South Dakota resident. If the person who died lived in Pennsylvania, New Jersey, Kentucky, Maryland or Nebraska, or owned real estate there, that state's inheritance tax can apply even if you live in South Dakota.
Does South Dakota have an estate tax in 2026?
No. South Dakota has no estate tax. Only the federal estate tax can apply, and only to estates over $15 million (2026).
Is an inheritance taxable income?
No. Money or property you inherit is not federal taxable income. But withdrawals from an inherited traditional IRA or 401(k) are taxed as income, and if you sell inherited property you may owe capital gains tax on any increase in value after the date of death.
What is the federal estate tax exemption for 2026?
$15,000,000 per person for deaths in 2026, set by Public Law 119-21 (2025). It is permanent and indexed for inflation from 2027. A surviving spouse can add the unused exemption of the first spouse to die (portability) by filing Form 706.
Sources
This information is provided for educational purposes only and should not be considered legal or tax advice. Consult a qualified tax professional for guidance specific to your situation.