Freelance Writer Taxes in South Dakota - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for a Freelance Writer in South Dakota

The wide-open spaces and growing digital landscape of South Dakota offer a unique environment for freelance writers, but navigating the tax implications of self-employment requires careful attention. As a freelance writer operating in the Mount Rushmore State, understanding both federal and state tax obligations is crucial for financial success.

The federal government requires all self-employed individuals, including freelance writers, to report income and expenses on Schedule C (Profit or Loss from Business) with Form 1040. Earnings exceeding $400 necessitate the payment of self-employment tax, covering both Social Security and Medicare contributions. Accurate record-keeping throughout the year is paramount to ensure proper tax filing and maximize potential deductions.

How South Dakota Handles Gig Worker Taxes

South Dakota stands out as one of the few states with no state income tax. This means freelance writers won’t be filing a state income tax return. However, this does not exempt them from federal tax obligations. The absence of state income tax can be a significant benefit, allowing writers to retain a larger portion of their earnings. However, it also means that federal tax planning becomes even more critical. South Dakota does collect sales tax, but generally, writing services are not subject to sales tax unless they involve tangible personal property. It’s important to stay updated on any potential changes to sales tax laws, as interpretations can evolve. Many South Dakota freelance writers benefit from the state’s pro-business environment and relatively low cost of living, but responsible tax management remains essential. The state’s focus on agriculture and tourism doesn’t diminish the growing freelance economy, and resources are available to help navigate the federal requirements. For more information on South Dakota business resources, visit the South Dakota Small Business Development Centers.

Key Tax Deductions for Home-Based Freelance Writers

• Home Office Deduction: To qualify for the home office deduction, the space must be used exclusively and regularly for business. “Exclusive use” means that portion of your home is used solely for writing – it cannot double as a guest room or family room. “Regular use” means you use the space consistently for your writing business. The deduction can be calculated using the simplified method ($5 per square foot, up to 300 square feet) or the actual expense method (calculating a percentage of your mortgage/rent, utilities, etc., based on the square footage used for business).
• Hardware & Software: The cost of essential tools like computers, cameras, printers, and software subscriptions (e.g., Adobe Creative Cloud, website hosting, grammar checkers) directly related to your writing business are deductible. For larger purchases, depreciation may be required over several years.
• Internet & Phone Bill: If you use your internet and phone for both personal and business purposes, you can deduct the percentage attributable to business use. Keep detailed records of how you use these services to justify your deduction.

Note on Mileage: As a home-based worker, mileage deductions are less common. However, you can claim mileage for trips made specifically for client meetings, research, or other work-related errands. Keep a detailed mileage log documenting dates, destinations, and business purpose.

The 15.3% Self-Employment Tax Explained

The 15.3% self-employment tax is comprised of two components: 12.4% for Social Security and 2.9% for Medicare. This tax is essentially the equivalent of the employer and employee portions of these taxes when working for a traditional employer. You are responsible for paying both portions as a self-employed individual. However, you can deduct one-half of your self-employment tax from your gross income.