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.
Those who can buy all their monthly groceries and supplies in one trip will pay $1.50, those who go week to week will pay $6. The poor will pay more.
The fun starts when people figure out they can save money on gasoline purchases by filling up multiple gas cans and taking them home in their cars and storing them in their garages.
Any additional revenue this tax generates will have to be spent on firetrucks and ambulances. Good times.
There would still be a sales tax on top of the transaction fee. 4.2% now and they will be increasing that as well.
This is the dumbest idea I’ve ever heard. No surprise who it’s coming from. Every time I see these folks names it makes me want to vomit then take a shower to clean the stink off. Geez. A feeble attempt to keep in the spotlight even if it’s an idea that will never fly.
One option is to gather signatures from citizens to put it on the ballot. Another option I heard them talk about is seeing if they can get a Joint Resolution from the SD Legislature to place it that way instead if they feel they may not get enough signatures.
Julie when I heard speak about this say this was in play but didn’t have a lot of faith that they might it that way.
Former legislature Mary Duvall addressed this at DakotaFest in Mitchell Tuesday saying this is a dumb idea.
https://getyarn.io/yarn-clip/bed6e899-9f6e-4f4f-953b-edbbf2a4056e/embed?autoplay=false
Insaner than most. Dumber than most. Would be best if these people just shut their mouths for a while and let the adults figure it out.
It would save out-of-state land owners a lot of money.
That is a sound argument! It will drive the demand for SD land for investments and then the cost of it, too. It’s already breaking records.
And what happens when this fails and SD is bankrupt or nearing it? Will they have to revert back to property tax system? It will be even higher when they are forced to go back to tried and true meausre of spreading the tax burden back out.
This gets worse the more I think about it!
The local counties and townships, despite what people think, are already running on tight budgets. They do great with what they are given. While the majority of property taxes go to schools, the rest goes to pay for policing/fire services, road maintenance and infrastructure, care for individuals in need, court services…and so much more. If their budget is already tight, how does this system pay the existing budgets? We will save money but the difference has to come from somewhere.
Somebody, somewhere has to make up the difference. Who will that be? So we don’t have property tax but then how much will the state have to increase a grocery tax or road tax or hotel tax to make up the difference?
This is a LIBERAL idea! Call it a “fund”, call it whatever you want it’s still a tax! And somebody still has to pay for it all!
16.2 percent tax on all purchases under $15 and under. That’s wild.
So the plan is to lower property taxes by imposing a new tax that may end up taking MORE money out of our pockets? And this is supposed to be a good thing? Let’s not forget that the whopping 0.3% state sales tax “cut” is set to expire in 2 years, meaning the rate goes back up to 6.5%.
The state has run surpluses for over a decade now, even with the budget drain that is Medicaid expansion. It’s time to lower taxes for everyone in the state, not impose new taxes on every transaction that occurs.
Can’t wait for this one to die instantly on its first committee hearing date. Great 41st day material.