This bill proposes the elimination of property taxes on owner-occupied single-family dwellings in South Dakota, while simultaneously increasing certain gross receipts and use tax rates to compensate for the lost revenue. Specifically, it sets the maximum mill levy for these dwellings to zero and raises the gross receipts tax rate from 4.2% to 5% across various sectors, including retail sales, services, and utilities. Additionally, a new excise tax rate of 5% will be applied to the sale of farm machinery and amusement devices. The revenue generated from these tax increases is designated to support school district general and special education funds, ensuring that funding remains stable despite the removal of property taxes on these homes.

The legislation also establishes a special education fund for school districts, funded by a property valuation-based levy, which will be calculated at eighty-five percent of market value. This fund is aimed at addressing the special education needs of children within the district and allows for expenditures on assistive technology as outlined in students' individualized education plans. The bill includes provisions for adjusting local effort and state aid based on local needs, mandating that state aid appropriations increase annually starting in 2026. Furthermore, it introduces a new tax rate of five percent on rental vehicle gross receipts, replacing the previous rate of four and two-tenths percent, with most provisions set to take effect on January 1, 2026.

Statutes affected:
Introduced, 01/08/2025: 10-12-42, 10-45-2, 10-45-5, 10-45-5.3, 10-45-6, 10-45-6.1, 10-45-6.2, 10-45-8, 10-45-71, 10-46-2.1, 10-46-2.2, 10-46-58, 10-46-69, 10-46-69.1, 10-46-69.2, 10-46E-1, 10-58-1, 13-37-16, 13-37-35.1, 13-13-71, 13-13-72, 13-13-72.1, 32-5B-20