(The Center Square) – South Dakota collects $4,677 in local and sales taxes per capita, which is the 38th highest in the country, according to a report from the Tax Foundation.
The nonpartisan organization ranked the 50 states and the District of Columbia based on fiscal year 2021. South Dakota collections were lower than all of its border states: Iowa ($5,934), North Dakota ($7,005), Nebraska ($6,355), Kansas ($5,944), Montana ($5,148) and Wyoming ($5,213).
The South Dakota Legislature passed a bill this year that cuts the sales tax rate from 4.5% to 4.2% for the next four years. Gov. Kristi Noem wanted a rollback of the grocery tax but could not get lawmakers to agree.
Noem will present her fiscal year 2025 budget on Dec. 5.
State collections have increased by 27% since 2019, and revenues increased by 10% when adjusted for inflation. The trend is not likely to continue, according to the Tax Foundation.
“The rate of revenue growth witnessed in FY 2021 was never going to be sustainable, but most states remain substantially better off than they were pre-pandemic, even after adopting tax relief, with every expectation that the new baseline is far higher than it was before,” the organization said in its report. “Revenues are high enough, in some states, that the tax-cutting trends of 2021-2023 are likely to continue into 2024.”
The District of Columbia collected the most state and local taxes at $13,278 per capita. New York was second at $10,266, followed by California at $9,175, according to the report.
Alaska collected the least amount at $4,192 per capita. Alabama had the second lowest amount at $4,245, followed by Tennessee at $4,272.
