What is the property tax cap?

In South Dakota, there is a cap on the amount of property taxes that can be collected by government entities. This cap is also known as the revenue limit. The revenue limit is calculated using the Consumer Price Index (CPI), which is an inflation index used by the government. The CPI is used to measure the average change in prices that South Dakotans pay for goods and services from one year to the next. Each year the State Department of Revenue will calculate the revenue limit based off the previous year’s CPI. The revenue limit is also determined by several formulas based off of the amount of property taxes collected by the various government entities, such as cities, counties, and school districts. The revenue limit is set so that government entities can not collect significantly more in property taxes than they have in the past. For example, if the CPI increased by 3 percent from one year to the next, then a government entity would not be allowed to increase their property tax collection by more than 3 percent. The property tax cap is set each year in order to limit the amount of money government entities can collect in property taxes.

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