South Dakota Education Funding Programs for Parents: What They Are and Who Can Apply

Quick answer: South Dakota does not have an education savings account or voucher program. Its main program is the Partners in Education Tax Credit Program, created in 2016 under SDCL chapter 13-65. Insurance companies receive a premium tax credit of up to 100 percent for contributions to a nonprofit Scholarship Granting Organization, which awards tuition scholarships to South Dakota K-12 students attending accredited nonpublic schools. Students qualify with household income up to 200 percent of the free or reduced-price lunch income standard, or if they are in foster care. Total credits are capped at $5 million per year, and South Dakota Partners in Education reported an average scholarship of $2,457 in 2025-26. Homeschool students are not covered.

South Dakota takes a narrower approach to school choice funding than many of its neighbors. Instead of putting state money into accounts that parents control, the state uses a tax credit to encourage insurance companies to donate to private school scholarships. For a broader look at how this model compares with ESAs and vouchers across the country, see our overview of state education funding programs for parents.

This guide covers what the South Dakota program is, who can apply, how the money reaches schools, its limits and what families who homeschool should know instead.

Sources: South Dakota Codified Laws chapter 13-65 (Partners in Education Tax Credit Program) and § 13-27-3 (alternative instruction); the South Dakota Division of Insurance Partners in Education Tax Credit Program page; South Dakota Partners in Education program overview; and the South Dakota Department of Education home schooling page. Program details and figures change. This is general information, not legal or tax advice. Last verified October 2026.

South Dakota's Programs at a Glance

Program	Type	Who it serves	Key limits
Partners in Education Tax Credit Program	Tax credit scholarship	K-12 students in South Dakota attending accredited nonpublic schools, with household income up to 200% of the free or reduced-price lunch standard, or in foster care	$5 million annual statewide credit cap; tuition and fees only
Alternative instruction (homeschool)	Not a funding program	Families teaching at home under SDCL 13-27-3	No state money; one-time notification to the Department of Education or local district

South Dakota lawmakers have debated education savings accounts. A 2025 proposal, House Bill 1020, was deferred in the House Education Committee, which ended it for that session. As of October 2026, no ESA or voucher law is in effect, so the tax credit program is the main option.

How the Partners in Education Tax Credit Program Works

The program was created by Senate Bill 159 in the 2016 legislative session and is codified at SDCL 13-65. South Dakota Partners in Education describes it as the nation’s 21st tax credit scholarship program. It began awarding scholarships in the 2016-17 school year.

The Money Comes From Insurance Companies

Unlike tax credit programs in states such as Oklahoma or Iowa, where families claim credits on their own returns, South Dakota’s credit goes to businesses. Under SDCL 13-65-2, any company that owes South Dakota’s insurance company premium and annuity tax may claim a credit for contributions made to a Scholarship Granting Organization, or SGO. The credit can equal up to 100 percent of the contribution.

The law caps total credits at $5 million in fiscal year 2025 and each year after. Each year, the Division of Insurance, part of the Department of Labor and Regulation, divides the available credits among participating SGOs based on the enrollment of the schools each SGO works with.

The Scholarship Granting Organization

An SGO is a 501(c)(3) nonprofit that collects contributions and awards scholarships. South Dakota Partners in Education is the main SGO for the program. State law requires each SGO to:

• spend at least 90 percent of contribution revenue on scholarships;
• carry forward no more than 25 percent of contribution revenue to the next fiscal year;
• verify each year that participating schools are accredited by the Department of Education;
• keep scholarships portable during the school year, so a student can move to another qualifying school and the amount may be prorated;
• report contributions, awards and the share of first-time recipients who came from public school;
• keep a board of at least five South Dakota residents and a staffed office in the state.

A qualifying school may sign a participation agreement with only one SGO each school year, and agreements for the next year must be completed by November 15.

How Scholarships Are Paid

Families do not receive cash or an account. Under SDCL 13-65-4, the SGO issues scholarship payments as checks made out to the student’s parent and mailed to the school where the student is enrolled. The parent endorses the check over to the school before it is deposited.

Who Can Get a Scholarship

SDCL 13-65-1 defines an eligible student as a child entering kindergarten through 12th grade who lives in South Dakota while receiving the scholarship and who meets one of two tests.

Income Test

The household’s total income in the year before the student enters the program must not exceed 200 percent of the income standard used to qualify for free or reduced-price lunch under the National School Lunch Program. The reduced-price lunch standard is set at 185 percent of the federal poverty guidelines, so the limit is well above the poverty line. Ask South Dakota Partners in Education for the current dollar figures for your household size before you assume you are over or under.

Once a student qualifies, the student remains income eligible for three years, or through high school graduation if entering high school, regardless of later household income, as long as funding is available. After that initial period, the student stays eligible if prior-year household income does not exceed 250 percent of the same standard.

The law also defines a “low-income eligible student” as one from a household at or below 100 percent of the free or reduced-price lunch standard, and SGOs must report how many scholarships go to these students.

Foster Care

Students in foster care qualify regardless of household income.

School Requirements

The scholarship can be used only at a qualifying school. Under the law, that means a nonpublic school operating in South Dakota, or a tribally controlled school on a federally recognized reservation in the state, that:

• is accredited by the South Dakota Department of Education;
• serves elementary or secondary students;
• has notified an SGO that it will participate and follow program rules;
• does not receive a majority of its revenue from public funds.

South Dakota Partners in Education reported 48 participating schools in 2025-26.

How Much the Scholarships Are Worth

The program does not set a fixed award. State law limits the average value of all scholarships an SGO awards to the “per student equivalent” defined in SDCL 13-13-10.1, which is the state’s school funding figure. Individual awards depend on available contributions, the school’s tuition and fees and the SGO’s policies.

South Dakota Partners in Education reported serving 1,783 students in 2025-26 with an average scholarship of $2,457. The Division of Insurance notes that the number and size of scholarships vary and can depend on how much money is contributed.

Scholarships cover tuition and fees at qualifying schools. They are not flexible accounts, so they cannot be used for tutoring, therapy, curriculum or other expenses outside the school’s tuition and fees.

Planning for the Gap

Because the average award is far below typical private school tuition, most families should expect to pay part of the cost themselves. Ask the school for its full tuition and fee schedule, any parish or member rates and any need-based aid it offers on its own. Then compare that total with a realistic scholarship estimate from the SGO.

Responsibilities of Families

SDCL 13-65-6 spells out what parents and students agree to when they participate:

1. Choose a school and apply for admission. The parent selects a qualifying school and applies there. Admission is up to the school.
2. Stay enrolled. The student must remain in attendance at the school throughout the year, unless excused for illness or other good cause, or unless the student transfers to another school.
3. Follow school policies. Families must comply with the school’s published policies.
4. Take required tests. The student must take the norm-referenced tests or statewide assessments the school administers.
5. Endorse the scholarship check. The parent endorses each payment to the school for deposit.

The law also states that the program does not expand the state’s regulatory authority over nonpublic schools beyond what is needed to enforce the program.

How to Apply

Applications go through the SGO, not the state. A typical sequence looks like this:

1. Pick a participating school and confirm it is accredited and working with the SGO this year.
2. Apply for admission to the school.
3. Gather income documents for the prior year, such as tax returns and wage statements, or foster care documentation.
4. Submit the scholarship application through South Dakota Partners in Education, following the dates and instructions in its current parent handbook.
5. Watch for an award notice and confirm the amount with the school’s business office.
6. Reapply or renew as instructed in later years, keeping in mind the 250 percent continued-eligibility limit after the initial period.

Because the statewide cap limits the total money available, applying early and completing the file promptly can matter. Our general guide on applying for a state education savings account has a document checklist that also works well for scholarship programs.

What South Dakota Homeschool Families Should Know

The Partners in Education program does not cover homeschool students, and South Dakota has no state program that pays for home education costs. If you are deciding between programs in different states, our guide on whether homeschoolers can use state education funds shows which states do include them.

Homeschooling in South Dakota is called alternative instruction. Under SDCL 13-27-3, parents file a notification with the Department of Education or the local district stating that the child is receiving alternative instruction in the basic skills of language arts and mathematics. Several features stand out:

• One-time notice. According to the Department of Education, parents submit a notification once for each child, using the department’s online system or a paper form, unless the child’s status changes.
• Updates within 30 days. Parents file an updated notification within 30 days if the child moves to or open enrolls in another district while still homeschooling, or stops homeschooling.
• No certification required. The person providing instruction does not need to be certified.
• Class size limit. No one may instruct more than 22 children.
• English mastery. Instruction must lead to mastery of the English language.

The state also offers some practical benefits. Under SDCL 13-34-23, school districts loan textbooks without charge to people ages 5 to 19. Under SDCL 13-36-7, public school districts must allow alternative instruction students to participate in athletics, fine arts and other activities in the district where they live, subject to the same eligibility rules as enrolled students. Homeschool students may also join the state’s reduced-tuition dual credit program if they have an Alternative Instruction Notification on file and complete a memorandum of understanding with the Department of Education.

For an overview of how rules differ by state, see our guide to homeschool laws by state.

How South Dakota Compares With Neighboring States

South Dakota’s approach is limited compared with some nearby states. Iowa’s Students First ESA pays $8,148 in 2026-27 to every Iowa resident student enrolled full time in an accredited nonpublic school, with no income limit, and Iowa also offers a Tuition and Textbook Credit of up to $500 per child. Wyoming and Missouri have their own programs with different rules. If you are thinking about a move, remember that eligibility depends on residency in each state.

Pros and Cons for Families

Advantages

• Statewide program with no enrollment cap.
• Initial eligibility protects students for three years, or through high school, even if income rises.
• Scholarships are portable between qualifying schools during the year.
• Testing runs through the school’s own norm-referenced or statewide assessments.

Drawbacks

• No help for homeschool families.
• A $5 million annual cap limits the total number and size of awards.
• Average awards cover only part of typical private school tuition.
• Only accredited nonpublic schools that participate with the SGO qualify.

The Bottom Line

South Dakota parents looking for help with private school tuition should start with the Partners in Education Tax Credit Program. Check the income limits for your household size, confirm your school participates and apply through the SGO as early as possible. Homeschool families will not find state funding, but they do have a simple notification process, access to textbook loans, activities and dual credit.

Frequently Asked Questions

Does South Dakota have an education savings account?

No. As of October 2026, South Dakota does not have an ESA or voucher program. A 2025 ESA bill was deferred in committee.

Who runs South Dakota's school choice scholarship?

The Partners in Education Tax Credit Program is overseen by the Division of Insurance, and scholarships are awarded by Scholarship Granting Organizations such as South Dakota Partners in Education.

What is the income limit?

Initial eligibility is household income up to 200 percent of the free or reduced-price lunch income standard. Students in foster care also qualify.

How much is the average scholarship?

South Dakota Partners in Education reported an average scholarship of $2,457 in 2025-26.

Can homeschoolers in South Dakota get funding?

No. The program covers tuition and fees at accredited nonpublic schools only.