Live in South Dakota, Work Remotely for a Oregon Employer: Who Taxes You?
Answer
Your employer's state gets nothing, and neither does yours. Wages are sourced to where the work is physically done — South Dakota, which does not tax them — and Oregon does not run a rule that would source your remote days back to it. No withholding, no returns.
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. Oregon does not.
Oregon also has a layer below the state one, and it is the layer that survives every agreement: The Portland area layers two local income taxes on top of the state tax — the Metro supportive housing tax and the Multnomah County preschool tax — and both reach nonresidents on income sourced to the district. They are administered by the City of Portland Revenue Division, not the Department of Revenue.
What you file
There is nothing to file in either South Dakota or Oregon 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 | Oregon | |
|---|---|---|
| Taxes wages | No | Yes — graduated |
| Reciprocity partners | None | None |
| Convenience rule | No | No |
| Nonresident return | Not applicable | Form OR-40-N |
| Credit for other-state tax | No income tax | Schedule OR-ASC-NP |
| Nonresident safe harbour | Not applicable | None published |
| Local income tax | No | Yes |
| Revenue department | South Dakota Department of Revenue | Oregon Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Oregon 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 → OregonWork state only
- 1099 contractor: South Dakota → OregonClient state only, if you work there
- Moved mid-year: South Dakota → OregonOne 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 Oregon employer. Which state do I pay?
Your employer's state gets nothing, and neither does yours. Wages are sourced to where the work is physically done — South Dakota, which does not tax them — and Oregon does not run a rule that would source your remote days back to it. No withholding, no returns.
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 Oregon is an error worth querying.
Does my Oregon employer's location alone create a Oregon tax obligation?
No. Oregon 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 Oregon are a different matter — those are Oregon-source income and can require a nonresident return.
How current is this?
The South Dakota and Oregon rules on this page were last checked against South Dakota Department of Revenue and Oregon Department 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
- Oregon Department of Revenue — individual income taxaccessed 2026-08-07