Pennington County Commissioners are considering increasing sales taxes to reduce property taxes. 

Historically, counties governments have relied primarily on property taxes and fees to fund public services, like road repairs and indigent legal defense. Until July 1, South Dakota law did not allow counties to raise revenue through sales tax collections. 

This year, the South Dakota Legislature approved two laws that capture increased sales taxes for owner-occupied property tax relief. One captures revenue from a sunsetting sales tax holiday and pays down a portion of owner-occupied property taxes. The other allows counties to adopt a sales tax as a revenue stream. In Pennington County, commissioners are considering whether to adopt that authority. 

The half penny sales tax will offset the county’s portion of owner-occupied property taxes, which is roughly 27 percent of your overall property tax bill. The sales tax increase will be revenue neutral, meaning no new money for safer roads or quicker lines at the treasurer’s office. 

State lawmakers have, for years, searched for ways to reduce property tax bills, which spiked during and after the COVID-19 pandemic. 

While the Pennington County mill levy has gone down since 2022, property values remain high compared to pre-pandemic levels. The state estimates Pennington County could raise enough to cover about 75% of owner-occupied property taxes. Proponents say tourists will pay down meaningful portions of local property taxes.

According to the state Department of Tourism, in 2025 visitor spending was $999.6 million. If imposed, the Pennington County sales tax increase would only generate $4.9 million from tourists.

The state estimates Pennington County will raise $26 million with the half penny sales tax. That means tourists will pay less than 20% of the county portion of owner-occupied property taxes. Residents will shoulder the other 80%.

Critics call the law a ‘reverse Robin Hood.’

“It’s a new tax,” said Rep. Will Mortenson, R-Fort Pierre, during debate on the South Dakota House of Representatives floor in March. “This is fundamentally a redistribution bill… from the poorest South Dakotans to the richest South Dakotans.”

As local home values spiked, median wages rose at roughly half the rate. Further, lower- and middle-income families—households of four earning $170,000 or below, according to Pew Research Center—pay proportionally more in sales taxes than wealthier folks do.

Pennington County’s draft ordinance does not define how property tax relief will occur. Because property taxes are tied to the value of a home, a $5 million house could get 20 times the property tax relief of a $250,000 house. 

South Dakota has a low overall tax burden, including favorable property taxes in the top ten nationwide. Charging more to those striving for stability risks more economic distress in Pennington County in the future.

The statewide .3% sales tax increase went into effect July 1. On Tuesday, Pennington County Commissioners may endorse their own .5% sales tax increase.

The increases come without any promise of investment in public good for those who will bear the brunt of the sales tax burden—not tourist, but middle- and lower-income families in Pennington County. 

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