It's Time to Cut SD's Food Tax

It's time to end or start phasing down the state’s grocery tax. We have known for years that this tax hurts South Dakotans. In families with limited budgets for food, the grocery tax is taking food off tables.

It seems the state now has the funds enough to consider a tax cut. The first tax cut should be on groceries! As legislators promised years ago when the food tax was going up, once the state gets sufficient funds from taxing online sales, the food tax can come down. That time has come.*

Every % off food would help. A recent study shows that even one percent off groceries reduces food insecurity.

Ask state legislators to cut the food tax.

-- 36 states and DC do not tax groceries. SD is one of only 3 taxing at the full rate with no offset. (Alabama, Mississippi, SD) Notably, none of SD’s neighbor states tax groceries, so SD loses businesses and loses tax revenue because SD’ans shop just outside our borders. This is especially extreme in the SE corner of the state.

-- Several other states have used a phase-down method to end or reduce their food tax. Examples: GA, SC, NC, and WV ended their state food tax. Arkansas and Missouri are now less than 1.5%.

-- Groceries would still be taxed by cities. (2% in most towns)

-- Revenue has grown sufficiently, especially from taxing online sales, so that we can end this unfair tax without affecting current state programs.

-- How much is your own food tax? Multiply the weekly cost of your family's food by 3.38. That's how much you would save over a year without state and city food tax.

(52 weeks x .065 sales tax rate = 3.38)

-- South Dakota is recognized as one of 5 states with the most unfairtax systems, taking a bigger share of income from struggling households than from wealthier ones. The food tax is the most regressive part of sales tax.

-- Refund programs do not work. South Dakota tried one for several years. It missed approximately 98% of low-income South Dakotans.

-- Historic note, recent history:

Over the past 18 years you have been paying higher tax on your groceries in order to make it possible for South Dakota to tax online sales. Back in 2003, tax rules were changed to follow "sales tax streamlining" rules to allow for taxing online sales, but the collateral damage was an increase in the food tax, only food. Some legislators said back then that they would cut the food tax when the state finally receives this new revenue. Now South Dakota is receiving millions in revenue from taxing online sakes. So now the legislature should recognize the sacrifice grocery shoppers have made for this and start reducing the food tax.

-- Food stamp(SNAP) purchases are not taxed (thankfully!). Does that solve the problem? No: Many low-income households do not get SNAP. Those who do are expected to buy some of their food with cash. Those who are able to increase their earnings enough to get off SNAP get a double whammy: No food assistance and now tax on all their groceries.

-- Food is a big expense for nursing homes. They need this tax relief.

-- Hunger in South Dakota: According to Feeding South Dakota, One out of every nine South Dakotans is food insecure. Worse, for children it’s one in six. These are our neighbors who do not have enough food to make it through the month. Part of their scarce income goes for the tax. Taxing groceries is only one of the causes of hunger in our state, but it is one.

-- As people of faith and as people of good will, surely we are called to respond to our neighbors in need. No one should have to pay a tax before they can eat.

Also, thousands of low-income SD workers need Medicaid expansion. The governor and state legislators are holding it in their hands. Let’s ask them to open their hands to the needy in our land. (Deuteronomy 15:11)

To find your state legislators, go to
*Below is a one-page handout that tells why food tax should get the first sales tax cut.

Info from Bread for the World-SD


1-pg Tale of 2 promises 2-10-22.pdf