South Dakota lets qualifying businesses buy certain goods without paying sales tax, but only with a valid exemption certificate on file. This guide covers who qualifies, how to complete the certificate, the 2026 rate, and the penalties for getting it wrong.
What Is a South Dakota Sales Tax Exemption Certificate?
A South Dakota sales tax exemption certificate is the document a qualifying buyer gives a seller to purchase without paying sales tax. The seller collects it, keeps it on file, and does not charge tax on that sale. South Dakota’s Department of Revenue (DOR) administers the rules through its Sales & Use Tax hub.
South Dakota is a full member of the Streamlined Sales and Use Tax Agreement (SSUTA), so sellers also accept the uniform Streamlined Certificate of Exemption. The state sales and use tax rate is 4.2% in 2026 per the DOR, plus municipal tax; see Commenda’s South Dakota sales tax page for local rates.
What Is the Difference Between a Resale Certificate and an Exemption Certificate?
A resale certificate covers goods bought to resell. An exemption certificate covers purchases exempt because of who the buyer is or how the item is used. In South Dakota both claims run through the same DOR exemption certificate, with resale listed as one exemption reason.
| Aspect | Resale certificate | Exemption certificate |
|---|---|---|
| Purpose | Buy goods you will resell in the ordinary course of business | Buy goods exempt by buyer type or end use |
| Eligibility | Businesses that resell products | Government, statutory nonprofits, qualifying manufacturers and farms |
| Items covered | Goods resold to customers in their original form | Goods or services exempt under statute |
| Documentation | Proof the items are for resale, tied to a tax license | Proof the buyer or use qualifies under the law |
What Types of Sales Tax Exemptions Does South Dakota Recognize?
The DOR’s newsroom guidance lists four reasons a transaction may be exempt. In practice, businesses claim exemptions in a handful of categories, each needing a valid certificate on file.
| Reason a transaction is exempt | Example | Source |
|---|---|---|
| The purchaser is a tax-exempt entity | Relief agency, government body | DOR, “4 Reasons A Transaction May Be Exempt” |
| The product or service is specifically exempt | Statutorily exempt goods | DOR newsroom |
| The purchaser files a completed exemption certificate | Resale, manufacturing claims | DOR newsroom |
| The product is delivered to a point outside South Dakota | Interstate shipment | DOR newsroom |
Resale exemption
Goods bought for resale in the ordinary course of business are exempt when the buyer gives the seller a valid certificate. A single certificate can serve as a blanket certificate for recurring purchases from the same seller. Knowingly claiming resale on goods you will not resell is a Class 1 misdemeanor, with a fine up to 50% of the tax owed, per the DOR exemption certificate.
Nonprofit sales tax exemption
South Dakota exempts only a narrow statutory list of nonprofits: relief agencies, religious and private schools, and their affiliated nonprofits. A federal 501(c)(3) designation alone does not grant South Dakota sales tax exemption, so many charities exempt elsewhere still pay South Dakota sales tax.
Qualifying relief agencies and private schools apply to the DOR for an exemption number; relief-agency numbers carry an “RA” prefix and renew every five years with a new application, per the DOR’s relief agencies guidance. Churches are not relief agencies by default and pay sales and use tax unless they run a qualifying activity like a soup kitchen or food pantry.
Government entity exemption
Purchases by federal, state, and local government for governmental purposes are exempt. Vendors need a completed exemption certificate from the entity, or documentation that government funds paid for the purchase. Government buyers claim the exemption on the standard DOR certificate.
Manufacturing exemption
Raw materials and components that become an ingredient or part of a finished product are bought for resale and claimed with a valid exemption certificate. Process equipment and supplies that do not become part of the product are treated differently, so manufacturers should confirm which purchases qualify in the DOR Sales & Use Tax Guide. Buyers claim the exemption on the South Dakota certificate or the Streamlined Certificate of Exemption.
Agricultural exemption
Qualifying agricultural inputs can be exempt, but South Dakota taxes farm machinery under a separate farm machinery excise tax, cut to 4.2% by House Bill 1137 (HB 1137), rather than the general sales tax. Confirm which agricultural purchases qualify for exemption in the DOR Sales & Use Tax Guide, and claim any exemption on the standard certificate.
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How Do You Get a South Dakota Sales Tax Exemption Certificate?
Most buyers do not apply to the state. They complete the exemption certificate (the South Dakota form or the Streamlined Certificate of Exemption) and give it to the seller at or before purchase. Only certain exempt entities, such as relief agencies and private schools, apply to the DOR first for an exemption number.
- Confirm your exemption reason (resale, government, statutory nonprofit, and so on).
- If you are a relief agency or private school, apply to the DOR for an exemption number first.
- Download the DOR exemption certificate or use the Streamlined Certificate of Exemption.
- Complete every required field and give the certificate to your seller.
- Keep a copy; sellers must retain it for three years.
How Do You Fill Out the South Dakota Exemption Certificate?
A valid certificate must include six items, per the DOR exemption certificate. A certificate completed electronically does not need a signature. South Dakota is one of four Streamlined Sales Tax (SST) states, with Nebraska, Ohio, and Wisconsin, that do not require a buyer ID number at all.
| Required field | Detail | Source |
|---|---|---|
| State the exemption is claimed in | South Dakota | DOR exemption certificate PDF |
| Purchaser’s name and address | Legal buyer identity | DOR exemption certificate PDF |
| Purchaser’s tax ID number | Federal Employer Identification Number (FEIN), or a driver’s license/state ID if no tax ID or FEIN exists | DOR exemption certificate PDF |
| Seller’s name and address | The vendor | DOR exemption certificate PDF |
| Purchaser’s type of business | Business category | DOR exemption certificate PDF |
| Purchaser’s reason for exemption | Resale, government, nonprofit, and so on | DOR exemption certificate PDF |
A buyer without an ID number may write “Not Required” plus the exemption reason. A seller who accepts the certificate in good faith is relieved of the tax; an incomplete certificate leaves the seller liable for the uncollected tax, so sellers should check every field, per the DOR Sales & Use Tax Guide.
Is Form 01-EX a South Dakota Exemption Certificate?
No. Form 01-EX is not a South Dakota form, and it is not a real Texas form number either. South Dakota uses its own DOR exemption certificate and accepts the Streamlined Certificate of Exemption.
The mix-up traces to Texas, whose actual resale and exemption document is Form 01-339, “Texas Sales and Use Tax Resale Certificate / Exemption Certification,” per the Texas Comptroller of Public Accounts. South Dakota issues no form by the number 01-EX.
Can You Use a Blanket Exemption Certificate in South Dakota?
Yes. A single exemption certificate can cover recurring purchases from the same seller. On the Streamlined Certificate of Exemption (SSTGB Form F0003), a buyer who does not check the “single purchase” box issues a blanket certificate that stays valid until canceled, as long as purchases occur at least once every 12 consecutive months, per the Streamlined form instructions.
Single-purchase certificates fit one-off buys. A blanket certificate fits an ongoing supplier relationship, where reissuing a form for every order wastes time.
Do South Dakota Exemption Certificates Expire?
Standard exemption certificates have no fixed expiration; a blanket certificate stays in force until the purchaser cancels it, per the DOR exemption certificate. Entity exemption numbers are different: relief agencies and private schools renew every five years by filing a new application, per the DOR relief agencies guidance. Sellers must keep each certificate on file for three years.
Refresh a certificate whenever a buyer’s name, address, tax ID, or exemption reason changes, so the information on file stays current.
What Is the South Dakota Sales Tax Rate in 2026?
The South Dakota state sales and use tax rate is 4.2% in 2026, confirmed by the DOR’s July 2026 Sales & Use Tax Guide. It was cut from 4.5% effective July 1, 2023 under HB 1137 and is scheduled to revert to 4.5% on June 30, 2027 unless the legislature acts. Municipalities add up to 2%, and a valid exemption certificate exempts both state and municipal tax.
| Rate | Effective | Authority | Source |
|---|---|---|---|
| 4.5% | Before July 1, 2023 | South Dakota Codified Laws (SDCL) 10-45-2 | SD DOR 2023 legislative updates |
| 4.2% | July 1, 2023 | HB 1137 (2023) | SD DOR 2023 legislative updates |
| 4.2% (still in effect) | As of July 2026 | HB 1137 | SD DOR July 2026 Sales & Use Tax Guide |
| 4.5% (scheduled) | July 1, 2027 | HB 1137 Section 19 sunset | SDCL 10-45-2, SD Legislature |
| + up to 2% municipal | Varies by city | SDCL municipal tax | SD DOR municipal tax guide |
HB 1137 passed the South Dakota House 66-3 on February 22, 2023, and Governor Kristi Noem signed it in March 2023, per the South Dakota Legislature. Look up any address with Commenda’s South Dakota sales tax page.
What Are the Penalties for Exemption Certificate Mistakes in South Dakota?
Knowingly using an exemption certificate to evade tax is a Class 1 misdemeanor. The buyer owes the use tax and faces a fine up to 50% of the tax owed, per the DOR exemption certificate. Sellers who fail to collect a valid certificate owe the uncollected tax themselves.
| Pitfall | Fix |
|---|---|
| Incomplete certificate, missing a required field | Complete all six DOR fields before accepting it |
| Wrong exemption reason | Match the reason to the actual use or buyer type |
| Missing records | Retain every certificate for three years |
| Misuse on non-eligible items | Claim the exemption only for goods that qualify |
How We Simplify South Dakota Exemption Certificate Management
Commenda’s global indirect tax software collects exemption certificates through a self-service portal, validates them, and stores them audit-ready, with alerts before a certificate or entity exemption number lapses. That turns a stack of paper certificates into one tracked, defendable record for every state you sell into.
Check current rates with Commenda’s South Dakota sales tax page and the sales tax calculator. The calculator looks up rates, not nexus, so use the US nexus guide to see where your sales create a filing obligation.
Book a demo to see how Commenda automates exemption certificate collection and validation for every state you sell into.
About the author
Sam is a seasoned expert in sales tax, leading Commenda's effort to build the worlds most comprehensive database of global tax rules and business regulations. At Silverhaze Partners, he worked in early-stage venture capital, where he saw firsthand how tax complexity and regulatory friction hold back startups from scaling internationally. That experience now powers his work at Commenda-bringing clarity, precision, and real-world insight to one of the most frustrating parts of doing business globally.
Disclaimer: Commenda and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.
