U.S. Rep. Dusty Johnson, R-South Dakota, announces his 2026 campaign for governor during an event on June 30, 2025, at the David Lust Accelerator Building in Rapid City. (Photo by Seth Tupper/South Dakota Searchlight)
Republican governor candidate Dusty Johnson wants to give first-time homebuyers two years without property taxes and also wants to provide $400 annual property tax credits to all other homeowners in the state, he announced Thursday.
“Property taxes have become a problem for every South Dakota homeowner, and I feel duty-bound to provide relief to all of them,” Johnson said in an interview with South Dakota Searchlight.
Johnson is serving the remainder of his term in the U.S. House while he seeks the Republican nomination for governor in June’s primary election. His proposal comes as lawmakers prepare to debate a heap of other property tax ideas during the legislative session that begins Tuesday at the Capitol in Pierre.
Homeowners’ property tax payments rose nearly 40% from 2020 to 2024, causing many to demand relief.
Johnson would pay for his proposal with $110 million in estimated annual revenue that will be available when the state sales tax rate goes back to 4.5%. Lawmakers reduced it to 4.2% in 2023 but scheduled the reduction to sunset after June 30, 2027.
“It’s important that the relief is fiscally responsible,” Johnson said. “There are a lot of plans out there. There are a lot of people promising the moon, but they can’t actually make the math work.”
Johnson said each homeowner would see the credit on their county property tax statement.
Johnson’s campaign said there are about 260,000 homeowner-occupied parcels in South Dakota, making a $400 credit for each come to about $104 million. The campaign said there are about 1,500 first-time homeowners every year who pay an average of $2,000 in property taxes, which comes to $3 million annually, or $6 million for the first two years.
Among the other property tax relief ideas that could be considered by lawmakers this winter are 19 proposed by a task force over the summer.
Hansen: Johnson tries to ‘take credit for others’ plans’
State House Speaker Jon Hansen, of Dell Rapids, served on the task force and is seeking the Republican nomination for governor. He accused Johnson of stealing the sales tax idea from the task force.
One of the task force recommendations, from Sen. Randy Deibert, R-Spearfish, would capture the revenue from the scheduled sales tax increase and place it in a “local effort replacement fund” to replace a portion of property taxes paid to school districts. The recommendation does not specify a plan for $400 credits or a two-year property tax holiday for first-time homebuyers.
Hansen also pointed to a social media post of his from Nov. 3 when he proposed the “preservation of $105 million in sales tax relief dedicated to property tax cuts.”
“Dusty Johnson can try to take credit for others’ plans all day, but the reality is he didn’t do the work to create this plan,” Hansen said in a statement. “This proposal was adopted by the property tax task force this summer, which I created and helped lead. Over two months ago I announced this proposal as just one aspect of a larger plan to significantly reduce property taxes. A vote on this plan is already coming this legislative session.”
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Hansen has also endorsed taking money from a state housing infrastructure fund and state reserve funds to provide $120 million of property tax relief to homeowners through $500 credits; cutting state spending by 5% and using the $123 million of savings for property tax cuts; and dedicating 25% of future state revenue growth to property tax relief.
Another Republican candidate for governor, Aberdeen businessman Toby Doeden, said Johnson’s plan “does nothing to actually confront the problems negatively impacting South Dakota.”
“Shifting from one tax to another doesn’t alleviate the burden on residents. It makes it worse,” Doeden said. “The state should be seeking to lower the tax burden on South Dakota families, not create an increase.”
Doeden has pledged to eliminate property taxes by utilizing savings from the creation of a state Department of Government Efficiency, by implementing “more fair and equitable” ways to generate revenue, and by growing the economy to widen the tax base.
Gov. Rhoden supports optional county sales tax
Republican Gov. Larry Rhoden is serving the remainder of former Gov. Kristi Noem’s term after she departed to serve in the Trump Cabinet. Rhoden is also running to keep his job, and has already signed one property tax relief proposal into law after legislators approved it in March.
The multifaceted law, which took effect in July, is intended to slow property tax increases. It places tighter limits on the growth of property assessments and local government budgets for five years, exempts some home improvements from affecting assessments, and makes more elderly and disabled people eligible for property tax assessment freezes by raising limits on their income and home values.
Governor: ‘Not much I’ve seen that I could support’ in legislative property tax proposals
Rhoden has additionally proposed an optional half-percent sales tax for counties, which they could use to reduce the county portion of owner-occupied property taxes on homes. Counties are not currently allowed to levy sales taxes.
Rhoden said Thursday in a statement that “South Dakotans deserve a meaningful property tax cut, and my plan delivers it.”
“A blanket statewide sales tax increase delivers less relief for the South Dakota communities who need it most,” Rhoden said. “My plan empowers voters in each county to make their own decisions, and to deliver a bigger property tax cut for homeowners if they choose.”
County commissioners could impose Rhoden’s proposed county sales tax, and citizens could gather petition signatures to send the decision to local voters.
Johnson said Rhoden’s plan “passes the buck” to county commissions. He also said it could transfer tax benefits from rural counties to urban counties, pointing to greater taxable sales in larger cities.
South Dakota Searchlight asked Johnson to square his property tax proposal with his earlier pledge to make schools the state’s top budget priority. He said long-term school funding depends on economic growth, and lower homeownership costs would help achieve that goal.
Johnson said homeowners who already qualify for state relief programs, such as elderly and disabled people, would still get the $400 credit.
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