On February 20, 2014, South Dakota Governor Dennis Daugaard signed landmark legislation to help South Dakotan residents who build airplanes from kits.
Under S.B. 80, South Dakotans who build their own planes are effectively exempt from South Dakotan sales taxes paid on plane parts or components. Technically, they first pay the sales taxes and then claim a credit for all of the sales taxes when they pay a fee to register the finished "homebuilt" airplane with the state government. The credit is capped at around 4% of the plane's value.
South Dakotans build about 10 airplanes from scratch each year, according to Mr Doug Schinkel, director of the business tax division of the South Dakota Department of Revenue. He does not expect any significant impact on the state's tax revenues.
The tax credit is allowed only for plane components purchased in the five years before the plane's registration, in order for the tax credit to not get out of hand.