- South Dakota rates now and next
- How the yearly rise works
- Tipped staff and the $35 test
- South Dakota's rate history
- Posters and paydays
- Federal rules that sit underneath
- South Dakota against its neighbours
- Mistakes South Dakota employers make
- Questions to settle before South Dakota payroll
- My verdict
- Frequently asked questions
The minimum wage in South Dakota is $11.85 an hour as of October 2026, and it rises to $12.30 on January 1, 2027. Tipped employees have a minimum of $5.925 an hour, rising to $6.15 in 2027, and the employer must make sure they get at least the full minimum once tips are counted.
South Dakota's Department of Labor and Regulation publishes the rate and adjusts it every year by the cost of living. This page draws on the department's minimum wage page and the U.S. Department of Labor's state, tipped, history and payday tables, plus its Fair Labor Standards Act reference guide, read in October 2026.
South Dakota rates now and next
| Rule | Now (as of October 2026) | From January 1, 2027 |
|---|---|---|
| Non-tipped minimum wage | $11.85 | $12.30 |
| Tipped minimum wage | $5.925 | $6.15 |
| Tip credit cap | 50% of the minimum | 50% of the minimum |
| Tipped employee test | More than $35 a month in tips | More than $35 a month in tips |
How the yearly rise works
The department says the non-tipped minimum wage is adjusted every year at the same rate as the cost of living, measured by the Consumer Price Index published by the U.S. Department of Labor. Any increase is rounded up to the nearest 5 cents. The other rule matters as much: the minimum wage can never decrease, even in a year when prices fall, so each new figure becomes the floor for every year after it.
Tipped staff and the $35 test
Here's the detail that sets South Dakota apart from its neighbours. The federal tipped table defines a tipped employee in South Dakota as one who gets more than $35 a month in tips, a higher bar than the $30 federal test. The tip credit can't exceed 50% of the minimum wage, which leaves a cash wage of $5.925 now. The department adds that employers must make sure tipped staff receive no less than the current minimum and must keep a record of all tips received.
- Pay tipped staff at least $5.925 an hour in cash in 2026 and $6.15 from 2027.
- Record every employee's tips.
- Check that cash wage plus tips reaches $11.85 an hour, and $12.30 from January 2027.
- Top up any shortfall in that pay period.
If you share tips, my guide to tip pooling explains how pools work.
South Dakota's rate history
| Year | South Dakota rate |
|---|---|
| 2020 | $9.30 |
| 2021 | $9.45 |
| 2022 | $9.95 |
| 2023 | $10.80 |
| 2024 | $11.20 |
| 2026 | $11.85 |
| 2027 | $12.30 |
The rate has risen every year in that run, and the steps have grown with inflation. A business that set pay once in 2020 at $9.30 and never revisited it would now be well below the legal floor.
Posters and paydays
The department says there's no state statute requiring its minimum wage posting, and it offers the 2026 and 2027 postings in English and Spanish as a courtesy. Federal posting rules still apply, and the department's main office in Pierre answers questions on 605.773.3101. On pay timing, the federal payday table lists South Dakota under monthly paydays, so the state rule allows a monthly payroll.
Federal rules that sit underneath
The federal reference guide sets time and a half after 40 hours a week for non-exempt staff, and the federal state table lists no separate state overtime rule for South Dakota, so the federal 40-hour rule applies. The guide also allows a youth rate of $4.25 for workers under 20 in their first 90 consecutive calendar days under federal law, but South Dakota's own minimum is far higher, so check with the department before paying anyone less than $11.85.
South Dakota against its neighbours
| State | Basic minimum wage (as of October 2026) |
|---|---|
| South Dakota | $11.85 |
| Nebraska | $15.00 |
| Minnesota | $11.41 |
| Montana | $10.85 |
| Iowa | $7.25 |
| North Dakota | $7.25 |
| Wyoming | $5.15, federal $7.25 for covered employers |
South Dakota pays more than Minnesota and Montana and well above Iowa and North Dakota, but less than Nebraska. A business in Sioux Falls with staff over the line in Iowa runs two very different floors, and my Minnesota minimum wage guide covers the nearest comparable rate.
Mistakes South Dakota employers make
- Applying the tipped rate to staff who get $35 or less a month in tips.
- Missing the January rise to $12.30.
- Not keeping a record of tips, which the department requires.
- Assuming the rate could fall in a low-inflation year. It can't.
Questions to settle before South Dakota payroll
- Will every hourly rate reach $12.30 on January 1, 2027?
- Does each tipped employee clear more than $35 a month in tips?
- Is every tip recorded, as the department requires?
- Is your payroll at least monthly, as the federal payday table lists for South Dakota?
- Are teen schedules inside the federal limits of 3 hours on a school day and 18 hours in a school week for 14 and 15 year olds?
My verdict
South Dakota's minimum moves every January and never goes down, so plan for $12.30 from 2027 and keep watching each autumn. For restaurants, the details that matter are the $35 tip test and the record of every tip. Check the department's page each autumn for the next year's tipped figure.
Frequently asked questions
What is the minimum wage in South Dakota?
It's $11.85 an hour as of October 2026, rising to $12.30 on January 1, 2027.
Want AI doing the heavy lifting in your marketing?
I build the systems that handle the boring 80 percent, so you get your week back. Done properly, with the human kept in.
What is the tipped minimum wage in South Dakota?
It's $5.925 an hour in 2026 and $6.15 from January 1, 2027.
Who counts as a tipped employee in South Dakota?
Someone who gets more than $35 a month in tips, according to the federal tipped table.
How is South Dakota's minimum wage adjusted?
Every year by the cost of living, measured by the Consumer Price Index, rounded up to the nearest 5 cents.
Can South Dakota's minimum wage go down?
No. The department says the minimum wage cannot decrease.
Do South Dakota employers have to record tips?
Yes. The department says employers must keep a record of all tips received by employees.
How often must South Dakota employers pay?
The federal payday table lists South Dakota under monthly paydays.
Is South Dakota's minimum wage higher than Minnesota's?
Yes. South Dakota pays $11.85 an hour and Minnesota $11.41 as of October 2026.
When does South Dakota's next minimum wage rise take effect?
On January 1, 2027, when the rate goes to $12.30 an hour for non-tipped employees.
