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modify the contractor's excise tax rate on the new construction of certain residential dwellings.

South Dakota currently taxes contractors on new single-family home construction at 5.5% on all gross receipts, but this bill creates a tax break by exempting the first $150,000 of receipts from taxation and only applying the 5.5% rate to amounts above that threshold. The $150,000 exemption amount will automatically adjust each July based on construction cost inflation, as measured by the Engineering News Record's Building Cost Index.

exempt individuals who make purchases outside of South Dakota from use tax.

HB 1252 removes the use tax requirement for South Dakota residents who purchase goods outside the state. Currently, South Dakota law requires residents to pay a "use tax" on items bought elsewhere, but this bill eliminates that obligation.

reduce the rate of sales tax on certain food.

South Dakota's sales tax on food purchases will gradually decrease over four years and then be eliminated entirely. Starting July 1, 2021, the tax rate on food drops from 4.5% to 4%, then steps down each year to 3%, 2%, and 1%, before reaching 0% on July 1, 2025. After that date, groceries and food items will no longer be subject to state sales tax.