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South Dakota Residency for Nomads 🏕️

If you’re American and you’re moving overseas or you travel often enough to be considered a nomad, becoming a South Dakotan is a fantastic way to save money and hassle. I did it myself, and here I’ll share everything I learned in the process.

Why South Dakota?

SD is unique among the 50 US states in having passed laws specifically intended to make it easier for nomads and long term travelers to become residents. It’s thus easy to benefit while traveling from their lack of state income taxes and other advantages for people without a permanent location. This is an important service for people who genuinely don’t have any long term home, at least in the US.

With just one night in a hotel or campground in the state (and a receipt to prove it), along with a local mail forwarding service, you can pick up a new SD driver’s license on the spot. If you want to register to vote and register your vehicle, those are easy too.

This is different from the other states without income tax like Alaska, Florida, Texas, and Washington, because all other states require you to maintain a residential address there and expect you to live there for a while to establish residence. SD requires just one night in the state every five years in order to renew your driver’s license in person, and doesn’t require a residential address.

For me, the benefit of this is not having to rely on a friend or family member in one of the other states without income tax to let me use their address on an ongoing basis, and going through the hassle of falsely demonstrating that I live there by putting utilities in my name or the like. Or spending enough time and rent in a state to do that without a friend, then bending the law by not maintaining the address I set up and not keeping my driver’s license up to date.

If you’re already living in a state without income tax and are planning to start long term travel, I suppose you could just continue using your last address on government forms. But USPS mail forwarding only works for a year, and only within the US. And even then, as mentioned above that would be bending the law since you’re supposed to keep your driver’s license and government forms up to date with your current address.

Thus, South Dakota not only has no income taxes, but also eliminates the hassle from being homeless/nomadic and out of state all the time. There are other benefits for RVers or people with cars. For instance, SD does not require annual inspections, so you don’t have to drive back to the state once a year.

Tax & Vehicle Benefits

Above, I’ve tried to emphasize the value of SD residency for nomads, which is not just about the tax benefits. But here are the tax and vehicle cost benefits of being a South Dakota resident:

  • No state income tax, including for earned income, pensions, dividends, interest, capital gains, etc.
  • No property tax.
  • No inheritance tax.
  • Low tax on vehicle purchases, and it’s applied only on the trade difference of a vehicle.
  • Low vehicle insurance rates.
  • Low vehicle registration fees.
  • No annual vehicle inspections.

If you’re moving from a high income tax state, they may try to keep taxing you for as long as they can, especially if they think you’re moving for tax avoidance. California and New York are the most notorious for their aggressive approaches to taxing people who’ve left if they think you’re still domiciled in their state or that you’re really leaving only for tax avoidance. If you’re moving from one of those states, you should probably consult a tax attorney. It might make sense to spend a year (and pay your taxes once) in a state other than South Dakota, before establishing residency there.

When leaving CA or NY, it’s especially important to document your departure and set up connections in your new home state (e.g., getting a new driver’s license, re-registering any vehicles, registering to vote, joining professional organizations, purchasing a home, etc.).

If this is a major concern for you (e.g., if you’re a high income earner, or you expect to retain ties to your former state), check out this site that describes how states typically determine residency, and this document that gives interesting examples of court cases decided for and against people who were pursued for taxes after they tried to move their domicile.

What You’ll Need to Bring

Transferring your driver’s license to SD and establishing residency is incredibly simple and takes only a few minutes. You’ll need the following:

  1. Your current driver’s license to trade in.
  2. Another form of identification. I brought my passport.
  3. Proof of your social security number, such as your social security card or last W-2.
  4. A receipt for your ownership of a mail forwarding address within the state.
  5. A hotel receipt for at least one night’s stay in SD. Important: The address on your receipt should be your mail forwarding address in SD, or alternatively it should have no address listed for you at all. (I haven’t seen these details anywhere else online; I learned them by getting this wrong and initially giving the Sioux Falls DMV a hotel receipt that used a different address. After having my receipt rejected, I was able to go back to the hotel and have them print a new receipt with an updated address.)

If you’re doing this in Sioux Falls (where I did — it’s the state’s largest city), it’s fine to budget only one day in town for this. Just make sure to arrive the night before, so you can get that receipt you’ll need from your hotel.

Here are SD’s official requirements: Required Driver License & ID Card Documents: Full-Time Travelers. That page mentions a “residency affidavit” which wasn’t in my list above. That’s because they gave me a copy at the DMV, so I didn’t need to bring one in.

Note that South Dakota doesn’t actually have a Department of Motor Vehicles (DMV). They issue drivers’ licenses from their Department of Public Safety (DPS). I’ll continue calling it the DMV in this post though since that’s a more familiar term for most people.

Additional Tips

Stay in a hotel near the Sioux Falls DMV. Motel 6 is a 15-minute walk and is the cheapest night’s sleep in the city unless you want to stay at a campground. Sleep Inn Airport is even closer, on the same block as the DMV. Both are also close to Sioux Falls Regional Airport, so staying at one of these places will save on rides to and from the airport. But more importantly, staying close to the DMV will help if you run into any problems. I had to go back to the DMV a couple of extra times while there and ended up Ubering back and forth from my hotel each time.

I used DakotaPost for the forwarding address requirement. I recommend them because they have a nice physical location in Sioux Falls where you can walk in and sign up on the spot, with no need for getting a USPS authorization form notarized like you would be required to if signing up with other services online. Although DakotaPost’s website pushes their more expensive virtual mailbox service that allows you to see your mail online, they also do simple mail forwarding starting at $155/year.

I actually tried another service first, called Traveling Mailbox. They’re fantastic and possibly the best deal (given my needs) for this kind of remote mailbox service. I already had a NC address with them, and signed up for a second address in SD, expecting to cancel the first account after becoming a SD resident. Well, I’m glad I didn’t cancel it beforehand because the SD DMV rejected my Traveling Mailbox address due to a legal requirement about them not maintaining a physical presence in the state. The helpful woman I spoke to at the Sioux Falls DMV recommended a couple alternative companies that always gave her the paperwork she needed on the first try: DakotaPost and Your Best Address. She preferred DakotaPost.

Edit (2021-05-19): A reader who switched to South Dakota residency based on this post wrote me to mention he used South Dakota Residency Center for mail forwarding since they’re cheaper ($110/year).

12 thoughts on “South Dakota Residency for Nomads 🏕️”

  1. Hi, thanks for this information. I am reading through SD’s requirements for “New Applicants and Transfers Out of State” here: https://dps.sd.gov/driver-licensing/required-documents

    It says for these individuals that “All applicants are required to provide two documents proving your residential/physical address.” Does this not apply?

    I do see something on another page about full-time travelers only needing to prove ownership of the PMB, but this seems to only apply to renewals and replacements. Is this situation then also applicable to nomads as new applicants?

  2. Excellent! Thanks for that clarification, Steven. Was planning on Texas, but SD seems better now other than that the timeframe is only 5 years. I just need to see if having an expired driver’s license will impact anything. And will confirm if anything has changed with new nomad applicants requirements also since you applied.

  3. Thank you for your blog post, it’s very informative.

    I have a question about South Dakota driving license.
    How did you manage to solve the issue with hotel receipt not having your physical address on it?
    Could you recommend a hotel/motel, as we likely have only one or two days to spare for South Dakota?

  4. Hi, Anna. If you set up an SD mail forwarding address before you arrive, just make sure to give that address to the hotel. However, if you check into your hotel before setting up an SD address, ask the hotel to print a receipt without your address included. They should be able to change or remove the address on the receipt they give you since hotels in Sioux Falls are used to people staying the night to get an SD driver’s license.

    Since I didn’t know this stuff in advance, here’s what I actually did:

    1. Stayed overnight at Super 8 by Wyndham Sioux Falls/41st Street.
    2. Went to the DMV and got rejected because they couldn’t accept forwarding addresses from Traveling Mailbox due to a legal technicality.
    3. Went to DakotaPost and got a new SD address from them.
    4. Got rejected from the DMV again because my hotel receipt had my Traveling Mailbox SD address instead of the new one.
    5. Went to the hotel and asked them to print a copy of my receipt with a different address. They had no problem with this since they were used to people in town for the same purpose as me.
    6. Third time was the charm at the DMV—success!

    It was no problem doing all of this in one day, but it took a lot of Uber rides. That’s why my post recommended staying in a hotel close to the DMV (Motel 6 and Sleep Inn Airport are both within walking distance).

  5. In regards to the “Residency Affidavit”, the questions are as followed…

    1. Is South Dakota your state of residence? Y/N
    2. Is South Dakota the state you intend to return to after being absent? Y/N
    3. Do you maintain a residence in another state? Y/N

    If my answers are all No, will they decline?

  6. Ryan, yes, I imagine they’d decline, or if you get a friendly person they might guide you on what needs to be the case for you to be approved.

    In case it helps, consider that they don’t specify any timeframe for when you intend to return. There’s also nothing wrong with changing your mind in the future if circumstances change and you decide to settle in another state.

  7. Does it matter how I book the hotel? I expect they should always provide a receipt, even if the night is booked via some booking website.

  8. Do you have to go to the same DPS in the city that my mailbox address is? Or can I go to any city in South Dakota?
    Thank you.

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