South Dakota Economy

According to the U.S. Bureau of Economic Analysis, the gross state product of South Dakota was $29.4 billion as of 2004. The per capita personal income was $26,894 in 2004, the 37th highest in the nation and 13.08 percent below the national average. 13.2% of the population is below the poverty line.

Agriculture has historically been a key component of the South Dakota economy. Although other industries have expanded rapidly in recent decades, agricultural production is still very important to the state's economy, especially in rural areas. Major products of South Dakota agriculture include beef, wheat, corn (maize), pork, wool, soybeans, oats, mutton, alfalfa, sunflowers, and poultry. Agriculture-related industries such as meat packing and ethanol production also have a considerable economic impact on the state. South Dakota is one of the top five ethanol-producing states in the nation.[16]

Another important sector in South Dakota's economy is tourism. Many travel to view the attractions of the state, particularly those of the Black Hills region such as historic Deadwood, Mt. Rushmore, and the nearby state and national parks. One of the largest tourist events in the state is the annual Sturgis Motorcycle Rally. The three-day event drew over 450,000 attendants in 2006, significant considering the state has a population of only 750,000.[17] In 2006, tourism provided an estimated 33,000 jobs in the state and contributed over two billion US$ to the economy of South Dakota.[18]

As of 2005, South Dakota has the lowest per capita total state tax rate in the United States.[19] The state does not levy inheritance taxes, personal or corporate income taxes or taxes on intangible personal property. The state sales tax rate is 4 percent. Various localities have local levies so that in some areas the rate is 6 percent. The state sales tax does not apply to sales to Indians on Indian Reservations, but many reservations have a compact with the state. Businesses on the reservation collect the tax and the state refunds to the Indian Tribes the percentage of sales tax collections relating to the ratio of Indian population to total population in the county or area affected.

Ad valorem property taxes are local taxes and are a large source of funding for school systems, counties, municipalities and other local government units. Their administration is a local responsibility. The state revenue department does not collect or use property taxes, but it does centrally assess the property of large companies. The legislature sets some standards by general acts.