Northern Plains News: 5 Things to Know About the $1.50 Tax Amendment that would replace most local property taxes with retail transaction tax

5 Things to Know About the $1.50 Tax Amendment
In Brief: In 2026, voters could see a measure that would replace most local property taxes with a retail transaction fee
By Todd Epp, Northern Plains News – Aug 20
South Dakota voters could face, on the November 2026 ballot, an initiated constitutional amendment from Mike Mueller, former state Sen. Julie Frye-Mueller, and Matt Smith that would replace most local property taxes with a new retail transaction fee — $1.50 on purchases of $15 or more, and ten percent on purchases under $15 — and create a state “property tax replacement fund” to reimburse schools, counties, and cities.

The LRC’s August 2025 review says the measure would affect state and local finances and requires a fiscal impact statement; it also flags single-subject risks. Sponsors say the goal is to ease the property-tax burden; if voters approve, the Legislature would have to build the collection and distribution system.
1. What does the amendment do?
It would replace local property taxes with a new $1.50 fee on retail purchases of $15 or more, and a 10 percent fee on purchases under $15.
2. Who is behind it?
Sponsors include Rep. Mike Mueller and fomer state Sen. Julie Frye-Mueller of Rapid City, and activist Matt Smith. They argue property taxes are unfair because they continue after a mortgage is paid off.
3. How would it affect schools and counties?
The Legislative Research Council warns the measure could cause major revenue shortfalls for schools, counties, and cities. Lawmakers would need to rebuild the state’s entire tax system to make up the difference. That’s according to the Legislative Research Council’s August 2025 review memo.
4. What are the main criticisms?
Governor Larry Rhoden and groups such as Americans for Prosperity say the plan is regressive, hitting low-income residents hardest. Economists also warn it would destabilize funding for local services.
5. What happens next?
Backers will collect signatures to place the measure on the 2026 ballot. If it qualifies, voters will decide whether to replace property taxes with the new purchase-based tax system.


Since mid-March, the governor has been running a shadow reelection campaign through his Open for Opportunity Tour. 



