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.

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.

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.

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.

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.

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.

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.

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.

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.'

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.

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.

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.

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.

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 an old requirement for counties to pay cities road tax money from the 1980s.

This bill removes the requirement that counties remit to municipalities an amount equal to the road levy for calendar years 1984, 1985, and 1986. It eliminates the provision requiring counties to pay municipalities an amount based on the average road levy distributed during those years, and repeals the related section that determined payments for municipalities incorporated after January 1, 1984.

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.