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SD HB1218
Bill
Status
1/29/2026
Primary Sponsor
John Hughes
Click for details
AI Summary
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Creates two new subclasses of nonagricultural property for taxation: "commercial-operator" (owner-operated businesses with material participation) and "commercial-investor" (passive investment properties)
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Commercial-operator classification requires the ownership holder, qualified family members, or qualified entities to materially participate in day-to-day management for at least 10 years, following federal IRS standards under 26 U.S.C. § 469(h)
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Beginning with taxes payable in 2028, commercial-operator nonagricultural property must receive a school district levy at least 25% lower than commercial-investor nonagricultural property
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Property owners must apply annually by August 1 to the director of equalization for commercial-operator classification, with required documentary evidence and annual affidavit renewals
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Penalties for misrepresentation include $2,500 per year for knowing misrepresentation (plus Class 1 misdemeanor charges) and $500 per year for negligent misrepresentation, deposited into the county general fund
Legislative Description
Create a new class of nonagricultural property for purposes of taxation, and to provide a penalty therefor.
Property Tax
Last Action
Taxation Deferred to the 41st legislative day, Passed, YEAS 7, NAYS 5.
2/12/2026