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Bill

Bill

HB 1281

reduce the sales and use tax rates on food, to increase the rates for certain taxes, use taxes, and excise taxes, and to provide a new fund for school district capital outlay projects.

2026 Regular Session Introduced by Eric Emery and 4 co-sponsors

South Dakota bill reduces food sales tax while raising other taxes and excise taxes, creating new school capital funding with revenue-neutral design.

Taxation Deferred to the 41st legislative day , Passed, YEAS 11, NAYS 0 H.J. 9
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Bill Summary · HB 1281

Legislative bill overview

HB 1281 reduces South Dakota's sales and use tax rates on food while offsetting revenue loss by increasing rates on other sales taxes, use taxes, and excise taxes. The bill establishes a new dedicated fund for school district capital outlay projects, funded through the tax rate adjustments.

Why is this important

Food tax reduction directly affects household grocery budgets, potentially providing relief to lower-income families who spend a higher percentage of income on food. The revenue neutral design and school funding mechanism represent a significant reallocation of the tax burden across different economic sectors and consumer groups.

Potential points of contention

  • Regressive vs. progressive impact: Raising other taxes to offset food tax cuts may shift burden toward different income groups or businesses; analysis needed on which taxes increase and who bears that cost
  • School funding adequacy: Whether the new capital outlay fund provides sufficient, stable funding for district infrastructure needs or creates unpredictable budgeting for schools
  • Business sector effects: Excise tax increases could raise prices on specific goods (fuel, alcohol, tobacco, etc.), affecting those industries and their consumers differently than food tax relief

Compiled from official sources — confirm details with the bill’s official record.

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