Is Shipping Taxable in South Dakota? South Dakota Sales Tax Rules for Delivery Charges
In South Dakota, delivery charges are included in gross receipts and are subject to the same sales or use tax rate as the product or service sold. Delivery charges include shipping, postage, handling, crating, packing, and fuel surcharge. If the product or service is taxable, the delivery charge is generally taxable. If the product or service is not taxable, the delivery charge is not taxable.
On this page
- Is Shipping Taxable in South Dakota?
- General Rule: Delivery Charges Are Included in Gross Receipts
- What Counts as Delivery Charges?
- Does Separately Stating Shipping Make It Non-Taxable?
- Delivery Charges for Nontaxable Products or Services
- Common Compliance Issues for Ecommerce Sellers
- Practical Tips for Sellers Shipping to South Dakota
- Conclusion
Is Shipping Taxable in South Dakota?
In South Dakota, delivery charges are included in gross receipts and are subject to the same sales or use tax rate as the product or service sold.
Delivery charges include charges by the seller for preparation and delivery to a location designated by the purchaser. These charges include shipping, postage, handling, crating, packing, and fuel surcharge.
If the product or service is not taxable, the delivery charge is not taxable.
Source: South Dakota Department of Revenue, 2026 Sales & Use Tax Guide https://dor.sd.gov/media/kavh1fzg/2026-1_sales-use-tax-guide.pdf
General Rule: Delivery Charges Are Included in Gross Receipts
South Dakota generally includes delivery charges in gross receipts. If the underlying product or service is taxable, the related delivery charge is also taxable.
For example:
Product price: USD 100 Delivery charge: USD 8 Taxable gross receipts: USD 108
If the product is taxable, South Dakota sales tax generally applies to the full USD 108 amount.
What Counts as Delivery Charges?
South Dakota defines delivery charges as charges by the seller for preparation and delivery to a location designated by the purchaser of products or services. These charges include:
- shipping;
- postage;
- handling;
- crating;
- packing;
- fuel surcharge.
For example:
Product price: USD 100 Shipping charge: USD 8 Handling charge: USD 3 Fuel surcharge: USD 2 Taxable gross receipts: USD 113
If the underlying product is taxable, these delivery-related charges are generally taxable.
Does Separately Stating Shipping Make It Non-Taxable?
Generally, no. South Dakota’s rule focuses on whether the delivery charge relates to a taxable product or service. Delivery charges are included in gross receipts and taxed at the same rate as the product or service.
For example:
Product price: USD 100 Shipping charge: USD 8 Total: USD 108
If the product is taxable, the separately stated shipping charge is generally taxable.
Delivery Charges for Nontaxable Products or Services
If the product or service is not taxable, the delivery charge is not taxable.
Examples may include:
- nontaxable products;
- nontaxable services;
- sales for resale;
- transactions supported by a valid exemption certificate;
- other exempt or excluded transactions under South Dakota law.
For example:
Nontaxable product price: USD 100 Delivery charge: USD 8 Total: USD 108
If the underlying product or service is not taxable, the related delivery charge is generally not taxable. Sellers should retain proper documentation.
Common Compliance Issues for Ecommerce Sellers
Taxing only the product price
If a seller excludes delivery charges from gross receipts for taxable South Dakota sales, the seller may under-collect tax.
Assuming separately stated shipping is exempt
Separately stating shipping generally does not make it non-taxable when the product or service is taxable.
Ignoring fuel surcharge
South Dakota specifically includes fuel surcharge in delivery charges. Sellers should review fuel surcharge treatment carefully.
Misclassifying products or services
Delivery charges follow the taxability of the underlying product or service. Product and service taxability must be accurate.
Applying another state’s rule to South Dakota
Shipping taxability varies by state. South Dakota should be configured separately from states with different delivery charge rules.
Practical Tips for Sellers Shipping to South Dakota
Sellers shipping taxable products or providing taxable services to South Dakota customers should generally include delivery charges in gross receipts. This includes shipping, postage, handling, crating, packing, and fuel surcharge.
For nontaxable sales, sellers should retain exemption certificates, resale certificates, invoices, product or service classification records, order details, carrier records, marketplace reports, and sales tax filing records. Platform settings for Shopify, WooCommerce, Amazon, Walmart, eBay, and custom websites should align with South Dakota’s rules.
Conclusion
In South Dakota, delivery charges are included in gross receipts and are subject to the same sales or use tax rate as the product or service. Delivery charges include shipping, postage, handling, crating, packing, and fuel surcharge.
If the product or service is taxable, the delivery charge is generally taxable. If the product or service is not taxable, the delivery charge is not taxable. For ecommerce sellers, the key takeaway is clear: South Dakota delivery charges generally follow the taxability of the underlying product or service.
Source: South Dakota Department of Revenue, 2026 Sales & Use Tax Guide https://dor.sd.gov/media/kavh1fzg/2026-1_sales-use-tax-guide.pdf