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South Dakota

South Dakota

Incentives/Policies for Renewables & Efficiency

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Large Commercial Wind Exemption and Alternative Taxes   

Last DSIRE Review: 07/15/2014
Program Overview:
State: South Dakota
Incentive Type: Property Tax Incentive
Eligible Renewable/Other Technologies: Wind
Applicable Sectors: Commercial
Amount:Alternative tax assessment method: $3/kW of capacity and 2% of the gross receipts of the wind farm. Partial rebate available for cost of transmission line and collector system equipment located in SD and serving an eligible facility.
Eligible System Size:Wind farms 5 MW or greater
Start Date:7/01/2007 (facility date of operation)
Authority 1:
Date Enacted:
Date Effective:
SDCL ยง 10-35-16 et seq. (subsequently amended)
7/01/2007 (facility date of operation)

In South Dakota, wind farms constructed after July 1, 2007, are subject to an alternative taxation calculation in lieu of all taxes on real and personal property levied by the state, counties, municipalities, school districts, and other political subdivisions. The definition of "wind farm" includes only facilities producing electricity for commercial sale that have a minimum capacity of 5 megawatts (MW). All property used or constructed to interconnect individual wind turbines within a wind farm into a common project, termed the "collector system," is eligible for the exemption and alternative taxation.

The alternative taxation method has two components. The first component is an annual tax equal to $3 per kilowatt (kW) of capacity of the wind farm, prorated according to when the wind farm begins operation during the first calendar year. The second component is a 2% annual tax on the gross receipts of the wind farm. The gross receipts are calculated as the number of kilowatt-hours (kWh) produced multiplied by a base electricity rate of $0.0475 per kWh in 2008, with the base rate increasing by 2.5% annually thereafter.

A partial rebate of the taxes paid under this formula is available for the construction of transmission lines in South Dakota that serve an eligible facility. The total maximum rebate is 50% of the combined cost of the transmission lines and wind farm collector system. The maximum rebate in one year is 90% of the gross receipts tax for the first 5 years and 50% of the gross receipts tax for the next 5 years. Up to 80% of the rebate may be issued in the form of a tax credit in lieu of full payment of the gross receipts tax.

The money generated by the alternative taxation method described above will be deposited into the state's wind energy tax fund. All of the receipts from the capacity tax and 20% of the gross receipts tax will be redistributed back to the county treasurer of the county (or counties) where the wind farm is located before May of each year. The funds must be distributed among the school districts, the county, and the organized townships.

  Wendy Semmler
S.D. Department of Revenue and Regulation
Property and Special Tax Division
445 East Capitol Avenue
Pierre, SD 57501-3100
Phone: (605) 773-4923
Phone 2: (605) 773-6729
Web Site:
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Disclaimer: The information presented on the DSIRE web site provides an unofficial overview of financial incentives and other policies. It does not constitute professional tax advice or other professional financial guidance, and it should not be used as the only source of information when making purchasing decisions, investment decisions or tax decisions, or when executing other binding agreements. Please refer to the individual contact provided below each summary to verify that a specific financial incentive or other policy applies to your project.

While the DSIRE staff strives to provide the best information possible, the DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. make no representations or warranties, either express or implied, concerning the accuracy, completeness, reliability or suitability of the information. The DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. disclaim all liability of any kind arising out of your use or misuse of the information contained or referenced on DSIRE Web pages.

Copyright 2014 - 2015 North Carolina State University, under NREL Subcontract No. XEU-0-99515-01. Permission granted only for personal or educational use, or for use by or on behalf of the U.S. government. North Carolina State University prohibits the unauthorized display, reproduction, sale, and/or distribution of all or portions of the content of the Database of State Incentives for Renewables and Efficiency (DSIRE) without prior, written consent.