The Vote
The South Dakota Senate voted 14-20 on Friday to defeat Senate Bill 126, which would have increased the property tax exemption for permanently and totally disabled veterans and their surviving spouses from $200,000 to $300,000. The measure needed a majority of the 35-member Senate to pass; it fell six votes short.
What the Bill Would Have Done
Introduced by Sen. Joy Hohn, R-Hartford, SB 126 would have amended state law to exempt $300,000 of the full and true value of an owner-occupied dwelling from property taxation for veterans rated as permanently and totally disabled because of a service-connected disability, and for qualifying surviving spouses. Current state law sets the threshold at $200,000.
Hohn told senators the average home value in South Dakota now falls between $300,000 and $350,000 — figures that have climbed sharply in recent years. She said 22 other states already offer a full property tax exemption for 100 percent disabled veterans.
“The average home value in South Dakota is between $300,000 to $350,000,” Hohn said on the Senate floor. “Home values have continued to increase year after year.”
Supporters: Targeted Relief for Those Who Sacrificed Most
Hohn characterized the program as reaching a small slice of the state’s population. Citing figures from the South Dakota Veterans Council, she said roughly 4,000 veterans use the exemption statewide — about 0.47 percent based on the estimate she provided — and no more than 7,000 could qualify.
“These are permanent and totally disabled veterans,” Hohn said. “Once again, that is a rating that is something that one can never recover from.”
Sen. Amber Hulse, R-Hot Springs, whose father is a 100 percent disabled veteran, spoke in favor of the bill and disputed concerns that the exemption shift would significantly strain county budgets. Hulse said she examined the numbers for her own district — one of the highest-participating in the state — and found the fiscal impact minimal.
“I looked at the numbers. I looked at how it will impact the evaluation of the property in my district, one of the districts that it impacts the most, and I’m still voting yes today because the amount of shift that this will cause is almost like non-existent,” Hulse said.
Opponents: Tax Shift, Not Tax Relief
The bill’s most extensive opposition came from Sen. Taffy Howard, R-Rapid City, a U.S. Air Force veteran who said her immediate family’s military service spans multiple generations — including her son currently on active duty in the Navy.
Howard acknowledged her reluctance to oppose a veterans’ benefit but argued the bill shifts the property tax burden onto other homeowners, including seniors, young families, and non-disabled veterans — without addressing underlying structural problems in South Dakota’s property tax system.
“Property taxes don’t just disappear,” Howard said. “When we exempt more value, that cost shifts. Counties, cities, and school districts still must fund roads, law enforcement, fire protection, and local services. When the taxable base shrinks, that burden is pushed on to other homeowners.”
Howard also challenged the use of the U.S. Department of Veterans Affairs disability rating system as the basis for the exemption, arguing the VA’s combined rating formula does not always reflect total incapacity as most taxpayers might understand it.
Sen. Sam Marty, R-Prairie City, a Vietnam veteran, and Sen. Ernie Otten, R-Tea, also voted against the bill, citing similar concerns about property tax equity.
History of the Exemption
The exemption program was first established in 2007 at $100,000, raised to $150,000 in 2019, and increased to $200,000 in 2024. The 2024 increase came without the consumer price index adjustment advocates had requested.
What’s Next
With the bill declared lost Friday, there is no immediate path for SB 126 in the 2026 legislative session.
