Turo Host Taxes in South Dakota - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Turo Hosts in South Dakota

With the Black Hills National Forest drawing tourists year-round, renting out a vehicle on Turo in South Dakota can be a lucrative venture. However, alongside the income comes the responsibility of accurate tax reporting.

As a Turo host, earnings are considered self-employment income and must be reported to the IRS on Schedule C (Profit or Loss from Business) with your Form 1040. Crucially, this income is also subject to self-employment tax, covering both Social Security and Medicare, which Turo does not withhold. Maintaining meticulous records of income and expenses is paramount for a smooth tax filing process.

How South Dakota Handles Gig Worker Taxes

South Dakota stands out as one of the few states with no state income tax. This means Turo hosts in the Mount Rushmore State won’t need to file a state income tax return based on their Turo earnings. However, this does not exempt you from federal income tax obligations. The IRS requires all self-employment income to be reported, regardless of state tax laws. South Dakota does collect sales tax on rentals, and Turo generally handles the collection and remittance of this tax on behalf of hosts. It’s still vital to understand your responsibilities regarding reporting the gross rental income, even though the sales tax portion is managed by the platform. Given South Dakota’s relatively low cost of living and fuel prices, the standard mileage rate is often a very advantageous deduction for Turo hosts. Furthermore, the state’s focus on tourism means a higher potential for rental income, making accurate record-keeping even more important. For more information on South Dakota business resources, 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. South Dakota’s lower gas prices make the standard mileage rate an especially attractive option for maximizing deductions.
• Tolls & Parking: While South Dakota doesn’t have extensive toll roads, any parking fees incurred while preparing a vehicle for rental or during pick-up/drop-off are deductible.
• Phone & Data Plan: The percentage of your phone and data plan used for Turo-related communication and management is deductible. Keep a log of business usage.
• Vehicle-Related Costs: Expenses like car wash supplies to maintain a clean vehicle for renters, phone mounts for navigation, or even small amenities offered to renters (like hand sanitizer) 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 greater deduction.

Understanding the 15.3% Self-Employment Tax

Self-employment tax, totaling 15.3%, covers both Social Security and Medicare taxes. Unlike traditional employment, Turo (and other gig platforms) does not withhold these taxes from your earnings. Therefore, it’s your responsibility to calculate and pay this tax quarterly to the IRS, typically via estimated tax payments. Failure to do so can result in penalties.