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lower the cost threshold at which a tax increment finance base must be redetermined.

This bill lowers the threshold for when cities must recalculate their tax increment finance base when a development project costs more than originally planned. Instead of allowing cities to skip recalculation when extra costs are 35% or less above the original plan, the bill reduces that exemption threshold to 15%, meaning recalculation will be required more often when project costs increase.

modify requirements to create a tax increment financing district.

HB1289 modifies the rules for creating and operating tax increment financing (TIF) districts, which are special areas where tax revenue increases are used to fund local development projects. The bill updates definitions and requirements across multiple sections of South Dakota law governing TIF districts, though the specific substantive changes would need to be reviewed in the full bill text beyond the excerpted definitions shown.

require that county treasurers calculate excise tax using the amount shown on a bill of sale for a used vehicle sold, leased, or transferred by a person other than a licensed motor vehicle dealer.

This bill changes how county treasurers calculate excise tax on used vehicles sold between private individuals (not dealers) by requiring them to use the amount listed on the bill of sale rather than other valuation methods. Currently, the law allows dealers more flexibility in how purchase price is calculated for used vehicles, but this bill standardizes the process for private sales to rely on the bill of sale amount. This creates a clearer, more uniform way to determine what tax private sellers and buyers owe on used vehicle transactions.

modify the tax rate on gold severed in this state.

South Dakota currently taxes gold mining at a flat rate of four dollars per ounce, but this bill changes it to a percentage-based tax of one percent of the gold's market value instead. The new tax will be calculated based on the average London Bullion Market Association price of gold during the quarter when the gold was extracted. This shift means mining companies will pay taxes proportional to gold prices rather than a fixed amount per ounce.

revise certain references to the Internal Revenue Code.

South Dakota is updating its tax laws to reference the federal Internal Revenue Code as it exists on January 1, 2026, instead of an earlier version. This change affects multiple sections of state tax law related to income taxes, corporate taxes, and other tax matters, ensuring South Dakota's tax rules align with the current federal tax code.

require the review of a financing plan to establish a tax increment financing district.

This bill strengthens oversight of tax increment financing districts by requiring municipalities and counties to develop and have reviewed a detailed financing plan before establishing one of these districts. The new rules clarify what must be included in these plans—specifically how the local government intends to pay for project costs and what revenue sources it will use—and add the Department of Revenue's review as a required step in the process.

provide for compensation to counties for administering tax increment financing districts created by a municipality.

Counties can now deduct their administrative costs from tax increment financing revenues before passing the money to municipalities that created these districts. This change applies both when counties initially collect the tax increments and when they deposit remaining funds into special district accounts. The bill ensures counties are compensated for the work of managing these tax increment financing districts.

update the reference to the Internal Revenue Code to reflect current federal law for the administration of higher education savings plans.

South Dakota's higher education savings plan law references federal tax rules under the Internal Revenue Code to determine how these accounts operate. This bill updates that reference to align with current federal law, ensuring the state's savings plan regulations stay consistent with the latest federal tax requirements for education accounts.

establish the lifetime registration of and license fees for certain small trailers.

This bill reorganizes how South Dakota calculates vehicle license fees by clarifying which vehicles fall under which fee structures based on their type and weight. The changes streamline the existing fee system for automobiles, pickup trucks, vans, motor homes, motorcycles, snowmobiles, and other vehicles by directing each category to its specific fee section rather than applying one general rule to all vehicles.

require the approval of the county for the creation of a tax increment financing district by a municipality.

Municipalities must now get approval from their county's board of commissioners before creating a tax increment financing district. This new requirement applies whether the district is entirely within the county or only partially located there. The change gives counties a say in local development projects that were previously decided by cities alone.

require that a property tax bill provide access to a state website providing property tax information.

Property tax bills sent to South Dakota taxpayers must now include a QR code and website address that directs taxpayers to state information about property taxes and tax relief programs maintained by the Department of Revenue. The bill requires that tax bills notify taxpayers they can access additional tax information by scanning the QR code or visiting the provided internet address.

clarify when certification of values is transmitted to the county.

South Dakota's Department of Revenue must send property value certificates to county auditors by the fourth Monday of August, but if they miss that deadline, the law now clarifies that any assessment or tax based on those values remains valid as long as the certificate arrives within a reasonable timeframe. This change removes uncertainty about whether late-arriving certifications could invalidate property tax assessments.

update the reference to the Internal Revenue Code to reflect current federal law for the administration of South Dakota Retirement System statutes.

This bill updates South Dakota's retirement system law to reference the current federal tax code as of January 1, 2026, instead of an older version. The change ensures that rules governing the South Dakota Retirement System stay aligned with current federal tax law without requiring separate legislative updates each time federal tax code changes.

require notification of property owners prior to the establishment of a tax increment financing district.

Property owners must receive written notice at least ten days before a city or county establishes a tax increment financing district (TIF) in their area. The notice must inform them that their property falls within the proposed district and tell them when it will be officially created. This requirement gives property owners advance warning and time to respond before TIF districts take effect in their communities.

repeal income modifications for the bank franchise tax pertaining to bad debts.

This bill removes a tax break that allowed banks to deduct bad debts when calculating their state franchise tax. Under current law, banks can reduce their taxable income by claiming bad debt deductions, but this bill eliminates that modification so banks must pay franchise tax on their full income without that deduction.

provide for an automatic refund of an assessment on crops, livestock, and milk.

This bill creates an automatic refund process for assessments on crops, livestock, and milk, allowing growers to file a single electronic request before December 31st each year to automatically receive refunds for all assessments paid during the following year. Currently, growers must submit individual refund requests within 60 days of each assessment and provide documentation like invoices; the new system streamlines this by letting them opt in once annually instead. The bill applies this automatic refund option to assessments collected by the wheat, barley, corn, soybean, and dairy commissions.

establish a new fund to provide property tax relief.

South Dakota would create a new Property Tax Relief Fund administered by the Department of Revenue to help reduce property taxes for homeowners and businesses. Starting in 2026, the state would deposit 25% of any year-over-year increase in general fund revenue into this new fund, with the Legislature deciding how to distribute those funds to local governments to lower their property tax levies.

amend certain provisions pertaining to special education funding.

HB 1098 adjusts how South Dakota funds special education by establishing a new disability category called "Level six disability" for students requiring prolonged assistance, and it sets the special education levy at $1.262 per $1,000 of property valuation starting in 2026. The bill also creates a mechanism to reduce school district levies if local funding grows faster statewide than the actual increase in special education needs, keeping funding growth in line with demand.

create the homeowner property tax reduction fund, and to transfer moneys to the homeowner property tax reduction fund.

This bill creates a new state fund dedicated to reducing property taxes on owner-occupied homes by lowering the education levy portion of property tax bills. Starting August 1, 2027, a small percentage of revenue from several state taxes will be deposited into this fund instead of going to the general fund, and the money will be used specifically for homeowner property tax relief. The Department of Revenue will manage the fund, which cannot be transferred to the general fund and must be appropriated through the state budget.