While discussion of the inheritance tax has been popular at the national level during this election cycle, state residents will get the chance to vote on whether to eliminate the state-level inheritance tax in a November referendum. The tax, collected since 1915, is the state's seventh largest income generator.
In a given year, a little more than 3,000 estates in South Dakota are subject to the tax, and after various exemptions are taken into account, only about half pay any taxes. For those owing inheritance tax, the cost typically averages 5 percent of an estate's value.
At about 3 percent of the state's annual tax budget of $900 million, the inheritance tax last year generated more than $26 million, 90 percent of which goes to the state's general fund, and 10 percent to local governments. More than half of the $26 million total came from out-of-state heirs.
