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.

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.

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.

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.

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.

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.

Gives homeowners a tax credit on their primary residence.

This bill creates a property tax credit for owner-occupied single-family dwellings. For property taxes payable in 2027, county treasurers must apply a tax credit of either $500 or the total property tax amount (whichever is less) to each owner-occupied single-family dwelling. The bill appropriates $60 million from the general fund and $60 million from the budget reserve fund to the Department of Revenue to replace the foregone revenue from this tax credit. It also transfers $60 million from the South Dakota housing infrastructure fund to the general fund.

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.

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.

Lowers property taxes for homeowners while raising sales and use tax rates.

This bill reduces property taxes on owner-occupied single-family dwellings by setting their mill levy for school district general funds and special education funds to zero (reduced from $2.518 per $1,000 of taxable valuation). To replace this lost revenue, the bill increases gross receipts tax rates from 4.2% to 4.7% starting July 1, 2026, and to 5% starting July 1, 2027. These tax rate increases apply to retail sales, various services (accounting, legal, repair services, etc.), utilities, telecommunications, and other taxable services. The bill specifies that the increased tax revenue will fund state aid to replace the property tax revenue loss and ongoing expenditures for state employee, school employee, and Medicaid provider payroll and rate increases.

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.

Removes limits on how property tax adjustments can accumulate over time.

This bill eliminates the three-year limit on accumulating unused property tax index factors for counties and municipalities. Previously, local governments could only use unused index factors from the prior three years and were capped at either the three-year total or 10% (whichever was less). The bill removes these restrictions, allowing unlimited accumulation of unused index factors since 2024 for future property tax revenue increases.

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.'

Creates an online application for property tax relief programs.

This bill requires the South Dakota Department of Revenue to provide online application options for various property tax relief programs, including exemptions for disabled individuals, veterans, surviving spouses, and property tax assessment freezes. The bill modifies multiple statutes to allow applications to be submitted either on prescribed forms or through a website maintained by the department, and requires the department to provide online applications to county treasurers.

Lowers sales tax on food while raising other taxes to fund school construction projects.

This bill reduces sales and use tax rates on food while increasing tax rates for certain other taxes, use taxes, and excise taxes. It also provides a new fund for school district capital outlay projects. The bill makes various technical amendments to tax code definitions and structures, including changes to definitions of 'food,' 'prepared food,' 'retailer,' and other tax-related terms. The sales tax rate increases from 4.2% to 5% on non-food items.

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

This bill limits the annual increase in assessed value of owner-occupied single-family dwellings to 3% over the prior year's assessed value, with exceptions for new improvements made to the dwelling. The bill removes the previous time limitation (taxes payable 2027-2031) and makes this cap permanent, effective July 1, 2027. The cap applies per individual dwelling rather than county-wide totals.

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.

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 requirements for creating tax increment financing districts.

This bill significantly restricts the creation of tax increment financing (TIF) districts by: reducing the maximum percentage of assessed value from 10% to 5%, increasing the blighted area requirement from 25% to 50%, requiring consent from both municipalities and counties for TIF creation, requiring cost-benefit analysis, making TIF creation subject to referendum, limiting grants to 10% of project costs, and adding a 'financing plan' requirement to define revenue sources for project costs.

Updates rules for tax increment financing districts.

This bill makes technical updates to South Dakota's tax increment financing (TIF) district laws. Key changes include: (1) modifying how property tax abatements work by preventing discretionary formulas from being used for any property (rather than just within TIF districts), (2) clarifying that TIF districts must be contiguous geographic areas with specific rules about what constitutes contiguous parcels, (3) updating definitions and terminology throughout the TIF statutes, (4) requiring that district boundaries cannot split property being used for a single purpose, and (5) making various technical corrections to language and cross-references in the TIF statutory framework.

Limits property tax increases on owner-occupied homes and adjusts local tax rules.

This bill limits annual property tax assessment increases on owner-occupied single-family homes to an index factor (inflation-based) starting from a 2020 base value, with reassessment to market value only upon change of ownership. It establishes base amounts retroactive to November 1, 2020, and allows increases above the cap only for property use changes, additions/expansions, or improvements that increase value by more than 40%. The bill also permits taxing districts to exceed mill rate limitations to maintain revenue levels from the 2025 tax year adjusted for inflation and new development.

Makes it easier to adjust property tax calculations for development projects.

This bill lowers the threshold from 35% to 15% for when additional project costs in a tax increment financing district require redetermination of the tax increment base. Currently, if additional project costs are 35% or less of the original project plan amount, the tax increment base does not need to be redetermined. This bill changes that threshold to 15%.

Requires property tax bills to include a link to state tax information.

This bill requires property tax bills to include a QR code and internet address linking to a Department of Revenue website with property tax information and relief programs. The bill also requires at least 12-point font notice informing taxpayers about the additional tax information available through the QR code and internet address.

Creates a new property tax category for non-farm properties.

This bill creates a new taxation classification system for nonagricultural property, splitting it into two categories: commercial-operator nonagricultural property (for family businesses and properties where owners materially participate) and commercial-investor nonagricultural property (all other nonagricultural property). It establishes application and renewal processes for the commercial-operator classification, creates penalties for misrepresentation ($2,500 for knowing misrepresentation, $500 for negligent misrepresentation), and provides that commercial-operator properties will receive at least 25% lower school district tax levies starting in 2028.

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.

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.

Ends certain extra property tax levies for school districts.

This bill terminates certain school district excess tax levies that were approved prior to July 1, 2002, prohibiting their imposition in 2026 and thereafter.

Requires county approval before cities can create tax increment financing districts.

This bill requires municipalities to obtain consent by resolution from the board of county commissioners of each affected county before creating a tax increment financing (TIF) district.

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.

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.

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.

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.

Removes the cap on how much property tax increases can accumulate over time.

This bill eliminates the three-year limit on accumulating unused property tax index factors for counties and municipalities. Currently, local governments can only use unused index factors from the prior three years and are limited to ten percent or the three-year total, whichever is less. The bill removes these restrictions, allowing unlimited accumulation of unused index factors starting from 2024.

Limits how much property taxes can increase each year on homes and businesses.

This bill limits annual property tax assessment increases to 3% for owner-occupied single-family homes and nonagricultural property. Properties must be reassessed at full fair market value when ownership changes, property classification/use changes, or major additions/expansions occur (over 40% value increase). Minor renovations and additions under 40% value increase are exempt from reassessment.