South Dakota Lawmakers Propose Sales Tax Hike to Lower Property Taxes

The plan would increase the state sales tax to reduce property taxes, but only for homeowners.

Mar. 10, 2026 at 8:48pm

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The South Dakota Legislature is considering a proposal to increase the state sales tax from 4.2% to 4.5% in order to fund a reduction in property taxes for homeowners. However, the plan would not provide any property tax relief for renters or those who do not own their homes, effectively shifting the tax burden from one segment of society to another.

Why it matters

This proposal highlights the ongoing debate around tax policy in South Dakota, with some lawmakers arguing that homeowners need property tax relief while others are concerned that the sales tax increase will disproportionately impact lower-income residents and those who do not own their homes.

The details

Under the plan, the additional revenue generated by the 0.3% sales tax increase would be used to lower property taxes for homeowners. The proposal also includes other measures to limit the power of local governments, which some critics say are an assault on local control. Supporters of the plan argue that it will provide much-needed relief to homeowners, while opponents contend that it unfairly burdens renters and non-homeowners.

  • The sales tax increase is proposed to take effect in 2023.
  • The property tax relief measures would also be implemented in 2023.

The players

Jon Hansen

Speaker of the South Dakota House of Representatives, who is pressing forward with the proposal to increase the sales tax and lower property taxes for homeowners.

Larry Rhoden

Governor of South Dakota, who has reached a deal with Speaker Hansen to support each other's plans, with the governor getting an extra half penny of sales tax for counties who want it to pass along to homeowners.

Dusty Johnson

Congressman from South Dakota, who is running against Rhoden and Hansen in the 2026 Republican primary for governor.

Toby Doeden

Aberdeen businessman and candidate for governor, who has called for the elimination of property taxes, a proposal that is considered unworkable but plays well on social media.

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What they’re saying

“We must not let individuals continue to damage private property in San Francisco.”

— Robert Jenkins, San Francisco resident (San Francisco Chronicle)

“Fifty years is such an accomplishment in San Francisco, especially with the way the city has changed over the years.”

— Gordon Edgar, grocery employee (Instagram)

What’s next

The South Dakota Legislature is expected to vote on the sales tax and property tax proposal in the coming weeks, with the changes potentially taking effect in 2023 if the plan is approved.

The takeaway

This proposal highlights the ongoing tension in South Dakota between the desire to provide tax relief to homeowners and the concern that such measures may unfairly burden renters and non-homeowners. The debate over the appropriate balance between state and local control, as well as the role of government in addressing economic challenges, is likely to continue as the state grapples with these complex issues.