South Dakota Governor Signs Bills to Cut Homeowner Property Taxes

New laws rely on higher sales taxes to fund property tax relief for homeowners

Mar. 13, 2026 at 4:55pm

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Republican Gov. Larry Rhoden signed two bills into law that will work together to provide what he calls 'the largest property tax cut in South Dakota history.' One bill will raise the state sales tax rate from 4.2% to 4.5% to generate an estimated $114 million annually, which will be used to lower school district property taxes. The other bill will allow counties to impose a 0.5% sales tax to offset the county portion of homeowner property taxes.

Why it matters

The new laws aim to provide property tax relief for homeowners in South Dakota, which has seen a surge in home prices and property taxes in recent years. However, the relief will be funded through higher sales taxes, which could impact consumer spending.

The details

The bills signed by Gov. Rhoden will work in the following ways: 1) The state sales tax rate will increase from 4.2% to 4.5%, generating an estimated $114 million annually that will be used to lower school district property taxes. 2) Counties will be given the option to impose a 0.5% sales tax, with the proceeds offsetting the county portion of homeowner property taxes. The governor's office estimates this could result in a 10-25% property tax reduction for homeowners in counties that adopt the optional sales tax.

  • The state sales tax increase will take effect next year.
  • The state will use $56 million from its reserve funds to kickstart the property tax relief effort before the sales tax increase takes effect.

The players

Gov. Larry Rhoden

The Republican governor of South Dakota who signed the two bills into law.

Bill Janklow

The former governor of South Dakota who approved a historic reduction in property taxes in 1995.

Tony Venhuizen

The current lieutenant governor of South Dakota.

Jon Hansen

The Republican Speaker of the South Dakota House of Representatives who proposed the bill capturing revenue from the scheduled statewide sales tax increase.

Dusty Johnson

A U.S. Representative who is running against Rhoden for the Republican nomination for governor.

Toby Doeden

A businessman who is running against Rhoden for the Republican nomination for governor.

Jim Terwilliger

The state Bureau of Finance and Management Commissioner.

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What they’re saying

“We have estimates, county by county, of what it would raise. It really depends on which counties implement it.”

— Tony Venhuizen, Lieutenant Governor (siouxfallslive.com)

“The optional county sales tax alone would cause him to spend an additional $160 in sales taxes each year for his four-person family.”

— Jim Terwilliger, State Bureau of Finance and Management Commissioner (siouxfallslive.com)

What’s next

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The takeaway

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