House Committee takes First Step to Make Sales Tax Reduction Permanent

A South Dakota House committee has taken the first step in making the 0.3% reduction passed by the legislature last session permanent.

On an 11 to 1 vote, the House Taxation Committee passed HB 1001. The bill, introduced by Republican Rep. Chris Karr from Sioux Falls, removes the June 30, 2027 sunset provision on the “tax holiday.”

The reduction decreased the state sales tax from 4.5% to 4.2%.

Karr testified that the predicted decrease of $104 million has yet to occur, with only about $16 million reduction during the first six months of the 2024 fiscal year.

Nathan Sanderson, executive director of the South Dakota Retailers Association, spoke against the sunset repeal.

Sanderson and other opponents also warned of a ballot measure removing the sales tax on food as a reason to keep the 2027 sunset in place.

The measure now goes to the House of Representatives for consideration