Graphic Designer Taxes in South Dakota - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for a Graphic Designer in South Dakota

From branding the Black Hills Gold to crafting logos for Sioux Falls businesses, graphic designers in South Dakota play a vital role in the state’s vibrant economy. However, alongside creative freedom comes the responsibility of managing taxes as a self-employed individual.

As a graphic designer operating as an independent contractor in South Dakota, all income earned must be reported to the IRS. This is typically done using Schedule C (Profit or Loss from Business) when filing your federal income tax return. Crucially, earnings exceeding $400 are subject to self-employment tax, which covers both Social Security and Medicare contributions.

How South Dakota Handles Gig Worker Taxes

South Dakota stands out as one of the few states with no state income tax. This means graphic designers 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 designers to retain a larger portion of their earnings. However, it also means meticulous federal tax planning is even more critical. South Dakota’s relatively low cost of living, combined with the lack of state income tax, makes it an attractive location for freelancers, but it’s essential to remember that federal taxes still apply. Furthermore, while there's no state income tax, South Dakota does collect sales tax on certain services, and graphic designers should be aware of their obligations if their services are taxable. Staying informed about federal tax law changes is paramount, as these will directly impact your tax liability. For more information on South Dakota business resources, visit the South Dakota Department of Revenue: https://dor.sd.gov/.

Key Tax Deductions for Home-Based Graphic Designers

• 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 your graphic design work – it cannot double as a guest room or family space. “Regular use” implies consistent and ongoing use for business purposes. You can calculate the deduction 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 of the trade, such as computers, graphic tablets, cameras used for product photography, and software subscriptions (Adobe Creative Cloud, font licenses, website hosting) are generally deductible as business expenses.
• 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 support your deduction.

Note on Mileage: As a home-based worker, mileage deductions are less common. However, you can claim mileage for trips directly related to your business, such as client meetings, trips to purchase supplies, or attending industry events.

The 15.3% Self-Employment Tax Explained

The 15.3% self-employment tax is comprised of two parts: 12.4% for Social Security and 2.9% for Medicare. This tax is essentially the equivalent of the Social Security and Medicare taxes withheld from an employee’s paycheck, but as a self-employed individual, you are responsible for paying both the employer and employee portions.