Both of this year’s big property-tax-relief bills—Senate Bill 96 allowing counties to adopt a sales tax to lower property tax levies and Senate Bill 245 funneling this year’s reserves the additional 0.3% sales tax coming next year into property tax relief—direct breaks exclusively to homeowners. Neither bill uses sales tax dollars to lower tax rates on farms, businesses, or residential rental property.
Both bills thus mean folks who rent the roofs over their heads will pay higher taxes: more tax on their groceries and other purchases, no chance of a break on rent from landlords who aren’t getting a break on the tax on the houses and apartments they lease out.
A new draft issue memorandum from the Legislative Research Council addresses how much of their landlords’ property tax burden renters may bear:
Residents of this state who are renters incur a tax burden on the rental properties in which they reside. The pass-through of property taxes through rents is the subject of much economic research. However, the academic community has not reached a consensus on the degree to which property taxes are passed onto renters. Due to heterogeneity in the housing markets and property tax structures across the country, the insights from economic research performed in one part of the country may not be applicable to the housing market in this state. Regional analyses do provide an indication of how property tax burdens are passed onto renters.
In 2025, S.S. Baker analyzed the residential rental market in California to derive estimates on how increases in taxes affected rental rates. Ms. Baker found that for every $1 increase in property taxes, rental rates increased about $0.53, resulting in a roughly equal share of the tax burden between landlords and tenants. In 2020, D.J. Schwegman analyzed rental property in the state of New York, and the taxation thereof, to estimate the extent to which an increase in property taxes on rental property resulted in higher rents. Schwegman found that only about 10%–15% of a property tax increase is passed onto the renter through an increase in rental rates [links to LRC sources added; Legislative Research Council, Draft Issue Memorandum: “Tax Incidence on Vulnerable Populations,” presented to Legislative Executive Board 2026.08.26, p. 9].
The issue memo notes that while South Dakota doesn’t help renters with property tax relief, Minnesota and Iowa do, although they assume renters’ share of landlords’ property tax leans toward the lower end of the range indicated by the cited research:
Some states offer property tax relief for renters. Minnesota’s relief program assumes that 17% of a tenant’s rental payments derive from the property taxes imposed on the rental property. Iowa’s program assumes that 23% of a tenant’s rental payments derive from the property taxes imposed on the rental property.
South Dakota does not currently offer any property tax relief to renters [LRC, 2026.08.26, p. 9].
Last Session, the Legislature and the Governor chose a limited relief programs that favor wealthy homeowners. Perhaps next Session they’ll read this issue memo, look at other states’ efforts toward tax fairness, and work on shifting some of that wealth back to the lower-income folks who rent their homes.
People who have modest homes, no problem. People who have large homes, who then complain about the taxes, well you can’t afford it. Get something smaller and quit making it more difficult for the rest of us to have one.
One of those micro homes would suit me just fine.