Property taxes are the primary source of funding for schools, counties, municipalities and other units of local government. The Property Tax Division plays a critical role in ensuring that property assessments are fair, equitable and in compliance with state law.
How Property Taxes are Calculated
- Establishing the Value of the Property
The first step is to establish the full and true value of all property within the boundaries of each unit of government. State statutes require property to be assessed at its market (or full and true) value. Market value is the amount the property would probably sell for if sold on the open market.
- Determine the Taxable Value of the Property
All property is to be assessed at full and true value. Then the property is equalized to 85% for property tax purposes. If the county is at 100% of full and true value, then the equalization factor (the number to get to 85% of taxable value) would be .85. For example: A home with a full and true value of $230,000 has a taxable value ($230,000 multiplied by .85) of $195,500.
- Determine the Tax Levy for All Taxing Jurisdictions Which can Tax Properties
The third step is to determine the amount of taxes needed to meet the costs of operating a unit of government. The higher the cost of operating the city or school district, the larger the revenues required from property taxes. Revenues from property taxes, combined with other monies such as federal grants, must equal the size of the budget of the unit of government. The amount of property taxes a taxing entity can ask for is limited based on the Property Tax Reduction Act. The tax rate for all property in a local unit of government is arrived at by dividing the value of all the property into the amount of the budget that is unfunded from other sources. This calculation results in a tax rate expressed in dollars of property value, or “dollars per thousand”. For example: if the taxable value within a city is $10,000,000 and the city has a tax levy request of $100,000, the tax levy is $10 per thousand.
- Taxes are Computed for Individual Properties
The final step is to apply the tax rate calculated in step three to individual properties. For example, using a tax levy of $10 per thousand from the example above, the tax on a home with a taxable value of $200,000 would be calculated at $10 X 200 or a tax of $2,000.
Property Owner Appeal Process Guide
As the owner of real property in South Dakota, you have the right to ensure your property is being assessed at no more than market value, as well as assessed equitably in relationship to other properties. Understand the process of appealing your assessed value with the Property Owner Appeal Process Guide (PDF).
Opting Out of Tax Limitations
Taxing Districts (other than School Districts)
“Opting out” means the taxing entity needs more monies from property taxes than they are allowed by the limitation. The limitation allows a taxing entity to increase their tax call from the preceding year by the consumer price index and growth. The CPI for taxes payable in 2020 has been set at 2.4.
Get to know the roles of the people you talk to when you have property tax questions.
Director of Equalization
The county Director of Equalization has the responsibility of ensuring all property in the county is accounted for on the tax list. They are also responsible to ensure these properties are all assessed in an equal and uniform manner.
The Auditor figures the tax levies for all allowable taxing entities within the County and ensures the amount of taxes received complies with state law. In addition, the County Auditor serves as the clerk of the County Commission and records and preserves the records of the Commission proceedings.
The treasurer is responsible for collecting all property taxes for the county, cities, school districts and any other political district authorized to levy real estate taxes.
Property Tax Publications & Resources
Learn the steps to take to appeal the valuation of your property when you download the Appeal Process Guide for the Property Owner (PDF) and other resources:
Useful questions and answers for business property owners.
Learn the steps to take to appeal the valuation of your property when you download the Appeal Process Guide for the Property Owner (PDF).
Only the County Board of Equalization has the authority to hear appeals on property classifications. For more information, download the Appeal Process Guide for the Property Owner (PDF).
Download the Assessment Freeze for the Elderly and Disabled form (PDF) or obtain an application form from your local County Treasurers office. Your local County Treasurers office will assist you with any questions you may have about the form. Complete the form and return it to your local County Treasurer on or before April 1 of the current year. For more information, view the Assessment Freeze Brochure (PDF).
Download the Property Tax Exemption form or obtain an application form from your local County Treasurers office. Your local county treasurers office will assist you with any questions you may have about the form. Complete the form and return it to your local county treasurer on or before April 1 of the current year.