2026 South Dakota Legislative Session: What It Means for Wall and Our Region

The 2026 South Dakota Legislative Session produced several bills that will directly impact property taxes, housing, workforce development, infrastructure, and economic growth. Many of these measures align with priorities identified in WEDC's Strategic Plan, particularly housing development, workforce recruitment, business expansion, and investing in community infrastructure.

Below is a recap of some of the legislation that may have the greatest local impact.

Property Tax Relief

Property taxes remained one of the Legislature's top priorities this session, resulting in several significant measures designed to provide relief for homeowners.

SB 216 establishes a five-year cap on property tax growth for taxes payable from 2027 through 2031. The legislation is intended to slow the rate of increasing property taxes while maintaining predictable revenue growth for local governments.

SB 96 gives counties the option to adopt an additional 0.5% county sales tax dedicated exclusively to reducing owner-occupied residential property taxes. Revenue generated through the tax must first provide 100% property tax relief for owner-occupied homes before any remaining funds may be applied to agricultural and other property classifications. Counties may choose whether to place this local option before voters, creating another tool to address property tax concerns without reducing essential local services.

SB 245 creates the Homeowner Property Tax Reduction Fund, one of the state's largest long-term property tax relief initiatives. Beginning July 1, 2027, the state sales tax will increase from 4.2% to 4.5%, with the additional 0.3% dedicated to homeowner property tax relief. The legislation transfers nearly $56 million from state reserves into the new fund for FY2027 and provides ongoing funding through the dedicated sales tax revenue.

Working alongside the state's education funding bill, SB 245 lowers the school district general fund levy on owner-occupied property while replacing the lost school revenue with state dollars. This approach provides meaningful property tax relief without reducing funding available for public education.

Housing Development

Addressing South Dakota's housing shortage continued to receive bipartisan support.

SB 204 strengthens the South Dakota Housing Infrastructure Fund by expanding eligible infrastructure projects and authorizing the South Dakota Housing Development Authority to provide loans covering up to 50% of a housing infrastructure project's total cost. These funds can help communities finance critical infrastructure—including streets, water, sewer, and stormwater systems—that make new residential developments possible.

HB 1113 establishes down payment assistance opportunities for manufactured homes, creating additional pathways to affordable homeownership and expanding housing choices for South Dakota families.

These housing initiatives complement WEDC's ongoing efforts to increase housing opportunities and support future residential growth in the Wall area.

Workforce Development

South Dakota took an important step toward strengthening workforce development through SB 63, which establishes the State Office of Apprenticeship within the Department of Labor and Regulation. By administering apprenticeship programs at the state level rather than through the federal system, South Dakota will have greater flexibility to develop programs that better meet local workforce needs and strengthen partnerships between employers, schools, and training providers.

The state's minimum wage will also increase to $11.85 per hour beginning January 1, 2027.

Infrastructure Investments

Water infrastructure and conservation remained major priorities during the 2026 legislative session.

SB 222 appropriates $10 million from the state's general fund to improve water quality, water availability, and land conservation across South Dakota. The funding includes:

• $8 million for statewide riparian buffer initiatives that help reduce erosion, improve water quality, and protect waterways.
• $2 million for eligible water, wastewater, and stormwater infrastructure projects identified in the State Water Plan.
• The bill included an emergency clause, allowing the funding to become available immediately upon the Governor's signature.

In addition, SB 231 creates the new Water Infrastructure Development Fund, providing $3 million for grants and loans supporting rural water infrastructure projects. These investments will help communities expand and modernize critical infrastructure needed for residential development, business growth, and long-term economic sustainability.

Reliable infrastructure remains one of the most important foundations for future community and economic development throughout western South Dakota.

Local Government Tools

Communities received an additional financing option through HB 1245.

The legislation allows municipalities, with approval from 60% of local voters, to enact a temporary 1% local sales tax dedicated exclusively to voter-approved capital improvement projects such as streets, public buildings, parks, utilities, or other community infrastructure. The tax may only be implemented once every five years, providing communities another option for funding major capital investments while limiting reliance on property taxes.

Business and Regulatory Updates

Several additional bills may affect South Dakota businesses and future economic development.

SB 135, known as the Data Center Bill of Rights for Citizens, establishes important protections as large-scale data centers continue expanding across the country. The legislation applies to data centers using 10 megawatts or more of electricity and ensures that:

Data centers are responsible for paying the full cost of their electrical infrastructure and increased energy demands, preventing utility costs from being shifted to residential customers. Developers must work with local water providers to demonstrate that projected water usage is compatible with available water supplies before beginning operations. Local governments retain the authority to regulate the location, construction, development, and operation of data centers without state preemption. The bill positions South Dakota to attract technology investment while protecting residents, local infrastructure, and community decision-making.

Additional legislation includes:

HB 1215, authorizing licensing for cigar bars.
HB 1096, updating provisions governing limited liability partnership companies (LLLPs).
HB 1237, strengthening age verification requirements for online application store, publicly available website, electronic service, or other online platform.

Looking Ahead

This year's legislative session focused on balancing property tax relief with continued investments in housing, workforce development, infrastructure, and economic development. Together, these new laws provide communities like Wall with additional tools to address housing shortages, strengthen workforce pipelines, invest in public infrastructure, and support long-term economic growth.

WEDC will continue working with local, regional, and state partners to leverage these new opportunities as we implement our Strategic Plan and pursue projects that create lasting opportunities for our residents, businesses, and future generations.

Click for more information