Live in South Dakota, Work Remotely for a Arkansas Employer: Who Taxes You?
Answer
Nothing is owed on either side. South Dakota has no wage income tax, and Arkansas taxes nonresidents only on work actually performed inside Arkansas. Never setting foot in Arkansas keeps the income entirely outside its reach, so this pair produces no state return at all.
Last verified
Wages are sourced to the place where the work is physically performed. That default is what makes remote work simple, and it is only disturbed when the employer's state runs a convenience-of-the-employer rule. Arkansas does not.
What you file
There is nothing to file in either South Dakota or Arkansas on these wages. Your federal return is unaffected — the federal government taxes the income whatever the states do.
The two states, side by side
| South Dakota | Arkansas | |
|---|---|---|
| Taxes wages | No | Yes — graduated |
| Reciprocity partners | None | None |
| Convenience rule | No | No |
| Nonresident return | Not applicable | Form AR1000NR |
| Credit for other-state tax | No income tax | Form AR1000TC |
| Nonresident safe harbour | Not applicable | None published |
| Local income tax | No | No |
| Revenue department | South Dakota Department of Revenue | Arkansas Department of Finance and Administration |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Arkansas and working in South Dakota gives:Home state only.
Same two states, different situation
The withholding answer turns on how you are paid and where the work happens, not only on which two states are involved.
- W-2 commuter: South Dakota → ArkansasWork state only
- 1099 contractor: South Dakota → ArkansasClient state only, if you work there
- Moved mid-year: South Dakota → ArkansasOne part-year return — the state you moved to
Other South Dakota pairs
Questions people actually ask
I live in South Dakota and work remotely for a Arkansas employer. Which state do I pay?
Nothing is owed on either side. South Dakota has no wage income tax, and Arkansas taxes nonresidents only on work actually performed inside Arkansas. Never setting foot in Arkansas keeps the income entirely outside its reach, so this pair produces no state return at all.
Which state should my employer be withholding for?
Neither. There is no state income tax to withhold on either side of this pairing, so a state line on your pay stub for South Dakota or Arkansas is an error worth querying.
Does my Arkansas employer's location alone create a Arkansas tax obligation?
No. Arkansas sources wages to the place where the work is physically performed, and it does not apply a convenience-of-the-employer rule that would override that. Days you actually spend working inside Arkansas are a different matter — those are Arkansas-source income and can require a nonresident return.
How current is this?
The South Dakota and Arkansas rules on this page were last checked against South Dakota Department of Revenue and Arkansas Department of Finance and Administration on 2026-08-07. We re-check the full grid every December after state legislative sessions close, and re-check the convenience-of-the-employer states quarterly because that is where the rules move fastest.
Sources
Every fact above comes from the revenue department that publishes the rule. We do not cite secondary summaries, and we do not restate a figure we could not find at source.
- South Dakota Department of Revenue — individual income taxaccessed 2026-08-07
- Arkansas Department of Finance and Administration — individual income taxaccessed 2026-08-07