Renewable Energy System Exemption
Administered by S.D. Department of Revenue
South Dakota exempts renewable energy systems from property taxes: for systems under 5 MW, the first $50,000 or 70% of assessed value (whichever is greater) is exempt from real property tax. Geothermal thermal-only systems get a 4-year exemption for residential properties. To claim this exemption, contact your county Director of Equalization to register your eligible renewable energy facility.
Systems you install—including solar (PV, thermal, water heating), wind, geothermal heat pumps, biomass, hydro, hydrogen, and combined heat & power—qualify for South Dakota's property tax exemption if under 5 MW capacity. This means your customers' property tax liability drops significantly, improving project economics. Ensure the system is properly registered with the county Director of Equalization to apply the exemption.
This property tax incentive, established in March 2010, exempts renewable energy real property from taxation up to the first $50,000 or 70% of assessed value (whichever is greater) for systems under 5 MW across residential, commercial, industrial, and agricultural sectors. Geothermal thermal-only systems receive time-limited exemptions (4 years residential, 3 years commercial). Administration occurs at the county level through Directors of Equalization, with eligible technologies covering solar, wind, hydro, geothermal, biomass, hydrogen, combined heat & power, and anaerobic digestion.
Program details
- Program ID
- 4068
- Last updated
- 10/8/2025
Eligibility
- Sectors
- commercial industrial residential agricultural
- Technologies
- solar water heat solar space heat geothermal electric solar thermal electric solar thermal process heat solar photovoltaics wind (all) biomass hydroelectric hydrogen geothermal heat pumps municipal solid waste combined heat & power landfill gas solar pool heating wind (small) hydroelectric (small) geothermal direct-use anaerobic digestion
Program summary
In March 2010, South Dakota established a new property tax incentive that replaced two existing property tax incentives for renewable energy. Facilities that generate electricity using wind, solar, hydro, hydrogen generated by another eligible resource, or biomass resources are eligible for this incentive, as are facilities that generate other forms of energy using solar or geothermal resources.
For eligible facilities less than 5 megawatts (MW) in capacity, all real property used or constructed for the purpose of producing electricity is assessed in the same manner as other real property. However, the first $50,000 or 70% of the assessed value of eligible property, whichever is greater, is exempt from the real property tax. For geothermal systems that produce thermal energy, but not electricity, this exemption is limited to the first four continuous years for residential systems and to the first three continuous years for commercial systems.
Contact & resources
- Contact email
- proptaxin@state.sd.us
- Additional resources
Please verify current program details with the administering agency before making any financial decisions.
