Homeowners in six South Dakota counties will get a new property tax credit starting January 1, 2027. The program is part of a state law designed to lower property tax bills for people who own and live in their homes.
The counties taking part are Custer, Lawrence, Lincoln, Meade, Pennington, and Fall River. They will collect a local gross receipts tax of up to 0.5%. The money will go into a property tax reduction fund. That fund will then provide credits on property tax bills for owner-occupied homes.
Governor Larry Rhoden called the program the largest property tax cut in South Dakota history. State officials say the goal is to give homeowners relief while helping counties pay for local services.
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Property Tax Credit Program – How the Credit Works
The program was created by Senate Bill 96. It lets each county decide whether to adopt the tax. Counties that join must use the money to reduce property taxes for owner-occupied homes.
- Counties may charge up to 0.5% in gross receipts tax.
- The tax applies to certain goods, services, and electronic transfers.
- Money collected goes into a special property tax reduction fund.
- The fund first pays credits for owner-occupied homes.
- If money remains, it may help reduce taxes on farms and other property.
A gross receipts tax is different from a property tax. It is charged on business transactions rather than directly on a home’s value. Supporters say this spreads the cost across more people and businesses. Critics may worry that businesses could pass some costs to customers through higher prices.
The South Dakota Department of Revenue will collect the tax and send money to counties twice each month. Counties must notify the department at least 90 days before the tax starts.
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Which Counties Joined the Property Tax Credit Program
The six counties are mainly in western and southeastern South Dakota. They include some of the state’s faster-growing areas, such as Lincoln and Pennington counties.
| County | Program start | Funding source | Main benefit |
| Custer | January 1, 2027 | Up to 0.5% gross receipts tax | Credit on owner-occupied property tax bills |
| Lawrence | January 1, 2027 | Up to 0.5% gross receipts tax | Credit on owner-occupied property tax bills |
| Lincoln | January 1, 2027 | Up to 0.5% gross receipts tax | Credit on owner-occupied property tax bills |
| Meade | January 1, 2027 | Up to 0.5% gross receipts tax | Credit on owner-occupied property tax bills |
| Pennington | January 1, 2027 | Up to 0.5% gross receipts tax | Credit on owner-occupied property tax bills |
| Fall River | January 1, 2027 | Up to 0.5% gross receipts tax | Credit on owner-occupied property tax bills |
The credit will appear on future property tax bills. State guidance says 2028 tax bills must clearly show the owner-occupied property tax credit. That should help homeowners see exactly how much relief they receive.
Statewide Relief Also Planned
South Dakota is also using another law to reduce school property taxes. Senate Bill 245 provides statewide relief for owner-occupied homes. It does not require county action.
For taxes payable in 2027, the state will provide extra funding to lower the school general fund levy. This means homeowners across South Dakota may see some relief even if their county does not join the local program.
The state also approved a separate property tax credit for owner-occupied single-family homes. For 2027, the credit is up to $500 per home. It cannot be more than the total property tax owed on the home.
Together, these programs show that South Dakota leaders are trying to respond to growing concern about property taxes. Home prices, school costs, and local government spending have put pressure on household budgets.
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What Homeowners Should Know about the Property Tax Credit Program
Homeowners do not need to take action right now to receive the county credit. The credit will be applied through the property tax system. However, residents should watch for updates from their county treasurer and the state Department of Revenue.
- The local credit applies only in counties that adopted the program.
- It is for owner-occupied homes, not every type of property.
- The amount of the credit may depend on how much money the county collects.
- The statewide school tax relief applies across South Dakota.
- The $500 credit applies to eligible owner-occupied single-family homes in 2027.
The program begins January 1, 2027. County officials and state agencies will spend the coming months preparing tax systems, public notices, and billing changes.
For homeowners in the six participating counties, the change could mean a smaller property tax bill. For others, the statewide school tax relief may still provide some help.
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