PIERRE, S.D. – Governor Kristi Noem, Representative Mary Fitzgerald, and Senator John Wiik announced the introduction of a bill on Tuesday which would exempt groceries from the state-wide sales tax.
HB 1075, which establishes that the tax on the sale of all “food and food ingredients” is “zero percent,” would reduce state revenues by an estimated $102 million per year, while reducing the cost of groceries by 4.5%. The bill would not affect the sales taxes collected by cities.
Eliminating the state sales tax on groceries was a campaign point for Governor Noem in the 2022 election, one that she re-emphasized in her State of the State Address earlier this month.
“I’ve visited dozens of grocery stores across South Dakota in recent months, and every time, I meet South Dakotans who are shocked by the rising cost of food,” said Governor Kristi Noem. “They need relief – and we can afford to give it to them.”
“Food and food ingredients” specifically excludes alcohol, tobacco, cigarettes, cannabis products, and prepared food. These items will continue to be taxed at the standard sales tax rate. Prepared foods include any food that is sold heated or sold with eating utensils.
South Dakota is currently one of only three states that levies the full sales tax rate on food items.
According to the Governor’s Office, current general fund collections are $146 million above expected levels and are anticipated to rise to $203 million by the end of the fiscal year.
“Eliminating this tax will make it easier for South Dakota families to make ends meet, including my own kids and grandkids,” said Rep. Mary Fitzgerald. “As a former appropriator, I am confident that our state budget can afford this while still planning conservatively and responsibly for the future.”
The bill was introduced with 10 cosponsors, including Representatives Tina Mulally and Dennis Krull of Pennington County.
