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Bill

Bill

HB 1037

suspend the tax collection allowance credit for filing returns and remitting taxes electronically.

2025 Regular Session

South Dakota eliminates the tax collection allowance credit for electronic filing and payment, increasing taxes for compliant filers and state revenue but potentially discouraging digital compliance.

Signed by the Governor on 2025-03-31 H.J. 554
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Bill Summary · HB 1037

Legislative bill overview

HB 1037 eliminates South Dakota's tax collection allowance credit, which previously provided a financial incentive to businesses and individuals who filed tax returns and remitted taxes electronically. The bill suspends this credit, meaning taxpayers will no longer receive a reduction in their tax liability for complying with electronic filing and payment requirements.

Why is this important

This change affects state revenue and taxpayer costs. Removing the credit increases the effective tax burden on filers who use electronic methods, potentially reducing the financial incentive for digital compliance. For the state, it increases tax revenue collections but may paradoxically reduce e-filing adoption rates, potentially increasing administrative costs associated with paper processing.

Potential points of contention

  • Revenue vs. incentive trade-off: The state gains immediate revenue but loses an effective tool for encouraging cost-saving electronic filing
  • Disproportionate impact on small businesses: Smaller businesses with tighter margins may be more significantly affected than larger corporate filers
  • Administrative efficiency concerns: Reduced e-filing incentives could shift more taxpayers back to paper filing, increasing state processing costs despite revenue gains

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

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