This bill proposes significant changes to South Dakota's sales and use tax structure, particularly concerning food items. It establishes a zero percent sales tax rate on food and food ingredients while increasing the general sales tax rate from 4.2% to 5% for most retail sales. The bill also introduces new definitions for "prepared food" and clarifies what constitutes food and food ingredients, explicitly excluding items such as alcoholic beverages and tobacco. Additionally, it modifies the tax rates for various services and goods, ensuring that sectors like telecommunications and transportation are included under the revised tax framework.

Moreover, the bill creates a new School Building Construction Fund, funded by two percent of the taxes collected under several chapters, including those related to sales and use taxes. This fund aims to provide loans to school districts for constructing or expanding school buildings, with specific provisions regarding loan amounts, interest rates, and repayment terms. The total amount of loans issued in a year is capped between sixty million and ninety million dollars, and eligibility criteria for school districts are established. The bill also mandates the School Finance Accountability Board to create rules for the loan application process and requires an annual report from the Department of School and Public Lands on the loans provided. Additionally, it repeals a previous section of the law that included a sunset provision, ensuring the new amendments remain in effect indefinitely.

Statutes affected:
Introduced, 02/04/2026: 10-45-1, 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, 10-46-1, 10-46-2.1, 10-46-2.2, 10-46-48, 10-46-58, 10-46-69, 10-46-69.1, 10-46-69.2, 10-46E-1, 10-46E-9, 10-50-3, 10-58-1, 10-58-5