State Income Tax Savings:
South Dakota is a pure no income/capital gains tax state for trusts.
However, if income from trust is distributed, beneficiaries are taxed at his/her personal rates in his/her tax residence jurisdiction.
Income not distributed is generally taxed to the trust at the trust rate based on the trust's situs (none in South Dakota); there are certain exceptions with certain partnership and business interests.
Maximum federal tax rate: 39.5% ( Using insurance may allow for federal and state tax savings on growth as well as distributions):
- No state income or capital gains tax
- Lowest state insurance premium tax
- No intangibles tax (compare FL, KS, KY & MI)
- No dividends & interest tax
- No state LLC tax
- No state LLP tax
- No state ad valorem tax
- No city or local tax
- No state inheritance tax
- No state gift tax
- No state Generation-Skipping Transfer (GST) tax
- No state coupon tax
- No state personal property tax
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