Live in South Dakota, Work Remotely for a Delaware Employer: Who Taxes You?
Answer
This is the worst version of the convenience rule. Living in a no-income-tax state usually helps; here it hurts. Delaware claims the income under its convenience test, and because South Dakota levies no tax you have no home-state return and therefore no credit anywhere to recover it.
Last verified
The convenience rule is bad enough when your home state credits it back. Here there is nothing to credit it back against: South Dakota levies no income tax, so the Delaware liability is final rather than merely first.
Delaware sources a nonresident employee's remote workdays to Delaware when the employee works outside the state for their own convenience rather than because the employer requires it. Days worked outside Delaware at the employer's necessity are excluded.
The rule is not an administrative preference. Delaware applies it under 30 Del. C. §1124; Delaware Division of Revenue Technical Information Memorandum 2011-1, and the burden of showing that remote work is an employer necessity rather than an employee convenience falls on you and your employer, not on Delaware Division of Revenue.
Delaware also has a layer below the state one, and it is the layer that survives every agreement: Wilmington levies a city earned income tax on wages earned inside the city, collected by the city rather than the Division of Revenue.
What you file
- 1Nonresident return · DelawareForm PIT-NON
File a Delaware nonresident return. South Dakota does not tax wages, so there is no resident return and therefore no credit anywhere to offset the Delaware tax — this is the worst version of the convenience rule.
The two states, side by side
| South Dakota | Delaware | |
|---|---|---|
| Taxes wages | No | Yes — graduated |
| Reciprocity partners | None | None |
| Convenience rule | No | Yes — general rule |
| Nonresident return | Not applicable | Form PIT-NON |
| Credit for other-state tax | No income tax | Schedule I (Form PIT-RES) |
| Nonresident safe harbour | Not applicable | None published |
| Local income tax | No | Yes |
| Revenue department | South Dakota Department of Revenue | Delaware Division of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Delaware 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 → DelawareWork state only
- 1099 contractor: South Dakota → DelawareClient state only, if you work there
- Moved mid-year: South Dakota → DelawareOne 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 Delaware employer. Which state do I pay?
This is the worst version of the convenience rule. Living in a no-income-tax state usually helps; here it hurts. Delaware claims the income under its convenience test, and because South Dakota levies no tax you have no home-state return and therefore no credit anywhere to recover it.
Which state should my employer be withholding for?
Delaware. The wages are sourced to Delaware, so Delaware withholding is correct and there is no South Dakota withholding to set up, because South Dakota levies no income tax on wages.
Can I claim a credit for the Delaware tax?
No, and that is what makes this case unusual. A credit for taxes paid to another state is claimed on a resident return, and South Dakota does not have one — it levies no personal income tax. The Delaware tax is your final cost on this income unless your employer can establish that your remote work is a business necessity.
How current is this?
The South Dakota and Delaware rules on this page were last checked against South Dakota Department of Revenue and Delaware Division of Revenue 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
- Delaware Division of Revenue — individual income taxaccessed 2026-08-07