Republican Gov. Larry Rhoden on Thursday signed two bills he says will deliver “the largest property tax cut in South Dakota history,” though past reductions may have been larger when adjusted for inflation. The package uses higher sales tax collections to offset property taxes for homeowners.
One bill will generate an estimated $114 million annually by allowing the state sales tax to return to 4.5% next year, as scheduled. That revenue will flow into the state’s education funding formula to lower school district property taxes. The state will also use $56 million from reserves to launch the relief effort ahead of the rate change.
A second bill gives counties the option to add a half‑percent sales tax, with revenue applied directly to the county share of homeowner property taxes as a credit. The amount raised will depend on which counties adopt the tax.
Rhoden’s office estimates the statewide sales tax adjustment will reduce homeowner property taxes by 14–22%, or about $548 on a $325,000 home. Counties that adopt the optional tax could see an additional 10–25% reduction, averaging about $660 per homeowner.
The statewide bill was sponsored by House Speaker Jon Hansen, who is challenging Rhoden in the June 2 Republican gubernatorial primary.
The new laws follow last year’s property tax measures aimed at slowing valuation‑driven tax increases by capping growth in taxable values, limiting how new construction can expand collections, and expanding eligibility for tax relief programs. Lawmakers have faced rising homeowner complaints since the pandemic‑era housing surge drove values — and taxes — sharply higher.
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