South Dakota is one of the few states in the country that has no state income tax or capital gains tax on trusts. This creates tremendous planning opportunities for HNW and UHNW families and their advisors to grow trust principal state tax-free. When compounded over the life of the trust, it leads to significant growth in both principal and income available to the trust beneficiaries. See for yourself. We have created a calculator so you can compare the tax benefits of South Dakota to any other state in the country.
Tax Savings Calculator
Enter your data in the five blue boxes below, select a state and click the calculate button. A chart will pop up showing your potential tax savings with a South Dakota trust.
|Trust Size ($)|
|Remaining Term of Trust (years)|
|Expected Future Rate of Return for the Trust (%)|
|Annual % of income derived from Ordinary Income (%)|
|Annual % of income derived from Capital Gains (%)|
|Current Trust Situs||VS.|
|State Tax Rate on Income (%) (1)(2)(3)||VS.|
|State Tax Rate on LT Capital Gains (%) (1)(2)(3)||VS.|
(1) Have used the highest state tax rate for ordinary income and capital gain
(2) Have used federal rate of 20% for capital gain and 39.6% for ordinary income
(3) Calculated on highest rate for married filing jointly
(4) Source for state income tax rates was TaxFoundation.org and for state capital gains tax rates was Realized1031.
The calculation of expected growth of creating a trust in South Dakota is only an estimate that should not be relied upon. These estimates apply to only non-grantor trusts. Certain states will still impose taxes based upon the residence of the grantor at time of creation and/or residences of the fiduciaries and beneficiaries. This should not be construed as legal or tax advice. You should consult your own lawyer or tax professional before creating a South Dakota trust.
Sterling Trustees LLC makes no representations, warranties, or assurances as to the accuracy, currency or completeness of the content contained on this page or any website linked to this page.