South Dakota Legislature OKs Tax Credits for Private School, Homeschooling

PIERRE — The South Dakota Legislature has passed Senate Bill 190, authorizing property tax credits for families covering eligible educational expenses for private school or alternative instruction students. Sponsored by Sen. David Carley, R-Sioux Falls, and Sen. Sue Peterson, R-Wilmot, with Rep. Tyler Mulally as a key House backer, the bill allows credits up to 80% of a property owner's school district property taxes, capped per student at 80% of the general state aid per student equivalent — projected at $5,998.21 for FY2026 under Gov. Larry Rhoden's budget.

Statewide, 9,520 K-12 students attend private schools and 11,489 receive alternative instruction, per the fall 2024 enrollment census, making 21,009 potentially eligible. For 2026 property taxes, school districts could lose between $33.9 million and $126 million in revenue, varying by district participation and local enrollment in non-public options; no state aid would offset the shortfall. A typical owner-occupied home with $370,000 fair market value would face school taxes of $2,021, qualifying for a maximum credit of $1,617.

The bill aligns with broader school choice expansions, including Gov. Rhoden's November 14 announcement opting South Dakota into the federal U.S. school choice tax credit scholarship program under the One Big Beautiful Bill Act. That federal initiative offers nonrefundable credits up to $1,700 per individual for donations to scholarship-granting organizations funding private tuition, tutoring and textbooks for families below 300% of area median income. Meanwhile, a separate charter school push, Senate Bill 218 by Sen. Lauren Nelson, R-Yankton, stalled in February on a 17-17 Senate tie after Lt. Gov. Tony Venhuizen abstained.