Amazon Flex Taxes in South Dakota - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Amazon Flex Drivers in South Dakota

The wide-open roads of South Dakota offer a unique landscape for Amazon Flex drivers, but navigating the tax implications of independent contracting requires careful attention. Delivering packages across the Mount Rushmore State means understanding both federal and state tax obligations.

As an Amazon Flex driver, you are considered an independent contractor by the IRS. This means your earnings are subject to self-employment tax, and you’ll report your income and expenses on Schedule C (Profit or Loss from Business) when filing your federal income tax return. It’s crucial to accurately track all income received from Amazon Flex, as well as any related business expenses, to determine your taxable profit.

How South Dakota Handles Gig Worker Taxes

South Dakota stands out as one of the few states with no state income tax. This means you won’t owe income tax to the state on your Amazon Flex earnings. However, this does not exempt you from federal income tax or self-employment tax obligations. The lack of state income tax can be a significant benefit for South Dakota residents, allowing them to retain a larger portion of their earnings. However, it also means that all tax responsibilities fall squarely on the federal level. Many South Dakota residents, particularly those in rapidly growing areas like Sioux Falls and Rapid City, are turning to gig work like Amazon Flex, making accurate tax preparation even more important. While the state doesn’t offer specific gig worker tax forms, the general federal guidelines apply. It’s important to remember that even without state income tax, meticulous record-keeping is essential for maximizing deductions and minimizing your federal tax liability. For further information on South Dakota tax laws and resources, please visit the South Dakota Department of Revenue: https://dor.sd.gov/.

Top Tax Deductions for South Dakota Drivers

• Standard Mileage: The #1 deduction. The 2025 rate is 70 cents per mile. With South Dakota’s vast distances, particularly in the western part of the state, the standard mileage rate is often a very advantageous option for Amazon Flex drivers.
• Tolls & Parking: While South Dakota doesn’t have extensive toll road systems, any parking fees incurred directly for deliveries are deductible.
• Phone & Data Plan: The percentage of your phone and data plan used for business purposes (tracking deliveries, communicating with Amazon, etc.) is deductible.
• Vehicle-Related Costs: Expenses like car cleaning supplies, phone mounts, dash cams, and insulated hot bags used specifically for deliveries are deductible.

Key Warning: You cannot deduct both the standard mileage rate and actual car expenses like gas or repairs in the same year. Choose the method that yields the larger deduction.

Understanding the 15.3% Self-Employment Tax

The 15.3% self-employment tax covers both Social Security and Medicare taxes. Unlike traditional employment, Amazon Flex and other gig platforms do not withhold these taxes from your earnings. Therefore, it’s your responsibility to calculate and pay this tax, typically through estimated tax payments made quarterly to the IRS. Earnings over $400 are subject to this tax.