Live in California, Work in South Dakota: Which State Taxes Your Paycheck?
Answer
Your home state takes it and the work state does not. South Dakota levies no tax on wages; California taxes residents on all income regardless of where it was earned. The result is a single California resident return covering the full amount, with no offsetting credit.
Last verified
The instinct that working in a no-tax state means paying no tax is the single most expensive misunderstanding in this niche. South Dakota takes nothing, but California still taxes residents on income earned anywhere, so the full amount lands on your California return.
What you file
- 1Resident return · California
File a California resident return reporting all of your income.
The two states, side by side
| California | South Dakota | |
|---|---|---|
| Taxes wages | Yes — graduated | No |
| Reciprocity partners | None | None |
| Convenience rule | No | No |
| Nonresident return | Form 540NR | Not applicable |
| Credit for other-state tax | Schedule S | No income tax |
| Nonresident safe harbour | None published | Not applicable |
| Local income tax | No | No |
| Revenue department | California Franchise Tax Board | South Dakota Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in South Dakota and working in California gives:Work 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.
- Remote worker: California → South DakotaHome state only
- 1099 contractor: California → South DakotaHome state only — estimated payments
- Moved mid-year: California → South DakotaOne part-year return — the state you left
Other California pairs
Questions people actually ask
I live in California and work in South Dakota. Which state takes the tax out of my paycheck?
Your home state takes it and the work state does not. South Dakota levies no tax on wages; California taxes residents on all income regardless of where it was earned. The result is a single California resident return covering the full amount, with no offsetting credit.
Which state should my employer be withholding for?
California. Your employer should withhold California tax rather than South Dakota tax on these wages. If a South Dakota line is showing on your pay stub, raise it with payroll now rather than at filing time.
How current is this?
The California and South Dakota rules on this page were last checked against California Franchise Tax Board and South Dakota 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.
- California Franchise Tax Board — individual income taxaccessed 2026-08-07
- South Dakota Department of Revenue — individual income taxaccessed 2026-08-07