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South Dakota Opts Into Trump鈥檚 Education Tax Credit Program

South Dakota Education Secretary Joe Graves said the program will support education innovations and a 'robust competitive system.'

South Dakota Gov. Larry Rhoden speaks to media during an announcement at the St. Joseph Academy in Sioux Falls on Nov. 11, 2025. State Education Secretary Joe Graves (left), Lt. Gov. Tony Venhuizen (right) and St. Joseph Academy students stand around him. (Photo by Makenzie Huber/South Dakota Searchlight)

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South Dakota is the to commit to President Donald Trump鈥檚 federal education tax credit program, Republican Gov. Larry Rhoden announced Friday in Sioux Falls.

Under the program, South Dakotans who owe federal income taxes can either send up to $1,700 to the federal government, or they can donate that $1,700 to a government-recognized scholarship granting organization to public, private or homeschool entities in the state. The program starts in 2027.

Nebraska鈥檚 Republican Gov. Jim Pillen in September. Republican governors for North Carolina and Tennessee announced their commitment this summer. Oregon, New Mexico and Wisconsin officials said to opt into the program. Some critics nationally have questioned whether there will be proper in place.

Rhoden called the imminent program a 鈥渨inning situation鈥 for South Dakota taxpayers.

鈥淚鈥檇 just as soon give those dollars to a private school than Uncle Sam,鈥 Rhoden said at the announcement, standing in front of a row of students attending the St. Joseph Academy. 鈥淚 think they know how to spend it a little wiser than the federal government.鈥

Rhoden added that the federal tax credit will 鈥減air well鈥 with South Dakota鈥檚 existing tax credit program, which allows insurance companies to donate up to a total of $5 million to a private school scholarship program for students whose families have low incomes.

South Dakota Gov. Larry Rhoden (left) and First Lady Sandy Rhoden (right) speak to St. Joseph Academy students in Sioux Falls on Nov. 11, 2025. (Photo by Makenzie Huber/South Dakota Searchlight)

The program will further support the state鈥檚 , Rhoden said, including homeschooling and microschools popping up throughout the state. Alternative instruction enrollment has , making up about 7% of school-age children in the state.

Sara Hofflander, founder of St. Joseph Academy, said the school is 鈥済rateful鈥 for the potential extra funding, though she plans to 鈥渁pproach everything cautiously.鈥

鈥淩unning an independent school obviously requires a heavy commitment from families,鈥 Hoffman said, adding that the extra funding would 鈥渓ift some of that burden, so we can focus more on the needs of our students.鈥

Historically, 鈥渟chool choice鈥 efforts in the state have met resistance from the public school industry.

Advocates vehemently fought former Gov. Kristi Noem鈥檚 effort to , which would have provided public funding for private education and homeschool options during the last legislative session, calling the failed effort an . Those same advocates referred to the state鈥檚 education tax credit program as 鈥.鈥

But Rob Monson, executive director for the School Administrators of South Dakota, said the program will benefit public and private education. South Dakotans can direct their tax credit dollars to organizations representing public schools in the state. The on not only tuition and fees for private schools, but tutoring, special needs services for students with disabilities, transportation (such as busing), afterschool care and computers.

鈥淭hat鈥檚 a huge win for taxpayers of South Dakota, but also every form of education across the state,鈥 Monson said.

South Dakota Education Secretary Joe Graves said the program will support education innovations and a 鈥渞obust competitive system.鈥

Graves told lawmakers on Thursday, while , that 鈥渋nnovation鈥 would be key to improving student outcomes, especially for Native American students and children living in 鈥渆ducation deserts.鈥

鈥淲e鈥檙e not doing well enough, and we need to do better,鈥 Graves said at Friday鈥檚 announcement.

If more students attend private or alternative schooling options, that would mean less state funding for public schools because of decreased student enrollment. Monson told South Dakota Searchlight that state revenues could be impacted by participation in the tax credit program, since it would remove federal tax dollars used to support other programs or go toward states. The federal government would still be obligated to fund some federal education programs, Monson added.

The scholarship funds would be available to families whose household incomes do not exceed 300% of their area鈥檚 median gross income. The U.S. Department of Treasury is expected to issue proposed rules detailing the program鈥檚 operation.

Graves said he assumes there will be reporting 鈥渁t some level鈥 of how the funds are spent.

is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. South Dakota Searchlight maintains editorial independence. Contact Editor Seth Tupper for questions: [email protected].

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