Budget & Taxes

HB 1253 adjusts how property taxes are calculated for owner-occupied single-family homes and nonagricultural land by using a special averaging method. It requires county assessors to set each property's taxable value based on the "Olympic average" (removing the highest and lowest values) of its fair market value over the past eight years, or since a recent change in use or addition. This aims to stabilize tax bills by smoothing out annual value fluctuations. The bill specifically prevents this adjustment from increasing taxes on agricultural properties. It directly affects homeowners and nonagricultural property owners in South Dakota.

SB 223 modifies South Dakota's process for school districts to refer excess tax levies to voter approval. It changes the petition signature requirement from a flat 50 voters to "at least five percent of the registered voters" in the school district. The bill also adjusts notice rules, waiving newspaper publication requirements if the district mails the resolution to all property taxpayers within 20 days. This affects school districts seeking voter input on tax increases and directly impacts local taxpayers who may petition to refer levy decisions.

This bill reduces property taxes for homeowners by lowering the mill levy rate on owner-occupied single-family homes from $5.21 to $20.51 per $1,000 of taxable value (with the exact figure clarified in the bill text). It simultaneously raises the state sales tax from 4.2% to 4.7% for 2026-2027 and to 5% after 2027, and expands the gross receipts tax to cover more services like dry cleaning, beauty shops, and rentals. The revenue from these tax increases is explicitly allocated to replace lost school district property tax revenue and fund pay raises for state and school employees. The bill ensures school districts maintain their total funding levels under the new system.

SB 205 revises drone registration fees in South Dakota, charging 1.5% of purchase price for agricultural drones and 2% for all other drones. The collected fees fund a new "drone aviation fund" administered by the Board of Technical Education to support drone training grants at state technical colleges. This bill directly affects drone owners (especially agricultural users) by changing their registration tax rates and creating a dedicated funding source for drone industry workforce development. The fund will receive all drone registration fees and interest, with expenditures requiring annual budget approval. The bill does not apply to small unmanned aircraft systems covered under federal regulations.

HB 1259 requires South Dakota's Department of Revenue to offer online applications for several existing property tax relief programs, replacing the current paper-form requirement. It directly affects property owners applying for relief, including veterans with service-connected disabilities, surviving spouses of veterans, paraplegics, and residents eligible for tax freezes. The bill amends multiple statutes (§§ 10-4-24.14, 10-4-40, 10-4-41, 10-6A-4, 10-6B-9, 10-6C-3) to mandate that applications for these programs must be accessible via the Department's website. This change streamlines the application process by allowing online submissions instead of paper forms, while maintaining confidentiality for all submitted documents.

HB 1317 removes a 10% annual cap on how much South Dakota counties and municipalities can increase property taxes using accumulated unused index factors. Currently, local governments could only raise taxes based on these factors up to the prior three years' total or 10%, whichever was lower. The bill eliminates the 10% limit, allowing them to use all accumulated unused index factors from prior years without this restriction. This directly affects local governments' ability to adjust property tax revenue annually. The change modifies how county auditors calculate annual tax revenue limits under state law.