Property tax revenue is the principal source of funding for school districts and city and county government entities that provide public services across South Dakota. Property assessment and tax billing in the state is administered at the county level. In 2015, statewide property tax revenue amounted to nearly $1.2 billion. School districts collected about 56.7% of the total revenue, while counties took 26.5%, municipalities took 13.2% and townships took 1.7%. The remaining 1.9% went to special assessment districts for spending on local capital projects and related investments.

South Dakota Property Tax Basics

Residential and commercial property in South Dakota is assessed at full market value as determined by the county director of equalization on Nov. 1 each year. The taxable value of a property is set at 85% of its assessed value. This valuation applies to tax assessments taking place in the following calendar year. Actual tax payments are then due one year later. Thus, a property valuation on Nov. 1, 2016 applies to tax assessments in 2017, which then become payable on Jan. 1, 2018. One half of the property tax bill is due no later than May 1, while the remainder is due no later than Nov. 1.

Most South Dakota homeowners are eligible to pay a reduced rate for the portion of property tax going to the local school general fund. To get the reduced rate, a property must be the principal residence of the owner, who must also submit a certification form to the local county director of equalization. Once an owner-occupied dwelling is certified, it remains so until the property is sold or the owner-occupant moves. Residential property not certified as owner-occupied is subject to the same tax rate as commercial property and utility property. Agricultural property is a separate category of property assessed under a special productivity-based valuation system. Agricultural property has a lower property tax burden than other property in the state.

Average Property Tax in South Dakota

Average effective property tax rates in South Dakota vary according to the location and the type of property. The highest reported effective tax rate for owner-occupied property in the state was in the city of Redfield, which had an effective tax rate of roughly 2.4% on the market value of a home. The effective rate on the market value of commercial property was just less than 3%. The second-highest tax rate in the state was in the city of Sisseton, with an owner-occupied rate of nearly 2.3% and a commercial rate of nearly 2.7%. On the low end of the scale, Watertown had effective tax rates of 1.3% and 1.7% on owner-occupied property and commercial property, respectively. Sioux Falls, the largest city in South Dakota, had rates around 1.5% and 1.9%, respectively. South Dakota residents who live in unincorporated areas of the state are subject to lower overall rates than urban residents.

South Dakota Compared to the National Average

The overall effective property tax rate on the market value of owner-occupied housing across South Dakota is 1.32%, which is higher than the national average rate of 1.19%. Although just 15 states have a higher property tax rate than South Dakota, it is important to recognize that South Dakota has no individual income tax or corporate income tax. Additionally, South Dakota has a statewide sales tax of 4%, well below the national median of nearly 6%. So while the property tax burden in the state is relatively high, other taxes in the state are relatively low.

South Dakota Compared to Nearby States

South Dakota homeowners pay a higher property tax rate than homeowners in most neighboring states. Wyoming and Colorado impose an effective property tax rate of just 0.61% on the market value of owner-occupied housing. Montana has an effective rate of 0.86%, while Missouri is at 1.02% and Minnesota is at 1.19%. Iowa rises above South Dakota with an effective property tax rate of 1.49%, followed by Nebraska at 1.84%, the seventh-highest effective rate in the nation.

Wisconsin Property Tax Guide

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