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26.372.16 101st Legislative Session 18
2026 South Dakota Legislature
Senate Bill 18
ENROLLED
AN ACT
ENTITLED An Act to repeal income modifications for the bank franchise tax
pertaining to bad debts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
Section 1. That § 10-1-47 be AMENDED:
10-1-47. The terms "United States Internal Revenue Code" and "Internal Revenue
Code" mean the United States Internal Revenue Code as amended and in effect on January
1, 2025. This section applies to §§ 10-4-9.1, 10-4-9.2, 10-4-9.3, 10-4-9.4, 10-4-39, 10-
6-157, and 10-43-10.1, and subdivisions 10-6A-1(7), 10-6B-1(5), 10-18A-1(6), 10-43-
10.3(5), and 10-45A-1(5).
Section 2. That § 10-43-10.2 be AMENDED:
10-43-10.2. Added to taxable income are:
(1) Interest or dividend income derived from obligations or securities of states or
political subdivisions, or authorities thereof, not included in taxable income as
determined under the Internal Revenue Code;
(2) All income taxes paid or accrued, as applicable, during the tax year under the
provisions of this chapter or under the provisions of any income tax, or franchise
or privilege taxes measured by income levied by any other state or political
subdivision to the extent that the taxes were deducted to determine federal taxable
income;
(3) Any amount received as a refund of federal income taxes during the tax year if
that amount was previously deducted in determining net income;
(4) Dividends received from other corporations to the extent that the dividends have
been deducted from net income as determined under the Internal Revenue Code;
and
(5) Any capital loss from:
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(a) Liquidating sales within the twelve -month period beginning on the date on
which a financial institution adopts a plan of complete liquidation, if all the
assets of the financial institution are distributed in complete liquidation, less
assets retained to meet claims within the twelve-month period; or
(b) The distribution of property in complete liquidation of the financial
institution that is subject to federal corporate income taxes pursuant to
§ 336 of the Internal Revenue Code.
Section 3. That § 10-43-10.3 be AMENDED:
10-43-10.3. Subtracted from taxable income are:
(1) Dividends received from financial institutions subject to taxation under this
chapter, to the extent the dividends were included in taxable income as determined
under the Internal Revenue Code;
(2) Taxes imposed upon the financial institution within the tax year, under the Internal
Revenue Code, excluding any taxes imposed under 26 USC § 1374 and 26 USC
§ 1375;
(3) Any interest expense described in §§ 291(e)(1)(B) and 265(b) of the Internal
Revenue Code, which interest expense is deductible;
(4) Any capital gain from:
(a) Liquidating sales within the twelve -month period beginning on the date on
which a financial institution adopts a plan of complete liquidation, if all of
the assets of the financial institution are distributed in complete liquidation,
less assets retained to meet claims within the twelve-month period; or
(b) The distribution of property in complete liquidation of the financial
institution that is subject to federal corporate income taxes pursuant to
§ 336 of the Internal Revenue Code;
(5) For those financial institutions making an election pursuant to 26 USC § 1362(a)
of the United States Internal Revenue Code, as defined by § 10-1-47, imputed
federal income taxes in an amount equal to the taxes that would have been paid
on net income as defined in § 10-43-10.1 had the financial institution continued to
file its federal tax return without making an election to file pursuant to 26 USC
§ 1362(a); and
(6) For those financial institutions organized as limited liability companies, imputed
federal income taxes in an amount equal to the taxes that would have been paid
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on net income as defined in § 10-43-10.1 had the financial institution elected to
file as a subchapter C corporation under the Internal Revenue Code.
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An Act to repeal income modifications for the bank franchise tax pertaining to bad debts.
I certify that the attached Act originated in
the:
Senate as Bill No. 18
Secretary of the Senate
President of the Senate
Attest:
Secretary of the Senate
Speaker of the House
Attest:
Chief Clerk of the House
Senate Bill No. 18
File No. ____
Chapter No. ______
Received at this Executive Office
this _____ day of _____________,
2026 at ____________M.
By
for the Governor
The attached Act is hereby
approved this ________ day of
______________, A.D., 2026
Governor
STATE OF SOUTH DAKOTA,
ss.
Office of the Secretary of State
Filed ____________, 2026
at _________ o'clock __M.
Secretary of State
By
Asst. Secretary of State