DoorDash Dasher Taxes in South Dakota - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for DoorDash Dashers in South Dakota

Delivering for DoorDash across the wide-open spaces of South Dakota offers flexibility, but it also comes with tax responsibilities. As an independent contractor, understanding these obligations is crucial for a smooth tax season.

The IRS requires all DoorDash Dashers to report their earnings as self-employment income on Schedule C (Profit or Loss From Business) when filing federal taxes. Earnings over $400 necessitate the payment of self-employment taxes, covering both Social Security and Medicare contributions, which are not automatically withheld from your DoorDash payouts.

How South Dakota Handles Gig Worker Taxes

South Dakota stands out as one of the few states with no state income tax! This means Dashers won’t need to file a state income tax return based on their DoorDash earnings. However, this does not exempt you from federal income and self-employment tax obligations. While the lack of state income tax simplifies things, diligent record-keeping for federal purposes remains essential. South Dakota’s economy is heavily reliant on agriculture and tourism, and the gig economy, including delivery services, is growing, meaning the IRS will be paying close attention to accurate reporting. Dashers should be aware that even without state income tax, accurate federal reporting is paramount to avoid potential penalties. The state does collect sales tax on certain services, but this is generally handled by DoorDash, not directly by the Dasher. For further information on South Dakota tax laws and business resources, please visit the South Dakota Department of Revenue: https://dor.sd.gov/.

Top Tax Deductions for South Dakota Drivers

• Standard Mileage: The most popular and often most beneficial deduction. For the 2025 tax year, the standard mileage rate is 70 cents per mile. Given South Dakota’s relatively lower gas prices compared to coastal states, the standard mileage rate is likely to be a very advantageous option for most Dashers.
• Tolls & Parking: While South Dakota doesn’t have extensive toll roads, any parking fees incurred directly while actively delivering orders are deductible. Keep receipts!
• Phone & Data Plan: If you use your personal phone for DoorDash, you can deduct the percentage of your monthly bill that corresponds to business use. Carefully track the time spent dashing versus personal use.
• Vehicle-Related Costs: Expenses like car washes to maintain a professional appearance, phone mounts for safe navigation, insulated food bags, and dash cams are all potentially deductible business expenses.

Key Warning: You cannot deduct both the standard mileage rate and actual car expenses (like gas, oil changes, repairs, insurance) in the same tax year. Choose the method that yields the larger deduction.

Understanding the 15.3% Self-Employment Tax

Self-employment tax is a combined Social Security and Medicare tax for individuals who work for themselves. As a DoorDash Dasher, you are considered self-employed. This tax rate is 15.3% on net earnings (income after deductions) exceeding $400. Remember, DoorDash and other platforms do not withhold these taxes, so it’s crucial to plan for this liability throughout the year, potentially through quarterly estimated tax payments to the IRS.