Active Pilot & 2026 Legislation
South Dakota Child Care Cost-Sharing & Tri-Share Pilot
South Dakota's HB 1197 established a Tri-Share pilot in Rapid City and Sioux Falls in 2026. Employers can stack the pilot with the Federal 45F Credit for near-zero net cost.
2026
Program Year
Active
Program Status
45F
Federal Credit Available
All
Employers Eligible
⚖️ How the Cost Split Works
Employer Pays
~33%
of total tuition
South Dakota Pays
~33%
state match
Parent Pays
~33%
of total tuition
📊 The South Dakota Savings Stack
Stack available South Dakota programs with the Federal 45F Tax Credit for maximum employer savings.
| Benefit Layer | Small Business (<$32M) | Large Business |
|---|---|---|
| State Program Benefit | Varies by program | Varies by program |
| Federal 45F Credit (2026) | 50% Tax Credit | 40% Tax Credit |
| Net Employer Cost | Significantly Reduced | Significantly Reduced |
💰 Real-World Employer Savings
| Cost Component | Without Program | With State + 45F Stack |
|---|---|---|
| Annual child care cost (per employee) | $12,000 | $12,000 |
| State Program Benefit | $0 | Varies |
| Employee Share | $0 | Reduced |
| Employer Share | $12,000 | Reduced |
| Federal 45F Credit (50% of employer share) | $0 | Significant savings |
| Net Employer Cost | $12,000 | Significantly Lower |
📋 Available Programs & Incentives
South Dakota Employer Child Care Grant Pilot
State Grant
Competitive grants for employer child care programs
Eligibility: South Dakota employers in participating communities
South Dakota Child Care Assistance Program
State Subsidy
Sliding-scale co-pay based on income
Eligibility: Families at or below 85% SMI
Federal Section 45F Credit
Federal Tax Credit
Up to 50% of employer costs (max $600K/yr)
Eligibility: All U.S. employers with qualifying child care expenses
South Dakota Shining Stars Quality Rating
State Program
Quality ratings for child care providers
Eligibility: Licensed South Dakota child care providers
Duo-Share (Employer + Employee)
Employer Benefit
Flexible split — employer covers 25–75%
Eligibility: Any South Dakota employer, no state program required
📍 Geographic Coverage
Major Cities Served
County Coverage
Rapid City (Pennington County) is the primary pilot hub. All 66 South Dakota counties are eligible for the HB 1197 pilot. Contact DSS for enrollment.
❓ Frequently Asked Questions
South Dakota has allocated funding for a competitive employer child care grant pilot program. Contact South Dakota DSS for current grant availability and eligibility requirements.
Yes — all South Dakota employers can claim the Federal Section 45F Credit regardless of state program participation. This covers up to 50% of employer child care contributions, up to $600,000 per year.
Sioux Falls, Rapid City, and Aberdeen have the highest employer participation rates. Grant programs are available statewide.
South Dakota does not have a formal Tri-Share program. We recommend a Duo-Share model for South Dakota employers — contact us for a free consultation.
South Dakota's Child Care Assistance Program serves families at or below 85% of the State Median Income (SMI). Contact South Dakota DSS for current income thresholds.
Shining Stars is South Dakota's quality rating and improvement system for child care providers. Higher-rated providers receive additional funding and are preferred partners for employer child care programs.
Contact the South Dakota Department of Social Services at dss.sd.gov for grant application information and deadlines.
📚 References & Sources
Last Updated: March 1, 2026