Americans for Tax Reform congratulates South Dakota lawmakers for passing House Bill 1137 – the single largest tax cut in state history. The bill reduces the state sales tax rate from 4.5% to 4.2%, returning $103 million to South Dakota taxpayers every year in a state that already does not tax personal income of any kind. Thanks to a dedicated effort from the bill’s primary sponsor, Representative Chris Karr, the success of HB 1137 represents a major victory for all South Dakotan taxpayers.
“By reducing the state sales tax rate for all purchases, each and every South Dakota resident can look forward to keeping more of their hard-earned dollars, regardless of their socio-economic status,” said Americans for Tax Reform President Grover Norquist. “Cutting the sales tax rate for everyone will fortify South Dakota’s competitive advantage, especially as residents of deep-blue states continue to flee in droves to no-income-tax states like South Dakota.”
The passage of HB 1137 once again highlights the wisdom and foresight of South Dakota’s state legislature. Rather than rest on the laurels of their already superior tax no-income-tax regime, or enacting carve-outs that only benefit a handful of special interests, legislators like Rep. Chris Karr have gone above and beyond in making their state as economically competitive as possible.
The sales tax cut now heads to the desk of Governor Kristi Noem, one of 16 incumbent governors who have signed ATR’s Taxpayer Protection Pledge. Noem made her opposition to new and higher taxes abundantly clear last week as she vetoed a bill that would have doubled the tax on hotel stays, stating that “We are cutting taxes this legislative session, not raising them.” The governor’s dedication to tax relief, coupled with the unanimous passage of HB 1137 in the House and a 31-2 majority in the Senate, should make it a no-brainer for the Governor to sign this historic sales tax cut into law.
Even if Noem signs the bill, however, the work is far from over. Thanks to the last-minute addition of a 4-year sunset provision, lawmakers will need to approve the tax cut again, or the sales tax will revert to the higher 4.5% rate in 2027.