Updated October 4, 2026. Quick answer: No. South Dakota does not tax 401(k) or IRA withdrawals. The Department of Revenue calls the state “one of seven states that does not impose a state income tax”. Federal tax on the withdrawal still applies.
Hold a 403(b) or 457(b)? What the state’s own documents say about taxing those withdrawals: does South Dakota tax 403(b) and 457(b) withdrawals.
Withdrawing from an IRA or 401(k)? Whether the state withholds tax from it, from its own documents: South Dakota tax withholding on IRA and 401(k) withdrawals.
Taking money out of your TSP? How the state taxes it, from its own tax documents: Does South Dakota tax TSP withdrawals?.
Inheriting from, or planning for, someone in this state? Whether the state has an inheritance tax, from its own tax documents: Does South Dakota have an inheritance tax?.
Contributing to an HSA? How the state taxes it, from its own tax documents: Does South Dakota tax HSA contributions?.
What South Dakota does with 401(k) and IRA withdrawals
The Constitution does not itself bar an income tax. Article XI, Section 13 covers a tax “imposed by the state of South Dakota on personal or corporate income”, which “shall not be increased unless by consent of the people”, with the legislative alternative the section spells out. The no-tax answer therefore rests on the Department of Revenue’s statement.
| Item | What the documents say |
|---|---|
| Treatment | Not taxed by the state: no state income tax |
| State rate on a withdrawal | None |
| Source | South Dakota Department of Revenue; South Dakota Constitution, Article XI |
A $40,000 withdrawal
A $40,000 withdrawal from a traditional 401(k) or IRA adds $0 of South Dakota income tax. Your federal return still includes the withdrawal.
What changes in 2026
No change for 2026 appears in the documents read for this page.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal tax on these withdrawals in Publication 590-B, Distributions from Individual Retirement Arrangements and Publication 575, Pension and Annuity Income.
Related: whether South Dakota taxes pensions, how South Dakota taxes retirement income, whether South Dakota taxes Roth conversions, and the state-by-state table of 401(k) and IRA withdrawal tax.
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Answer againSources
- Individuals: Taxes (Income Tax section): https://dor.sd.gov/individuals/taxes/
- Constitution of the State of South Dakota (2024 edition), Article XI Sections 13-15: view the document
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.