Let's be honest… when you think of American business titans, South Dakota probably isn't the first state that springs to mind. Yet this understated prairie state has quietly built an impressive roster of major employers and industry leaders that would make many larger states jealous. From healthcare systems serving millions to the world's largest ethanol producer, South Dakota's business landscape tells a fascinating story of how smart policy and Midwestern work ethic can create real economic magic.
The state that taxes forgot (in the best way)
South Dakota has mastered the art of the humble brag when it comes to its business environment. The state consistently ranks second nationally for business tax climate, and once you dig into the details, you'll understand why companies are flocking here faster than tourists to Mount Rushmore.
Here's what businesses don't pay in South Dakota:
- Corporate income tax
- Personal income tax
- Inventory tax
- Inheritance tax
- Personal property tax
- Business inventory tax
- Bank franchise tax
The only major tax? A modest 4.2% sales tax that was recently reduced from 4.5%. It's like the state decided to throw a permanent tax holiday and forgot to end it.
This isn't just about keeping more money in corporate coffers though. These advantages have helped South Dakota build a surprisingly robust economy with a $57.5 billion GDP. Sure, Minnesota next door has 17 Fortune 500 companies to South Dakota's zero, but who's counting? South Dakota's 0.4% GDP growth in 2024 outpaced both North Dakota and Iowa, proving that you don't need corporate giants to build a thriving economy.
Healthcare giants anchor the employment landscape
When it comes to employment muscle, healthcare flexes hardest in South Dakota. The sector contributes $6.3 billion annually to the state's GDP and just added 2,700 new workers in 2024 alone.
Sanford Health leads the pack
Sanford Health isn't just big… it's "largest rural health system in the United States" big. With $7.7 billion in annual revenue and a network spanning 56 hospitals and 288 clinic locations, Sanford serves over 2 million patients across the Upper Midwest.
The Sioux Falls-based nonprofit just got even bigger with its January 2025 merger with Wisconsin's Marshfield Clinic Health System, creating a combined workforce exceeding 56,000 employees. That's roughly 6% of South Dakota's entire population working for one healthcare system. Talk about job security in the job security industry.
Avera Health keeps pace
Not to be outdone, Avera Health employs 18,000 people as South Dakota's largest private employer. This ministry of Benedictine and Presentation Sisters operates 417 locations across 100 communities in five states, covering an impressive 72,000 square miles of prairie, farmland, and small towns.
While Avera keeps its revenue figures closer to the vest than a blackjack dealer in Deadwood, its massive footprint speaks volumes about healthcare's economic impact. Between Sanford and Avera, these two systems essentially function as economic engines for entire communities, supporting everything from local coffee shops to real estate markets through their substantial payrolls.
Manufacturing and tech prove prairie innovation is real
South Dakota might be known for wide-open spaces, but its manufacturing and technology sectors are anything but empty. Food processing alone employs 22% of the state's industrial workforce, with giants like Smithfield Foods (3,500 employees in Sioux Falls) and Tyson Fresh Meats (2,100 employees in Dakota Dunes) turning the state's agricultural bounty into value-added products.
Daktronics lights up the world from Brookings
Here's a fun fact to drop at your next dinner party: those dazzling LED displays in Times Square and on the Las Vegas Strip? There's a good chance they came from Brookings, South Dakota, population 23,000. Daktronics, founded in 1968 by two South Dakota State University professors, has grown into a global leader with $818.1 million in revenue and 2,501 employees.
The company's origin story reads like a Midwestern fairy tale. Those professors wanted to keep engineering talent in South Dakota, so they started a company in a garage. Now Daktronics has 130,000+ installations worldwide, and half their workforce still calls South Dakota home. Who says you need Silicon Valley to build a tech empire?
The Raven flies with new wings
Sometimes getting acquired is actually good news. When CNH Industrial bought Raven Industries for $2.1 billion in 2021, locals worried about another corporate exit. Instead, the acquisition brought 300 new jobs and established a corporate cyber defense hub in Sioux Falls.
Raven's evolution from making high-altitude balloons to pioneering autonomous farming equipment shows South Dakota's knack for reinvention. It's like watching your quiet neighbor suddenly reveal they're secretly a tech genius… which, in this case, they kind of are.
Financial services find their (tax) haven
South Dakota's transformation into a financial services powerhouse started with one bold move in 1981. Citibank packed up its credit card operations in New York and headed for Sioux Falls to escape restrictive usury laws. That pioneering relocation sparked an industry that now represents the state's largest economic sector, contributing $7.9 billion annually… a whopping 24.1% of total state GDP.
First Premier Bank exemplifies this success story. With nearly $3 billion in assets and over 2,200 combined employees between the bank and its Premier Bankcard subsidiary, it ranks as the 13th largest ACH originating bank nationally and 15th largest issuer of Mastercard credit cards. Not bad for a bank headquartered in a state with fewer people than San Francisco.
The financial services boom has attracted Wells Fargo, Great Western Bank, and numerous other institutions. They come for the tax advantages, stay for the skilled workforce, and discover that yes, you can run a major financial operation from the middle of America just fine, thank you very much.
POET turns corn into fuel… and fortune
If you've ever wondered who's behind America's ethanol industry, meet POET. This Sioux Falls-based company produces 3 billion gallons of ethanol annually across 34 facilities in eight states, accounting for 19% of total U.S. production. With estimated revenues exceeding $5 billion, POET stands as South Dakota's largest company by revenue.
The company's origin story is pure American entrepreneurship. In 1987, Jeff Broin bought a bankrupt ethanol plant in Scotland, South Dakota. Today, POET employs 2,400 people, including 400 at its Sioux Falls headquarters, and has hosted presidential visits from Bush, Obama, and Biden. Apparently, nothing says "presidential photo op" quite like turning corn into fuel.
But POET represents something bigger than just ethanol. South Dakota generates 92% of its electricity from renewable sources, with wind power alone providing 55% through 1,417 turbines. This renewable energy infrastructure contributes $28.7 million annually in state and local taxes plus $20.6 million in land lease payments. It's almost like South Dakota looked at its endless wind and said, "Well, we might as well make money from this."
The infrastructure investing in tomorrow
South Dakota isn't resting on its low-tax laurels. The state recently scored its third consecutive Silver Shovel Award for major economic development projects, and the investments keep flowing.
Recent infrastructure wins include:
- $4.3 million federal investment
- New Rosebud Reservation training facility
- $42 million water infrastructure upgrades
- $120.5 million housing program
- 7,043 new home lots
- 5,127 multifamily units
The technology sector is particularly hot, representing 28% of job growth over the past five years. A Digital Government Summit focused on cybersecurity and AI implementation shows the state isn't just farming and finance anymore. There's even a $20 million NSF grant heading to South Dakota EPSCoR for research infrastructure improvement.
The good, the bad, and the windy
Let's talk challenges because even South Dakota isn't perfect (though don't tell them that). The state faces a classic good news/bad news scenario with its 1.9% unemployment rate. Great for workers, tough for employers trying to fill 33,000 open jobs with only 10,000 unemployed people in the entire state.
The average income of $55,480 trails Minnesota's $68,880, which might explain why some South Dakotans are willing to brave Minnesota winters for a bigger paycheck. And while the state ranks 35th in CNBC's overall business climate, that's actually not terrible when you consider they're competing without a single Fortune 500 headquarters.
The economic impact numbers tell an encouraging story though. The beef industry generates $0.95 in additional economic activity for every dollar spent. Independent businesses recirculate 52.9% of revenue locally compared to just 13.6% for chain stores. Even tourism is booming, with $4.96 billion in annual spending and an $8 billion total economic impact.
What's next for America's business-friendly frontier
South Dakota's future looks brighter than a Daktronics LED display. The state is positioning itself for $37 billion in planned transmission capacity expansion over the next decade, which will supercharge its already impressive renewable energy sector. Professional and business services showed the fastest growth among all sectors, expanding 1.7 times from 2014 to 2024.
The state's central location offers equal access to both coasts, supported by robust highway and railroad networks plus four ports of entry for international trade. Add in a 100% pension funding ratio and AAA credit rating, and you've got a state that manages money better than most of us manage our Netflix queues.
The bottom line that matters
South Dakota's largest businesses tell a story that defies coastal stereotypes about "flyover country." This is a state where two professors can build a global technology company from a garage, where a bankrupt ethanol plant can become a $5 billion enterprise, and where healthcare systems employ more people than most cities have residents.
The state has proven you don't need Silicon Valley's venture capital or Wall Street's proximity to build major businesses. You just need smart policies, hardworking people, and apparently, a complete aversion to income taxes. As South Dakota continues attracting businesses with its unique combination of tax advantages, renewable energy leadership, and that famous Midwest work ethic, one thing becomes clear: sometimes the best place to build a business empire is in the middle of nowhere.
Just don't tell everyone. South Dakota kind of likes being the business world's best-kept secret.
