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SD HB1281
Bill
Status
2/4/2026
Primary Sponsor
Erik Muckey
Click for details
AI Summary
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Sales and use tax rate on food and food ingredients reduced to 0%, while the general sales tax rate increases from 4.2% to 5% on goods, services, utilities, telecommunications, admissions, and passenger transportation
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Excise tax on farm machinery and irrigation equipment used for agricultural purposes increases from 4.2% to 5%
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Cigarette tax increases from 76.5 mills (7.65 cents) to 12.5 cents per cigarette for both Class A and Class B cigarettes
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Creates the School Building Construction Fund, funded by 2% of taxes collected from sales tax, use tax, farm machinery excise tax, and amusement device tax, to provide zero-interest loans to school districts for constructing or expanding school buildings
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School building loans capped at 40% of project costs with 20-year repayment terms; annual loan disbursements must total between $60-90 million, with 70% allocated to districts with fewer than 4,000 students and 30% to larger districts
Legislative Description
Reduce the sales and use tax rates on food, to increase the rates for certain taxes, use taxes, and excise taxes, and to provide a new fund for school district capital outlay projects.
Education
Last Action
Taxation Deferred to the 41st legislative day, Passed, YEAS 11, NAYS 0. H.J. 9
2/19/2026