Live in South Dakota, Work Remotely for a Virginia 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 Virginia does not run a rule that would source your remote days back to it. No withholding, no returns.
Last verified
An employer's address is not a tax nexus for its employees. Working from South Dakota keeps the income South Dakota-source, and since South Dakota levies no tax on wages, the income lands nowhere at all.
What you file
There is nothing to file in either South Dakota or Virginia 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 | Virginia | |
|---|---|---|
| Taxes wages | No | Yes — graduated |
| Reciprocity partners | None | 5 (Form VA-4) |
| Convenience rule | No | No |
| Nonresident return | Not applicable | Form 763 |
| Credit for other-state tax | No income tax | Schedule OSC |
| Nonresident safe harbour | Not applicable | None published |
| Local income tax | No | No |
| Revenue department | South Dakota Department of Revenue | Virginia Department of Taxation |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Virginia 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 → VirginiaWork state only
- 1099 contractor: South Dakota → VirginiaClient state only, if you work there
- Moved mid-year: South Dakota → VirginiaOne 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 Virginia 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 Virginia 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 Virginia is an error worth querying.
Does my Virginia employer's location alone create a Virginia tax obligation?
No. Virginia 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 Virginia are a different matter — those are Virginia-source income and can require a nonresident return.
How current is this?
The South Dakota and Virginia rules on this page were last checked against South Dakota Department of Revenue and Virginia Department of Taxation 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
- Virginia Department of Taxation — individual income taxaccessed 2026-08-07
- Virginia — Form VA-4accessed 2026-08-07
- Virginia Tax — Reciprocityaccessed 2026-08-07