Taxes & Property Tax

Changes how schools calculate property taxes and state funding for general and special education.

This bill revises property tax levies for school districts by reducing the maximum general fund levy rates and adjusting the state aid formula. It decreases the maximum levy from $5.211 to $4.874 per thousand dollars of taxable valuation for general property, from $1.125 to $1.052 for agricultural property, and from $2.518 to $2.355 for owner-occupied single-family dwellings. The bill also updates the target teacher salary base year and makes minor adjustments to the overhead rate in the state aid formula.

Changes public notice requirements for school districts raising property taxes.

This bill increases the property tax exemption for disabled veterans and surviving spouses from $200,000 to $225,000 of the full and true value of their owner-occupied dwellings. It also makes minor administrative changes to application procedures and language cleanup.

Changes how property taxes are calculated for homes and non-farm properties.

This bill changes property tax assessment methodology for owner-occupied single-family homes and nonagricultural property. Instead of using only current year fair market value, assessments will be based on an 'olympic average' (removing highest and lowest values) of the most recent 8 assessment years. The bill defines assessment sample period as 8 years, creates the olympic averaging formula, and requires directors of equalization to use this intertemporal average value method. Properties with use changes or additions use a shorter averaging period from when the change occurred.

Allows cities to create their own funding systems for local construction projects.

This bill creates a new local funding mechanism for municipalities to finance capital improvement projects. It establishes a capital improvement board structure with 5 appointed members to approve ordinances for a special gross receipts tax (up to 1% on tangible personal property and services). The tax requires board approval, then voter approval by 60% margin, and can only be used for municipal acquisition/lease of property and equipment, or construction/repair/renovation of municipal property. The tax has a maximum 60-month duration or until minimum specified funds are collected, and municipalities cannot impose the tax again for 24 months after collection ends.

Changes how tax money from new mining permits gets distributed.

This bill modifies how severance tax revenues from precious metals mining are distributed. It creates a new category for permits issued on or after July 1, 2026, maintaining the existing 80% state/20% county split but removing the $1 million cap per county. The bill also makes technical language updates, changing 'shall' to 'must' and updating references from 'secretary of revenue' to 'secretary of the department.'

Allows cities to create property tax rebate programs.

This bill authorizes municipalities to create property tax rebate programs for owner-occupied single-family dwellings. The rebate can only apply to municipal taxes (not county or school district taxes). If a municipality establishes such a program, it must provide rebates to all applicants who meet the criteria set in the municipal ordinance.

Changes the rules for tax increment financing districts.

This bill modifies the requirements for creating tax increment financing (TIF) districts in South Dakota. Key changes include: requiring referendum approval for TIF district creation, reducing the maximum assessed value threshold from 10% to 5% of total political subdivision property, increasing the blighted area requirement from 25% to 50%, requiring cost-benefit analysis showing social/economic benefits exceed costs, requiring mutual consent between municipalities and counties for TIF district creation, limiting grants to 10% of project costs, and making various technical definition updates.

Puts certain tax money into a fund to reduce homeowner taxes.

Creates a homeowner tax reduction fund in the state treasury that will provide property tax rebates for owner-occupied single-family dwellings. Starting January 31st each year, the state treasurer must deposit the greater of $100 million or a calculated percentage of tax revenues from various state tax chapters into this fund. The Department of Revenue will administer the fund and provide rebates to qualifying homeowners. The bill becomes effective July 1, 2027.

Raises income limits for seniors to qualify for property tax freezes.

This bill increases the income limits for property tax assessment freezes from $65,000 to $85,000 for multiple-member households (single-member household limit remains at $55,000). It also changes the automatic inflation adjustment start date from 2026 to 2027 and clarifies that the freeze applies to 'individual's owner-occupied' dwellings rather than just 'person's' dwellings.

Creates a fund to help reduce property taxes.

This bill creates a new Property Tax Relief Fund in the state treasury, administered by the Department of Revenue. Starting in 2026, the state will transfer 25% of annual general fund increases into this fund. The fund's purpose is to supplement property tax levies of political subdivisions to reduce property taxes on real property, with expenditures requiring legislative appropriation.

Lets counties add a sales tax to lower property taxes for homeowners.

This bill creates a new county option gross receipts tax (up to 0.5%) on sales of tangible personal property and services that are already subject to state sales tax. Counties must use all proceeds to provide property tax credits, first to owner-occupied residential property, then to agricultural and other property. The tax requires county ordinance adoption and can be subject to voter referendum. The state Department of Revenue will administer the tax collection and distribution.

Limits how much property taxes can increase on owner-occupied homes each year.

This bill limits annual property tax assessment increases on owner-occupied single-family homes to 3% per year starting with assessment year 2026, using 2020 fair market values as the baseline. When properties are sold, they are reassessed at current fair market value to establish a new base amount. The bill also allows taxing districts to exceed mill rate limitations to maintain revenue levels from the 2026 tax year, adjusted for growth and improvements.

Requires governments to pay legal costs when property owners win tax assessment appeals.

This bill requires courts to award attorney fees and disbursements to property owners and taxpayers who successfully appeal their property tax assessments in both circuit court and Supreme Court cases. Currently, courts may only award fees against unsuccessful appellants. The bill makes fee awards mandatory when property owners/taxpayers prevail in their appeals.

Changes what counts as blighted property for tax increment financing.

This bill modifies tax increment financing (TIF) district creation requirements by: (1) increasing the minimum blighted area requirement from 25% to 50% of the district's real property, (2) changing the conjunction from 'or' to 'and' making both blight and economic development criteria mandatory, and (3) making minor technical changes to the definition of 'blighted area' including removing 'diversity of ownership' as a blight factor and eliminating 'open space with obsolete platting' as a standalone blight category.

Changes requirements for creating tax increment financing districts.

This bill modifies the requirements for creating tax increment financing (TIF) districts in South Dakota. Key changes include: reducing the maximum assessed value limit from 10% to 2.5% of total political subdivision property; increasing the blighted area requirement from 25% to 50% of district area; requiring both county and municipal consent for districts crossing jurisdictional boundaries; adding requirements for financing plans and cost-benefit analysis; removing grant-making authority from project costs; and making TIF district creation subject to referendum.

Creates a new transaction tax to reduce property taxes.

This bill creates a new transaction tax system where a tax of $1.50 is imposed on retail transactions of $15 or more, and 10% on transactions under $15. The revenue goes to a property tax replacement fund that the Department of Revenue uses to reduce property taxes, prioritizing owner-occupied homes first, then agricultural property, then other property. The bill also establishes collection procedures, penalties for non-compliance (Class 1 misdemeanor for late payment, Class 6 felony for false returns), and updates related tax code sections to reference the new transaction tax.

Creates a fund to reduce property taxes for homeowners.

This bill creates a homeowner tax reduction fund in the state treasury to provide property tax rebates for owner-occupied single-family dwellings. The Department of Revenue will administer the fund, and expenditures must be budgeted through the general appropriation bill. Money in the fund cannot be transferred to the general fund.

Stops tax increment financing districts from giving out grants.

This bill removes the authority for political subdivisions to issue grants as part of tax increment financing (TIF) districts. It eliminates the definition of 'grants' from the law, removes grants from the definition of 'project costs,' and removes references to grants throughout the TIF statutes. TIF districts will still be able to fund public works and improvements, but can no longer provide direct financial grants to private entities.

Makes temporary sales tax cuts permanent.

This bill repeals the sunset provision for a reduction in gross receipts and use tax rates that was set to expire on June 30, 2027. By removing this expiration date, the tax rate reductions become permanent.

Reduces property taxes for seniors who own and live in their homes.

This bill creates a new property tax assessment freeze program for qualifying senior citizens. Seniors aged 65+ who have owned their single-family home for at least 10 consecutive years, been South Dakota residents for at least 25 years, and have no delinquent property taxes can freeze their property's assessed value at either the year they first qualify or the 2020 assessment year, whichever is later. The bill establishes application procedures through county treasurers and allows the freeze to continue annually as long as the person owns the property.

Limits how much property tax revenue can increase each year.

This bill increases the cap on property tax revenue increases for taxing districts and school districts from 3% to 5% for taxes payable in years 2027-2031. The bill modifies existing property tax limitation statutes to allow higher percentage increases in property tax revenue during this specific five-year period.

Changes public notice requirements before voting on tax increases.

This bill establishes new public notice requirements for school districts and other taxing districts before voting to impose excess tax levies. It requires at least 21 days advance notice through website publication or newspaper, plus direct mail/electronic notification to all property owners. The notice must specify the maximum amount being considered, current allowable amount, hearing details, estimated tax increase per $100,000 of taxable value, and intended use of the levy funds. The governing body must provide opportunity for public comment at the hearing.

Provides emergency funding for tax refunds to elderly and disabled residents.

This bill appropriates $425,000 from the general fund to the Department of Revenue to provide tax refunds to elderly persons and persons with disabilities for real property tax and sales tax under existing chapters 10-18A and 10-45A. Up to $20,000 of the appropriation may be used for administration. The bill includes standard appropriation language regarding voucher approval, warrant drawing, fund reversion by June 30, 2027, and declares an emergency for immediate effect.

Exempts farmers' market sales from sales tax.

This bill creates a new sales tax exemption for certain agricultural and artisanal products sold directly to consumers at farmers' markets. The exemption covers fresh seasonal fruits and vegetables, meat, eggs, dairy, baked goods, flowers, and artisanal products. It defines farmers' markets as public, recurring marketplaces where multiple independent producers, primarily farmers, sell agricultural products directly to consumers.

Removes an exemption for certain healthcare facilities.

This bill repeals the property tax exemption for certain nonprofit health care facilities. It removes section 10-4-9.3 which exempted property owned by nonprofit 501(c)(3) organizations used primarily for human health care from taxation, provided they were licensed health care facilities, orphanages, mental health centers, or camps that admitted all persons and conformed to state regulations. The bill also repeals the definition of 'wellness center' as it relates to these exemptions.

Creates a fund to reduce taxes for homeowners.

This bill establishes the homeowner tax reduction fund in the state treasury, administered by the Department of Revenue, to provide property tax rebates for owner-occupied single-family dwellings. The rebate amount is calculated using a formula based on total appropriations and number of eligible property owners, with rebates equal to the lesser of the calculated amount or the property taxes exceeding $250. Administrative costs are covered by $2 per property owner.

Removes a budget calculation requirement for counties.

This bill removes the 5% buffer calculation requirement from county budget and tax levy processes. It eliminates the requirement that counties add 5% to their calculated tax levy needs as a cushion, and repeals the section that mandated this 5% addition to appropriations when determining tax levy amounts.

Allows multiple garages on your property to qualify for homeowner tax breaks.

This bill expands the tax classification definition of 'owner-occupied single-family dwelling' to include all garages and ancillary structures related to residential use, even if they are located on separate parcels of land. It changes the language from 'attached or unattached garage' and 'parcel' (singular) to 'all garages and ancillary structures' and 'parcels' (plural). The bill also updates the contractor provision to reference the expanded definition.

Changes tax refund rules for elderly and disabled residents.

This bill modifies tax refund programs for elderly persons and persons with disabilities by: (1) updating income thresholds and calculation methods for retail sales and service tax refunds, (2) eliminating the property tax refund program (repealing chapter 10-18A), (3) updating cross-references throughout the tax code to remove references to the eliminated property tax refund program, and (4) modifying how pro rata distributions are calculated when appropriated funds are insufficient to pay all claims.

Raises sales taxes to lower property taxes.

This bill creates a property tax local effort replacement fund and significantly restructures South Dakota's tax system. It reduces school district property taxes to zero dollars per thousand dollars of taxable valuation (from the current $5.21 maximum general rate, $1.125 for agricultural property, and $2.518 for owner-occupied homes) starting in 2027. To replace this revenue, it increases the state sales tax rate from 4.2% to 6.2% on retail sales, services, utilities, telecommunications, and oil and gas field services.

Clarifies when property value certifications are sent to counties.

This bill makes two minor administrative changes to property tax assessment procedures: (1) extends the deadline for the Department of Revenue to transmit certification of values to counties from the second Monday of August to the fourth Monday of August, and (2) clarifies that 'the certificate' (rather than just 'it') must be transmitted within a reasonable time to avoid invalidating assessments or tax levies.

Gives veterans and their surviving spouses refunds on past property taxes.

This bill allows qualifying disabled veterans and their unremarried surviving spouses to petition county commissioners for a refund of property taxes paid in the previous four years on property that would have qualified for the veteran disability tax exemption if they missed the application deadline. The bill adds this refund provision to existing law that already exempts these veterans from property taxes on their primary residence.

Eliminates property taxes.

This bill eliminates property tax mill levies across South Dakota by reducing all county, township, municipality, and school district property tax levies to zero. The bill requires the Bureau of Finance and Management to recommend annual appropriations to transfer state funds to political subdivisions for their necessary expenditures, effectively replacing property tax revenue with state funding.

Changes the tax rate on gold mining.

This bill changes the tax on gold mining/extraction in South Dakota from a flat rate of $4 per ounce to 1% of market value (based on London Bullion Market Association quarterly average price). It applies to any person severing gold in the state.

Eliminates a tax break banks get for bad loans.

This bill repeals income modifications for the bank franchise tax pertaining to bad debts. Specifically, it removes provisions that required banks to add back bad debt deductions in excess of actual worthless amounts charged off, and removes provisions that allowed banks to subtract adjustments related to changes in federal bad debt computation methods. The bill makes technical formatting changes throughout the tax code sections affecting financial institutions.

Updates state tax code references to match federal tax law.

This bill updates South Dakota's reference to the Internal Revenue Code from January 1, 2025 to January 1, 2026, ensuring state tax law remains current with federal tax code changes. This is a routine annual update that affects multiple sections of South Dakota tax law.