25.317.34 100th Legislative Session 1019
2025 South Dakota Legislature
House Bill 1019
Introduced by: Representative Venhuizen
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An Act to eliminate certain property taxes levied on owner -occupied single-family 1
dwellings, and to increase certain gross receipts tax rates and use tax rates. 2
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA: 3
Section 1. It is the intention of the Legislature that the proceeds of the tax rate increases in 4
sections 3 to 18, inclusive, and section 24 of this Act, are used to supplant all foregone 5
property tax revenue from a mill levy of zero applied to owner -occupied single-family 6
dwellings for school district general funds and school district special education funds. 7
It is the intention of the Legislature that these levies for owner -occupied single-family 8
dwellings do not affect the mill levies for the other classifications of real property, and do not 9
adversely affect the total amount of moneys available to school districts through the school 10
district funding formulas for general funds and special education funds. 11
Section 2. That § 10-12-42 be AMENDED: 12
10-12-42. For taxes payable in 2025 2026, and each year thereafter, the levy for 13
the general fund of a school district is as follows: 14
(1) The maximum tax mill levy is five dollars and fifty-four and four-tenths cents per 15
thousand dollars of taxable valuation, subject to the limitations on agricultural 16
property as provided in subdivision (2) of this section and owner-occupied property 17
as provided in subdivision (3) of this section; 18
(2) The maximum tax mill levy on agricultural property for the school district is one 19
dollar and nineteen and seven -tenths cents per thousand dollars of taxable 20
valuation. If the district's levies are less than the maximum levies as stated in this 21
section, the mill levies imposed in subdivisions (1) and (2) must maintain the same 22
proportion to each other as represented in the mathematical relationship at the 23
maximum mill levies; and 24 25.317.34 2 1019
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(3) The maximum tax mill levy for an owner-occupied single-family dwelling pursuant 1
to § 10-13-40 for the school district is two dollars and sixty-seven and nine-tenths 2
cents zero dollars and zero cents per thousand dollars of taxable valuation. If the 3
district's levies are less than the maximum levies as stated in this section, the 4
levies must maintain the same proportion to each other as represented in the 5
mathematical relationship at the maximum levies. 6
All levies in this section must be imposed on valuations where the median level of 7
assessment represents eighty-five percent of market value as determined by the 8
Department of Revenue. These valuations must be used for all school funding purposes. 9
If the district has imposed an excess levy pursuant to § 10-12-43, the levies must 10
maintain the same proportion to each other as represented in the mathematical 11
relationship at the maximum levies in this section. The school district may elect to tax at 12
less than the maximum amounts set forth in this section. 13
Section 3. That § 10-45-2 be AMENDED: 14
10-45-2. There is hereby imposed a tax upon the privilege of engaging in business 15
as a retailer, a tax of four and two-tenths at the rate of five percent upon the gross receipts 16
of all sales of tangible personal property consisting of goods, wares, or merchandise, 17
except as otherwise provided in this chapter, sold at retail in the state to consumers or 18
users. 19
Section 4. That § 10-45-5 be AMENDED: 20
10-45-5. There is imposed a tax, at the same rate of four and two-tenths percent 21
set forth in § 10-45-2, upon the gross receipts of any person from engaging or continuing 22
in any of the following businesses or services in this state: 23
(1) abstractersAbstracters; 24
(2) accountantsAccountants; 25
(3) ancillaryAncillary services; 26
(4) architectsArchitects; 27
(5) barbersBarbers; 28
(6) beautyBeauty shops; 29
(7) billBill collection services; 30
(8) blacksmithBlacksmith shops; 31
(9) carCar washing; 32
(10) dryDry cleaning; 33 25.317.34 3 1019
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(11) dyeingDyeing; 1
(12) exterminatorsExterminators; 2
(13) garageGarage and service stations; 3
(14) garmentGarment alteration; 4
(15) cleaningCleaning and pressing; 5
(16) janitorialJanitorial services and supplies; 6
(17) specialtySpecialty cleaners; 7
(18) laundryLaundry; 8
(19) linenLinen and towel supply; 9
(20) membershipMembership or entrance fees for the use of a facility or for the right to 10
purchase tangible personal property, any product transferred electronically, or 11
services; 12
(21) photographyPhotography; 13
(22) photoPhoto developing and enlarging; 14
(23) tireTire recapping; 15
(24) weldingWelding and all repair services, except repair services for farm machinery, 16
attachment units, and irrigation equipment used exclusively for agricultural 17
purposes; 18
(25) cableCable television; and 19
(26) rentalsRentals of tangible personal property except leases of tangible personal 20
property between one telephone company and another telephone company, motor 21
vehicles as defined pursuant to § 32-5-1 leased under a single contract for more 22
than twenty-eight days, and mobile homes. 23
However, theThe specific enumeration of businesses and professions made in this 24
section does not, in any way, limit the scope and effect of the provisions of § 10-45-4. 25
Section 5. That § 10-45-5.3 be AMENDED: 26
10-45-5.3. There is imposed, at the same rate of four and two-tenths percent set 27
forth in § 10-45-2, an excise tax on the gross receipts of any person engaging in oil and 28
gas field services (group no. 138) as enumerated in the Standard Industrial Classification 29
Manual, 1987, as prepared by the Statistical Policy Division of the Office of Management 30
and Budget, Office of the President. 31
Section 6. That § 10-45-6 be AMENDED: 32 25.317.34 4 1019
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10-45-6. There is hereby imposed a tax of four and two-tenths percent, at the 1
same rate set forth in § 10-45-2, upon the gross receipts from sales, furnishing, or service 2
of gas, electricity, and water, including the gross receipts from such these sales by any 3
municipal corporation furnishing gas, and electricity, to the public in its proprietary 4
capacity, except as otherwise provided in this chapter, when sold at retail in the State of 5
South Dakota this state to consumers or users. 6
Section 7. That § 10-45-6.1 be AMENDED: 7
10-45-6.1. Except as provided in § 10-45-6.2, there is hereby imposed a tax of 8
four and two-tenths percent, at the same rate set forth in § 10-45-2, upon the gross 9
receipts from providing any intrastate, interstate, or international telecommunications 10
service that originates or terminates in this state and that is billed or charged to a service 11
address in this state, or that both originates and terminates in this state. However, the 12
tax imposed by this section does not apply to: 13
(1) Any eight hundred or eight hundred-type service, unless the service both originates 14
and terminates in this state; 15
(2) Any sale of a telecommunication service to a provider of telecommunication 16
services, including access service, for use in providing any telecommunication 17
service; or 18
(3) Any sale of interstate telecommunication service provided to a call center that has 19
been certified by the secretary of revenue to meet the criterion established in § 10-20
45-6.3 and the call center has provided to the telecommunications service provider 21
an exemption certificate issued by the secretary indicating that it meets the 22
criterion. 23
If a call center uses an exemption certificate to purchase services not meeting the 24
criterion established in § 10-45-6.3, the call center is liable for the applicable tax, penalty, 25
and interest. 26
Section 8. That § 10-45-6.2 be AMENDED: 27
10-45-6.2. There is hereby imposed a tax of four and two-tenths percent, at the 28
same rate set forth in § 10-45-2, upon the gross receipts of mobile telecommunications 29
services, as defined in 4 U.S.C. § 124(7) as of (January 1, 2002), that originate and 30
terminate in the same state and are billed to a customer with a place of primary use in 31
this state or are deemed to have originated or been received in this state and to be billed 32
or charged to a service address in this state if the customer's place of primary use is 33 25.317.34 5 1019
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located in this state regardless of where the service actually originates or terminates. 1
Notwithstanding any other provision of this chapter and for purposes of the tax imposed 2
by this section, the tax imposed upon mobile telecommunication services must be 3
administered in accordance with 4 U.S.C. §§ 116-126, as in effect on (July 28, 2000). 4
Section 9. That § 10-45-8 be AMENDED: 5
10-45-8. Except as otherwise provided in this chapter, there is imposed a tax of 6
four and two-tenths percent, at the same rate set forth in § 10-45-2, upon the gross 7
receipts from all sales of tickets or admissions to: 8
(1) Places of amusement; 9
(2) Athletic contests; or 10
(3) Events. 11
Section 10. That § 10-45-71 be AMENDED: 12
10-45-71. There is imposed a tax of four and two-tenths percent, at the same 13
rate set forth in § 10-45-2, on the gross receipts from the transportation of passengers. 14
The tax imposed by this section applies to any transportation of passengers if the 15
passenger boards and exits the mode of transportation within this state. 16
Section 11. That § 10-46-2.1 be AMENDED: 17
10-46-2.1. For the privilege of using services in South Dakota this state, except 18
those types of services exempted by § 10-46-17.3, there is imposed on the person using 19
the service an excise tax equal to four and two-tenths at a rate of five percent of the value 20
of the services at the time they are rendered. However, this This tax may not be imposed 21
on any service rendered by a related corporation, as defined in subdivision 10-43-1(11), 22
for use by a financial institution, as defined in subdivision 10-43-1(4);, or on any service 23
rendered by a financial institution, as defined in subdivision 10-43-1(4), for use by a 24
related corporation as defined in subdivision 10-43-1(11) and as provided below. 25
For the purposes of this section, the term, related corporation, includes a 26
corporation, which together with the financial institution, is part of a controlled group of 27
corporations, as defined in 26 U.S.C. § 1563 as in effect on (January 1, 1989), except that 28
the eighty percent ownership requirements set forth in 26 U.S.C. § 563(a)(2)(A) § 29
1563(a) for a brother-sister controlled group are reduced to fifty-one percent. 30 25.317.34 6 1019
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For the purpose of this chapter, services rendered by an employee for the use of 1
the employer are not taxable. 2
Section 12. That § 10-46-2.2 be AMENDED: 3
10-46-2.2. An excise tax is imposed upon the privilege of the use of rented 4
tangible personal property and any product transferred electronically in this state at the 5
same rate of four and two-tenths percent set forth in § 10-46-2.1, of on the rental 6
payments upon the property. 7
Section 13. That § 10-46-58 be AMENDED: 8
10-46-58. There is imposed a tax of four and two-tenths percent, at the same 9
rate set forth in § 10-46-2.1, on upon the privilege of the use of any transportation of 10
passengers. The tax imposed by this section applies to any transportation of passengers 11
if the passenger boards and exits the mode of transportation within this state. 12
Section 14. That § 10-46-69 be AMENDED: 13
10-46-69. There is hereby imposed a tax of four and two-tenths percent, at the 14
same rate set forth in § 10-46-2.1, upon the privilege of the use of mobile 15
telecommunications services, as defined in 4 U.S.C. § 124(7) as of (January 1, 2002), 16
that originate and terminate in the same state and are billed to a customer with a place 17
of primary use in this state. Notwithstanding any other provision of this chapter and for 18
purposes of the tax imposed by this section, the tax imposed upon mobile 19
telecommunication services must be administered in accordance with 4 U.S.C. §§ 116-20
126, as in effect on (July 28, 2000). 21
Section 15. That § 10-46-69.1 be AMENDED: 22
10-46-69.1. Except as provided in § 10-46-69, there is hereby imposed a tax of 23
four and two-tenths percent, at the same rate set forth in § 10-46-2.1, upon the privilege 24
of the use of any intrastate, interstate, or international telecommunications service that 25
originates or terminates in this state and that is billed or charged to a service address in 26
this state, or that both originates and terminates in this state. However, the The tax 27
imposed by this section does not apply to: 28
(1) Any eight hundred or eight hundred type service, unless the service both originates 29
and terminates in this state; 30 25.317.34 7 1019
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(2) Any sale of a telecommunication service to a provider of telecommunication 1
services, including access service, for use in providing any telecommunication 2
service; or 3
(3) Any sale of interstate telecommunication service provided to a call center that has 4
been certified by the secretary of revenue to meet the criterion established in § 10-5
45-6.3 and the call center has provided to the telecommunications service provider 6
an exemption certificate issued by the secretary indicating that it meets the 7
criterion. 8
If a call center uses an exemption certificate to purchase services not meeting the 9
criterion established in § 10-45-6.3, the call center is liable for the applicable tax, penalty, 10
and interest. 11
Section 16. That § 10-46-69.2 be AMENDED: 12
10-46-69.2. There is hereby imposed a tax of four and two-tenths percent, at the 13
same rate set forth in § 10-46-2.1, upon the privilege of the use of any ancillary services. 14
Section 17. That § 10-46E-1 be AMENDED: 15
10-46E-1. There is hereby imposed an excise tax of four and two-tenths five 16
percent on the gross receipts from the sale, resale, or lease of farm machinery, attachment 17
units, and irrigation equipment used exclusively for agricultural purposes. However, if If 18
any trade-in or exchange of used farm machinery, attachment units, and irrigation 19
equipment is involved in the transaction, the excise tax is only due and may only be 20
collected on the cash difference. 21
Section 18. That § 10-58-1 be AMENDED: 22
10-58-1. There is imposed upon owners and operators a special amusement 23
excise tax of four and two-tenths five percent of the gross receipts from the sale or the 24
operation of any mechanical or electronic amusement device. The tax imposed by this 25
section is in lieu of the tax imposed pursuant to chapter 10-45. 26
Section 19. That § 13-37-16 be AMENDED: 27
13-37-16. For taxes payable in 2025 2026, and each year thereafter, the school 28
board shall levy no more than one dollar and forty -eight and eight-tenths cents per 29
thousand dollars of taxable valuation of property classified for purposes of taxation as 30 25.317.34 8 1019
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agricultural property or nonagricultural property, as a special levy in addition to all other 1
levies authorized by law for the amount so determined to be necessary, and the levy must 2
be spread against all of the taxable property of the district not classified as owner-occupied 3
single-family dwellings, as defined in § 10-13-39. The proceeds derived from the levy 4
constitute a school district special education fund of the district for the payment of costs 5
for the special education of all children in need of special education or special education 6
and related services, who reside within the district, pursuant to the provisions of §§ 13-7
37-8.4 to 13-37-8.10, inclusive. 8
The levy in this section is based on valuations where the median level of 9
assessment represents eighty-five percent of market value, as determined by the 10
Department of Revenue. The total amount of taxes that would be generated at the levy 11
pursuant to this section is considered local effort. Money in the special education fund may 12
be expended for the purchase or lease of any assistive technology that is directly related 13
to special education and specified in a student's individualized education plan. This section 14
does not apply to real property improvements. 15
Section 20. That § 13-37-35.1 be AMENDED: 16
13-37-35.1. Terms used in chapter 13-37 mean: 17
(1) "Level one disability," a mild disability; 18
(2) "Level two disability," cognitive disability or emotional disorder; 19
(3) "Level three disability," hearing impairment, deafness, visual impairment, deaf-20
blindness, orthopedic impairment, or traumatic brain injury; 21
(4) "Level four disability," autism; 22
(5) "Level five disability," multiple disabilities; 23
(5A) "Level six disability," prolonged assistance; 24
(6) "Index factor," is the annual percentage change in the consumer price index for 25
urban wage earners and clerical workers as computed by the Bureau of Labor 26
Statistics of the United States Department of Labor for the year before the year 27
immediately preceding the year of adjustment or three percent, whichever is less; 28
(7) "Local effort," must be calculated for taxes payable in 2025 and thereafter using a 29
special education levy of one dollar and twenty-eight and eight-tenths cents per 30
one thousand dollars of taxable valuation of property classified for purposes of 31
taxation as agricultural property or nonagricultural property; 32
(8) "Allocation for a student with a level one disability," for the school fiscal year 33
beginning July 1, 2024, is $7,556.00. For each school year thereafter, the allocation 34 25.317.34 9 1019
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for a student with a level one disability must be the previous fiscal year's allocation 1
for the child increased by the index factor; 2
(9) "Allocation for a student with a level two disability," for the school fiscal year 3
beginning July 1, 2024, is $16,553.00. For each school year thereafter, the 4
allocation for a student with a level two disability must be the previous fiscal year's 5
allocation for the child increased by the index factor; 6
(10) "Allocation for a student with a level three disability," for the school fiscal year 7
beginning July 1, 2024, is $22,854.00. For each school year thereafter, the 8
allocation for a student with a level three disability must be the previous fiscal 9
year's allocation for the child increased by the index factor; 10
(11) "Allocation for a student with a level four disability," for the school fiscal year 11
beginning July 1, 2024, is $17,831.00. For each school year thereafter, the 12
allocation for a student with a level four disability must be the previous fiscal year's 13
allocation for the child increased by the index factor; 14
(12) "Allocation for a student with a level five disability," for the school fiscal year 15
beginning July 1, 2024, is $36,582.00. For each school year thereafter, the 16
allocation for a student with a level five disability must be the previous fiscal year's 17
allocation for the child increased by the index factor; 18
(12A) "Allocation for a student with a level six disability," for the school fiscal year 19
beginning July 1, 2024, is $11,692.00. For each school year thereafter, the 20
allocation for a student with a level six disability must be the previous fiscal year's 21
allocation for the child increased by the index factor; 22
(13) "Child count," is the number of students in need of special education or special 23
education and related services according to criteria set forth in rules promulgated 24
pursuant to §§ 13-37-1.1 and 13-37-46 submitted to the Department of Education; 25
(14) "Fall enrollment," the number of kindergarten -through-twelfth-grade students 26
enrolled in all schools operated by the school district on the last Friday of 27
September of the previous school year minus the number of students for whom 28
the district receives tuition, except any nonresident student who is in the care and 29
custody of a state agency and is attending a public school and any student for 30
whom tuition is being paid pursuant to § 13-28-42.1, plus the number of students 31
for whom the district pays tuition; 32
(15) "Nonpublic school," a sectarian organization or entity accredited by the secretary of 33
education for the purpose of instructing children of compulsory school age. This 34 25.317.34 10 1019
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definition excludes any school that receives a majority of its revenues from public 1
funds; 2
(16) "Nonpublic fall enrollment," the number of children under age eighteen, who are 3
approved for alternative instruction pursuant to § 13-27-3 on the last Friday of 4
September of the previous school year plus: 5
(a) For nonpublic schools located within the boundaries of a public school 6
district with a fall enrollment of six hundred or more on the last Friday of 7
September of the previous school year, the number of kindergarten -8
through-twelfth-grade students enrolled on the last Friday of September of 9
the previous regular school year in all nonpublic schools located within the 10
boundaries of the public school district; 11
(b) For nonpublic schools located within the boundaries of a public school 12
district with a fall enrollment of less than six hundred on the last Friday of 13
September of the previous school year, the number of resident 14
kindergarten-through-twelfth-grade students enrolled on the last Friday of 15
September of the previous school year in all nonpublic schools located 16
within this state; 17
(17) "Special education fall enrollment," fall enrollment plus nonpublic fall enrollment; 18
(18) "Local need," an amount to be determined as follows: 19
(a) Multiply the special education fall enrollment by 0.1062 and multiply the 20
result by the allocation for a student with a level one disability; 21
(b) Multiply the number of students having a level two disability as reported on 22
the child count for the previous school fiscal year by the allocation for a 23
student with a level two disability; 24
(c) Multiply the number of students having a level three disability as reported 25
on the child count for the previous school fiscal year by the allocation for a 26
student with a level three disability; 27
(d) Multiply the number of students having a level four disability as reported on 28
the child count for the previous school fiscal year by the allocation for a 29
student with a level four disability; 30
(e) Multiply the number of students having a level five disability as reported on 31
the child count for the previous school fiscal year by the allocation for a 32
student with a level five disability; 33 25.317.34 11 1019
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(f) Multiply the number of students having a level six disability as reported on 1
the child count for the previous school fiscal year by the allocation for a 2
student with a level six disability; 3
(g) When calculating local need at the statewide level, include the amount set 4
aside for extraordinary costs defined in § 13-37-40; 5
(h) When calculating local need at the statewide level, include the amount set 6
aside for the South Dakota School for the Blind and Visually Impaired; 7
(i) Sum the results of subdivisions (18)(a) to (h), inclusive; 8
(19) "Effort factor," the school district's special education tax levy in dollars per thousand 9
divided by $1.288. The maximum effort factor is 1.0. 10
Section 21. That § 13-13-71 be AMENDED: 11
13-13-71. If local effort increases on a statewide aggregate basis by a greater 12
percentage than local need on a statewide aggregate basis from any one year to the next, 13
for the following year each of the mill levies specified in subdivision 13-13-10.1(13) shall 14
subdivisions 10-12-42(1) and (2) must be reduced proportionally so that the percentage 15
increase in local effort on a statewide aggregate basis equals the percentage increase in 16
need on a statewide aggregate basis. 17
Section 22. That § 13-13-72 be AMENDED: 18
13-13-72. It is the policy of the Legislature that In 2026 and each year thereafter, 19
the appropriation for state aid to education must increase on an annual basis annually by 20
the percentage increase in local need on an aggregate statewide basis so that the relative 21
proportion of local need paid by local effort and state aid shall remain constant. For school 22
fiscal years 2017 to 2022, inclusive, the proportion of local need paid by local effort and 23
state aid shall be adjusted annually to maintain the proportion between state aid and local 24
property taxes and to reflect adjustments in local effort due to the implementation of the 25
other revenue base amount as defined in § 13-13-10.1. 26
Section 23. That § 13-13-72.1 be AMENDED: 27
13-13-72.1. Any adjustmentsIn 2026 and each year thereafter, any adjustment 28
in the levies specified in § 10-12-42 made pursuant to §§ 13-13-71 and 13-13-72 shall 29
be based on maintaining must maintain the relationship between statewide local effort as 30
a percentage of statewide local need in the fiscal year succeeding the fiscal year in which 31 25.317.34 12 1019
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the adjustment is made. For school fiscal years 2017 to 2022, inclusive, the proportion of 1
local need paid by local effort and state aid shall be adjusted annually to reflect 2
adjustments in local effort due to the implementation of the other revenue base amount 3
as defined in § 13-13-10.1. However, if If the levies specified in § 10-12-42 are not 4
adjusted to maintain this relationship, the target teacher salary, as defined in § 13-13-5
10.1 shall be, is reduced to maintain the relationship between statewide local effort as a 6
percentage of statewide local need. 7
Section 24. That § 32-5B-20 be AMENDED: 8
32-5B-20. There is hereby imposed a tax of four and two-tenths five percent upon 9
the gross receipts of any person renting a rental vehicle as defined in § 32-5B-19. This 10
tax applies to all vehicles registered in accordance with § 32-5-6, 32-5-8.1, or 32-5-9. 11
Any rental vehicle not licensed in accordance with § 32-5-6, 32-5-8.1, or 32-5-9 is subject 12
to the motor vehicle excise tax in § 32-5B-1. 13
The tax imposed by this section is in addition to any tax levied pursuant to chapter 14
10-45 or 10-46 upon the rental of a rental vehicle. The provisions of chapter 10-45 apply 15
to the administration and enforcement of the tax imposed by this section. The tax imposed 16
by this section is in lieu of the tax levied by § 32-5B-1 on the sales of such motor vehicles. 17
A violation of this section is a Class 1 misdemeanor. 18
Section 25. Sections 3 to 18, inclusive, and section 24 of this Act are effective beginning 19
January 1, 2026. 20
Section 26. That 2023 Session Laws, chapter 32, § 19 be REPEALED: 21
Section 27. The amendments to the Code sections in sections 1 to 17, inclusive, 22
of this Act are repealed on June 30, 2027, and those Code sections will revert in word and 23
substance to that which existed immediately prior to the effective date of this Act. 24