Empower South Dakota families and help students thrive. While South Dakota’s state tax-credit program has historically been closed to individual residents, the new federal tax credit program is opening exciting new pathways to fund local K-12 scholarships.
State tax credit details
At the state level, South Dakota’s SGO tax credit program is restricted strictly to insurance companies. This means individual taxpayers and married couples cannot claim state tax credits for personal redirects.
Applicable federal rules
The federal Section 25F program launching in January 2027 provides a direct solution for South Dakota individuals. You can redirect up to $1,700 of your federal tax liability and receive a 100% dollar-for-dollar federal tax credit directly. Since South Dakota does not offer an individual state SGO tax credit to offset your federal credit, you can claim the full federal tax credit, provided the state officially opts into the program.
FAQs for families and donors
How does the priority framework work for families?
Scholarship granting organizations must follow a federal prioritization model. When awarding scholarships, organizations must consider prior-year recipients first, followed by siblings of current recipients, before opening the application pool to new families.
How do SGOs verify household income?
To keep the process simple but secure, organizations can verify household income using standard documents like paystubs, tax returns, W-2 forms, or documentation showing participation in needs-based federal or state programs.
Are my redirected funds protected from fraud?
Yes. SGOs must hold qualified contributions in separate, segregated accounts and are required to obtain annual financial and programmatic audits conducted by qualified, independent third parties to verify compliance.
