South Dakota

House committee squashes half-century tax break for SD data centers

Published

3 weeks ago

February 4, 2026

House committee squashes half-century tax break for SD data centers

PIERRE — Controversial data centers built in South Dakota won’t get a sales tax break—at least not yet.

The House State Affairs committee met Feb. 4 to weigh House Bill 1005, a bill which would have given owners and operators of qualifying data centers exemptions on the state’s sales and use tax for investments made in computer software and “enterprise information technology equipment”—a wide array of computer hardware, servers, power infrastructure, maintenance and security systems.

The exemption would apply to data centers that are issued a building permit between July 1 and June 30, 2036.

Data centers are physical facilities that house servers and networking equipment, which are typically used to store, manage, process and distribute large amounts of data.

Some of the common types of modern data centers include:

AI data centers, which are specifically designed to support artificial intelligence applications;
Colocation data centers, where third-parties manage the servers and components;
Cloud data centers, where major providers, like AMS, Microsoft and Google, host cloud-based data and applications; and
Enterprise data centers, which are often used for private uses by corporations.

Particularly large data centers are sometimes known as “hyperscalers.” These facilities can cost hundreds of millions to billions of dollars and require hundreds of acres of land to build, with construction at-times occurring in multi-year phases.

The legislation would have required businesses to submit documentation to the secretary of the state Department of Revenue, who would determine if the data center’s eligibility for the tax exemption.

A data center would have been able to receive the break if it could prove the facility’s electrical demands were under a written agreement or rate schedule that avoids shifting electrical costs to other consumers; and notice was given to local water providers that the site’s water consumption was “compatible for the location,” per the bill’s language. Data center owners would have also had to file an annual affidavit that discloses whether the business continues to meet the eligibility criteria.

However, those documents would have been considered confidential under the proposed legislation.

The bill was rejected by the committee, with nine members voting for and three against the legislation. Sioux Falls Republican Bethany Soye was excused from the vote.

Supporters of the legislation told committee members the sales tax break was essential to give data center investors and developers enough incentive to build in the Mount Rushmore state.

State Rep. Kent Roe, R-Hayti, who drafted the legislation, urged the committee to green-light the tax break on the premise that the state would reap a bounty of benefits—from “immense” property tax revenue and the creation of new high-quality jobs, to diversifying the state’s economic makeup.

Roe said other states have already legislated or otherwise implemented sales tax exclusions, and South Dakota needs a similar policy to remain competitive.

“We tax this technology higher than most,” Roe said. “That’s the truth. President Trump has stressed America’s need to lead. Our senators and congressmen highlight AI’s role in health care and national security. This is a national concern.”

Data center lobby uses well-worn revenue pitch

Steve DelBianco, president of NetChoice, a D.C. e-commerce trade group, threw out big numbers to buoy the benefits argument. Over the next 10 years, he projected $333 milllion of new property tax revenue to South Dakota from data centers alone.

For Jay Grabow, chair of the Deuel County Commission, the existential crisis his area faces is real. In 1920, per historical U.S. Census publications, Deuel County once called 8,759 people local inhabitants. Fast-forward to 2024, the county’s population has more-than-halved to 4,335, according to the U.S. Census Bureau.

Some of that Grabow attributes to the farming industry becoming more efficient over time—driving people per acre down—and the loss of at least one 200-employee business.

That means increased taxes over a smaller taxable population, Grabow said. And it also means Dallas-based Applied Digital, which is proposing a 430 megawatt AI data center east of Toronto, South Dakota, is, in the commissioner’s eyes, a means to lowering property taxes.

“We’re merely trying to keep what we had, merely trying to figure out a better way to do property taxes than to burden it on the people,” Grabow said. “If we can spread that across a $400 million billing, we have $1.1 billion of assets today. That’s a nearly-40% increase on our assets that we can spread those taxes across. That’s a 10 to 15% property tax [cut] across the board for those people.”

The economic windfall arguments resembled the debate over carbon pipelines over the last several years, when pipeline companies and some analysts projected an Iowa company’s transmission line could generate billions in the state and lower local taxes, as seen in previous Argus Leader reporting.

DelBianco said businesses and governments have increased their use of the cloud in recent years. The tech industry is tasked with building 50 data centers a year to keep up with U.S. demand, he added.

But the supply can’t be met if South Dakota doesn’t give developers and businesses a big-enough carrot to offset the significant capital investments they would make, DelBianco said.

Nick Phillips, executive vice-president for external affairs of Digital Applied, said South Dakota has been “unintentionally tax[ing] itself out of this market” under the current tax policy.

“The siting decision is binary,” Phillips said. “A project is built here or it is built somewhere else … Other states are capturing the investment, the jobs, and the long-term tax base.”

“The truth is that it’s just fiscally irresponsible to spend a billion dollars on a data center and have the equipment [that] goes in there, be subject to sales tax, when a billion dollar manufacturing, agricultural, another facility doesn’t pay sales tax on its equipment,” DelBianco added . “There are 40 states that exempt the equipment, so we have to pick the states that welcome through that policy.”

Data center opposition says tech threatens South Dakota’s largest industry

But opponents viewed the Big Tech push as an infringement upon South Dakota’s already No. 1 industry: agriculture.

Michelle Oftedahl, a Toronto, South Dakota, farm owner who lives a few miles away from Applied Digital’s proposed data center, spoke to the “unintended consequences” of boosting data centers. Farmland often out-prices what young farmers can afford to break into the ag industry, Oftedahl said, but it’s not too much for corporations with billions of dollars to spare.

Incentivizing data centers, the fifth-generation farmer added, would give rise to companies “buy[ing] land up cheap, knowing that they can cash in on possible future expansion projects, such as power plants, substations, and transmission lines, things that are needed to support the high amount of energy production required.”

“Encouraging large-scale economic development like data centers risks discouraging many young people from choosing agriculture for their future,” Oftedahl said. “This isn’t simply a vote about a sales tax exemption. It’s a statement about our values. Is South Dakota still first and foremost an ag state, or is large industrial economic [sic] now more important?”

Sara Steever, a retired Lennox resident who formerly led Sioux Falls agri-marketing agency Paulsen, questioned whether companies “worth billions and trillions of dollars” needed the tax breaks.

“Turns out that the fact that we can provide access to the megawatts of energy that is needed is tremendously valu[able],” Steever said as a remote testifier. “These companies don’t need tax breaks. They need connectivity, which we already have.”

Dakota Rural Action Lobbyist Melissa McCauley said the bill would lead to a “huge miss on revenue” for the state, given what she perceived as the broad nature of the proposed exemption.

“We are concerned that nearly everything needed to outfit the data center down to its door locks, security cameras, and even the cost of laying the fiber to the center would be exempt,” McCauley said. She asked openly whether a fiscal note should be added to the bill.

Tax break eligibility would not be public record under Roe bill

The stipulation that a data center’s eligibility documents would not be public record rankled opponents—some lawmakers, too.

Austin Adee, a Deuel County resident, said that section of the bill would create an “NDA-shielded secret court.” House Speaker Jon Hansen, who is running for South Dakota governor in 2026, raked the measure over this.

“This particular measure lacks transparency,” said House Speaker Jon Hansen. “The information goes to the secretary of the Department of Revenue, who can unilaterally decide without real qualification whether or not there’s going to be a tax break or not, whether or not rates are going to pass on, whether rate increases are going to pass on to consumers, and the people aren’t entitled to see any of the documentation that supports that decision. I think that’s wrong.”

The bill split the few Democrats on the committee, with Rosebud State Rep. Eric Emery supporting the legislation and House Minority Leader Erin Healy, of Sioux Falls, against it.

Emery asked Roe if the initiative behind the data center push included any guarantees that they would bring the promised jobs and wage-growth, to which Roe responded, “there’s no guarantees.”

Roe expounded upon this later, though, by pointing to the property tax revenue Applied Digital would likely bring to Deuel County—”north of $5 million” per annum, the Hayti lawmaker said, which is close to half of the county’s total budget.

At one point, Emery made a motion to send HB 1005 to the floor without a recommendation from the committee. Assistant Majority Leader of the House Marty Overweg spurned the idea, calling it “bad committee policy.” The motion died on a 5–7 vote.

Healy noted the day’s hearing lacked testimony from Sioux Falls stakeholders, despite a surge of public input in the city.

“I do believe that there is potential economic impact for data centers, but I also believe that economic development should never move faster than public input and transparency and also accountability,” Healy said.

House members will likely have to take up the debate once more during the 101st Legislative Session, as State Sen. Casey Crabtree, a Madison Republican who works for an area energy provider, filed a similar bill in the hours after the committee’s Feb. 4 decision.

The new legislation, a self-titled “Data Center Bill of Rights for Citizens”—akin to Crabtree’s 2024 “Landowner Bill of Rights,” which offered concessions to carbon pipeline opponents in order to ease pipeline development in South Dakota—also intends to exempt data centers from paying a sales and use tax for purchases made in developing a site, while also clarifying regulatory authority and preventing electric rate shifts onto consumers.

Crabtree’s bill does not provide an end-date on the sales and use tax exemption.

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South Dakota

SD Lottery Mega Millions, Millionaire for Life winning numbers for Feb. 27, 2026

Published

10 hours ago

February 28, 2026

Press Room

The South Dakota Lottery offers multiple draw games for those aiming to win big.

Here’s a look at Feb. 27, 2026, results for each game:

Winning Mega Millions numbers from Feb. 27 drawing

11-18-39-43-67, Mega Ball: 23

Check Mega Millions payouts and previous drawings here.

Winning Millionaire for Life numbers from Feb. 27 drawing

03-04-13-28-42, Bonus: 02

Check Millionaire for Life payouts and previous drawings here.

Feeling lucky? Explore the latest lottery news & results

Are you a winner? Here’s how to claim your prize

Prizes of $100 or less: Can be claimed at any South Dakota Lottery retailer.
Prizes of $101 or more: Must be claimed from the Lottery. By mail, send a claim form and a signed winning ticket to the Lottery at 711 E. Wells Avenue, Pierre, SD 57501.
Any jackpot-winning ticket for Dakota Cash or Lotto America, top prize-winning ticket for Lucky for Life, or for the second prizes for Powerball and Mega Millions must be presented in person at a Lottery office. A jackpot-winning Powerball or Mega Millions ticket must be presented in person at the Lottery office in Pierre.

When are the South Dakota Lottery drawings held?

Powerball: 9:59 p.m. CT on Monday, Wednesday, and Saturday.
Mega Millions: 10 p.m. CT on Tuesday and Friday.
Lucky for Life: 9:38 p.m. CT daily.
Lotto America: 9:15 p.m. CT on Monday, Wednesday and Saturday.
Dakota Cash: 9 p.m. CT on Wednesday and Saturday.
Millionaire for Life: 10:15 p.m. CT daily.

This results page was generated automatically using information from TinBu and a template written and reviewed by a South Dakota editor. You can send feedback using this form.

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South Dakota

Feeding South Dakota

Published

23 hours ago

February 27, 2026

Press Room

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South Dakota

SD Lottery Millionaire for Life winning numbers for Feb. 26, 2026

Published

1 day ago

February 27, 2026

Press Room

The South Dakota Lottery offers multiple draw games for those aiming to win big.

Here’s a look at Feb. 26, 2026, results for each game:

Winning Millionaire for Life numbers from Feb. 26 drawing

03-14-22-50-57, Bonus: 04

Check Millionaire for Life payouts and previous drawings here.

Feeling lucky? Explore the latest lottery news & results

Are you a winner? Here’s how to claim your prize

Prizes of $100 or less: Can be claimed at any South Dakota Lottery retailer.
Prizes of $101 or more: Must be claimed from the Lottery. By mail, send a claim form and a signed winning ticket to the Lottery at 711 E. Wells Avenue, Pierre, SD 57501.
Any jackpot-winning ticket for Dakota Cash or Lotto America, top prize-winning ticket for Lucky for Life, or for the second prizes for Powerball and Mega Millions must be presented in person at a Lottery office. A jackpot-winning Powerball or Mega Millions ticket must be presented in person at the Lottery office in Pierre.

When are the South Dakota Lottery drawings held?

Powerball: 9:59 p.m. CT on Monday, Wednesday, and Saturday.
Mega Millions: 10 p.m. CT on Tuesday and Friday.
Lucky for Life: 9:38 p.m. CT daily.
Lotto America: 9:15 p.m. CT on Monday, Wednesday and Saturday.
Dakota Cash: 9 p.m. CT on Wednesday and Saturday.
Millionaire for Life: 10:15 p.m. CT daily.

This results page was generated automatically using information from TinBu and a template written and reviewed by a South Dakota editor. You can send feedback using this form.

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