Updated October 5, 2026. Quick answer: No. The Department of Revenue says South Dakota is “one of seven states that does not impose a state income tax”, so annuity payments add no South Dakota income tax.
How South Dakota treats annuity income
| Item | What the documents say |
|---|---|
| Treatment | Not taxed by the state |
| Where it is written | South Dakota Department of Revenue, Individual Taxes page |
| Annuities | The page does not name annuities; it says the state has no income tax |
A $24,000 example
A stream of $24,000 in annuity payments adds $0 of South Dakota income tax. Federal tax on the payments still applies.
What changes in 2026
The latest documents read print no 2026 change to the way annuity income is taxed.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal side in Topic no. 410, Pensions and Annuities and Publication 575, Pension and Annuity Income.
Related: whether South Dakota taxes pensions, how South Dakota taxes retirement income, state tax on 401(k) and IRA withdrawals, how a surrendered annuity is taxed, and pension and annuity decisions.
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Answer againSources
- Individual Taxes (South Dakota Department of Revenue): https://dor.sd.gov/individuals/taxes/
Sources: the primary documents linked above, read on October 5, 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.