Property Tax Relief Without the Sales Tax Hike

South Dakota homeowners are getting taxed out of houses they have lived in for forty years. Young families are priced out of a first home, and seniors on fixed incomes watch a tax bill climb faster than the Social Security increase does, which amounts to a slow-motion eviction notice delivered one assessment at a time. In District 32 this is the issue people stop me about on the sidewalk.

The 2025 and 2026 sessions did pass property tax relief. They did it the wrong way, and the wrong way is worth understanding in detail, because it will be sold to you as a win.

What SB 245 actually does

SB 245 passed in 2025 and takes effect July 1, 2026. It creates a property tax reduction fund out of three-tenths of the sales tax, plus a one-time fifty-six million dollar transfer from state reserves. The Department of Revenue estimates the result at up to a fifteen percent average reduction for owner-occupied homes.

That sounds like relief until you read where the money comes from. The mechanism depends on a sales tax increase: South Dakota's statewide rate is scheduled to go from 4.2 percent to 4.5 percent in 2027, and three-tenths of every additional sales tax dollar funds the property tax cut.

So it is a swap, not a cut. Working families who rent pay the new sales tax and see none of the property tax benefit, and roughly one third of South Dakotans rent. Small businesses pay the new sales tax on every transaction, and a senior homeowner who downsized out of her house a decade ago pays it too, with nothing whatsoever coming back the other direction to offset a dime of it.

Three citizen groups launched a referendum effort on April 29, 2026 to repeal SB 245. I understand the anger behind it, and I do not think repeal is the right tool now. The relief took effect on July 1 and homeowners are already counting on it, so pulling it back now punishes the people it finally reached. Fix the funding instead. Cancel the 2027 sales tax increase, pay for the relief with spending restraint, and extend it to the renters who are paying in today and getting nothing back.

SB 96 was the cleaner path and it is already law

The same 2025 session passed SB 96, which lets counties impose an optional county gross receipts tax in exchange for reducing owner-occupied property taxes.

Counties choose. Voters choose. Local control, and no statewide sales tax hike attached to it. Pierre does not need to do this for us so much as it needs to get out of the way.

Three things I would actually do

Cap the growth of assessed valuations on owner-occupied homes. The biggest driver of a rising property tax bill is not the mill levy, it is an appraisal climbing faster than anybody's wages. Cap the year-over-year growth on owner-occupied homes and pair that cap with regular reassessment, so the system stays honest in both directions and nobody winds up sitting on a frozen assessment while the neighbor who just bought in pays full freight.

Shift some school funding off local property tax and onto the state. Our school funding formula puts an outsized share of the bill on local property taxpayers. A modest shift toward state general fund support relieves local pressure without raising any other tax. The state's job is managing the money it already collects, not finding new things to tax.

Hold the line on state spending, because this is the part underneath the whole problem. HB 1326, the 2026 general appropriations bill, passed the House 50 to 17 and the Senate 25 to 9. A budget that clears both chambers that comfortably is a budget almost nobody in that building is seriously questioning. Pierre has been growing faster than the families it serves.

Three things I will not do

I will not vote for property tax relief that raises the sales tax on working families.

I will not vote for a state income tax. Look at any state that has both an income tax and a sales tax and you will find the income tax never brought the sales tax down. No income tax is the single most important thing protecting a working family's budget in South Dakota.

I will not vote for corporate tax carveouts that hand one industry a special deal while homeowners and small businesses pay full freight. That is favoritism wearing an economic development name tag.

The questions I get asked most about property tax are answered below. If yours is not there, write to zac@zac4sd.com and I will answer it.

Strong Families. Strong South Dakota.

Property tax cuts mean schools lose funding. Are you against education?

Property tax relief does not mean cutting school funding. It means finding better ways to fund schools than taxing homeowners out of their homes. SB 245 pays for relief with a sales tax increase, which is the part I want changed. SB 96 allows counties to choose sales tax over property tax. There are multiple ways to fund schools that do not punish seniors on fixed incomes or young families.

The state needs that revenue to function. You can't just cut without cutting services.

Look at how the 2026 general appropriations bill moved. It cleared the House 50 to 17 and the Senate 25 to 9, and the growth inside it drew almost no resistance. That is not a debate about essential services. That is growth nobody is checking. When I talk about spending discipline, I mean asking hard questions about every new dollar and every new position.

No income tax means we rely on sales tax, which hits the poor hardest.

The best protection for working families is keeping the overall tax burden low. A state income tax has never reduced the sales tax anywhere it has been tried. It has simply stacked one on top of the other. South Dakota's no-income-tax status keeps more money in working families' hands.

You opposed the new state apprenticeship office. Don't you care about workforce development?

I fully support workforce development. What I oppose is creating a new state office with seven new employees and an $830,000 annual price tag funded only for two years with no plan for year three. Workforce development can be pursued through existing agencies and private partnerships.

Data center tax incentives bring jobs. Aren't you against economic development?

Economic development that gives tax breaks to massive corporations while raising the burden on homeowners is not economic development. It is corporate welfare. Real economic development grows the tax base broadly, not by privileging a handful of favored industries.

Property tax relief sounds great, but how do you actually make it permanent?

Through three steps. First, structural reform that caps the growth of assessed valuations. Second, shifting some school funding off of local property tax and onto the state. Third, long-term spending discipline. No single bill fixes this. A sustained plan does.