In his campaign for Governor, Congressman Dusty Johnson has proposed giving homeowners $400 property tax credits plus two years of zero property tax for first=time homebuyers. Team Johnson says those tax breaks would cost $110 million:
Johnson’s campaign said there are about 260,000 homeowner-occupied parcels in South Dakota, making a $400 credit for each come to about $104 million. The campaign said there are about 1,500 first-time homeowners every year who pay an average of $2,000 in property taxes, which comes to $3 million annually, or $6 million for the first two years [Joshua Haiar, “Johnson for Governor Campaign Proposes $400 Property Tax Credits for Homeowners,” South Dakota Searchlight, 2026.01.08].
Johnson would recoup the cost of those property tax breaks with the revenue the state will resume taking in when the state sales tax sunrises back to 4.5% on July 1, 2027. That sales tax hike would give Johnson plenty of wiggle room: by my estimate, restoring those three percentage points to the state sales tax rate would generate $159 million.
But Senate committees don’t sound eager to put Johnson’s plan in motion. On a 4–3 vote Friday, Senate Taxation killed Senate Bill 118, a plan that would have dedicated those upcoming three percentage points of sales tax to a fund for homeowner property tax rebates. Senate Taxation did approve Senate Bill 125 to establish a homeowner tax reduction fund, but they stripped out the language giving a formula for the size of the tax breaks, and they added no language to tell us where we’ll get the money for this fund.
Meanwhile, Senate Appropriations signaled those three tasty percentage points may not be available for Johnson or anyone else angling to lower any other taxes. Senate Appropriations voted 6–3 to advance Senate Bill 195, which would nix the sunset and keep the state sales tax rate at 4.2%. Prime sponsor Senate President Pro Tempore Chris Karr (R-11/Sioux Falls) told the committee he doesn’t want anyone using sales tax to fund other tax cuts:
“That’s a futile philosophy that I don’t agree with. It’s bad tax policy. Not only that, if we increased our sales tax to pay for another item like property tax relief, that does not allow us to be flexible and nimble in a way that our sales tax needs to be,” Karr told the committee.
“Because if we do come upon really hard times, and I know there’s a lot of folks talking about the lack of government federal dollars coming into our state, at some point that did happen, and you already ratcheted up the sales tax for property tax relief, how much more would you be able to ratchet it up to take care of South Dakota’s services and needs, and then without making us basically uncompetitive in our area?” he continued [Bob Mercer, “Keep 4.2% Sales-Tax Rate, Senate Panel Says,” KELO-TV, 2026.02.06].
Senator Karr does offer his own funding mechanism for property tax relief. His Senate Bill 199 would put 25% of the increase in general fund moneys from this budget year over last into a property tax relief fund. In subsequent years, SB 199 would require adding that same quarter of the yearly increase in general fund moneys plus whatever amount was put in the fund the previous year. SB 199 does not specify what form the property tax relief would take.
General fund moneys increased $150 million from FY 2025 to FY 2026. 25% of that increase would put $38 million in an SB 199 fund, not nearly enough to fund Dusty Johnson’s proposed tax breaks for homeowners, at least not in the first year. But if the budget keeps growing, SB 199 could add $76 million in the second year, which combined with the first year’s deposit would give Governor Johnson enough to start writing checks to homeowners.
I count 46 bills and 3 resolutions for constitutional amendments tagged “Property Tax” in the Legislative hopper. Most await committee hearing. Seven are dead. Both chambers unanimously approved Senate Bill 12, which allows veterans who can’t use their legs to apply for four years of back-refunds on home property taxes if they fail to meet the normal exemption-filing deadline.