South Dakota inventionINDEX March 2026: 1.08% (A+ grade)

The inventionINDEX measures innovation output by comparing GDP growth with patent production growth. 

Anything over C grade is positive sentiment; anything under C is negative outlook/sentiment. Using that sentiment, it is possible to observe trends over time, and also compare states/countries. In doing so, we can predict which states have the best chance to recover economically from the pandemic (or any other economic incident that may occur).

South Dakota inventionINDEX Scores – Last 12 months

The March 2026 South Dakota inventionINDEX score of 1.08 percent signifies a return to peak performance for the state, earning a distinguished A+ rating. This latest figure reflects a clear upward trajectory in the first quarter of the year, building upon the 1.07 percent recorded in February and representing a notable recovery from the 1.02 percent C+ rating seen in January. By reaching this level, South Dakota has matched its performance from exactly five years prior in March 2021, suggesting a durable and recurring capacity for high-level innovation during the spring season. The transition from a C+ to an A+ in just two months highlights a rapid mobilization of creative resources and intellectual property activity across the state.

An examination of the sixty-month historical data reveals that the South Dakota index is characterized by extreme sensitivity, where marginal fractional changes result in significant rating shifts. While the current 1.08 percent score is robust, it sits slightly below the five-year peak of 1.14 percent reached in September 2024. The state has demonstrated considerable resilience over the last five years, successfully navigating multiple dips into the D-range, such as the 0.96 percent low in February 2023 and the 0.97 percent recorded in October 2025. Despite these occasional fluctuations, the overall trend suggests an ecosystem that frequently rebounds to the 1.08 percent to 1.12 percent range, maintaining a competitive baseline for regional development.

The positive outcomes of securing an A+ rating are vital for South Dakota’s economic positioning. A high inventionINDEX score serves as a powerful signal to outside investors and venture capital groups that the state possesses a highly efficient environment for research, development, and the commercialization of new ideas. These periods of high performance are typically associated with increased patent filings, enhanced collaboration between academic institutions and private industry, and a more vibrant atmosphere for technology startups. By maintaining an A+ grade, the state fosters a culture of excellence that can attract high-skilled talent and encourage local enterprises to pursue ambitious, long-term technological advancements.

In contrast, the negative implications of lower scores, such as the D and C-range ratings observed periodically over the last sixty months, present significant challenges. When the index falls toward 0.96 or 1.00 percent, it often indicates a period of intellectual cooling or systemic bottlenecks in the innovation pipeline. Such downturns can lead to a more cautious investment climate and may result in a slower pace of industrial modernization. Furthermore, sustained periods of lower scores risk a migration of innovative talent to more active regional hubs, underscoring the necessity of consistent policy support and infrastructure investment to prevent the stagnation that often accompanies these numerical declines.

Discussion:

In March, the South Dakota inventionINDEX scored a positive sentiment which was higher than the previous year’s average and outperformed the upward trend for the year. This is in contrast to the prior 12 months, which experienced a slight downward trend. 

As the economy continues to stabilize in the post-pandemic era, it remains uncertain whether any backlog of applications still exists or if the department has returned to normal processing timelines. The inventionINDEX could also be affected by lingering consequences from the pandemic, such as company closures, reduced workforces, and limited R&D capabilities, which may still be impacting current operations.

Learn More:

Are you thinking of patenting any of your bright ideas? Did you know your research work could be eligible for the R&D Tax Credit and you can receive up to 14% back on your expenses? To find out more, please check out our free online eligibility test.

Swanson Reed’s South Dakota office provides R&D tax credit consulting and advisory services to Sioux Falls, Rapid City, Aberdeen, Brookings, and Watertown.

Feel free to book a quick teleconference with one of R&D tax specialists if you would like to learn more about R&D tax credit opportunities.

Who We Are:

Swanson Reed is the largest Specialist R&D tax credit advisory firm in the United States. With offices nationwide, we are one of the only firms globally to exclusively provide R&D tax credit consulting services to our clients. We have been exclusively providing R&D tax credit claim preparation and audit compliance solutions for over 30 years. 

Swanson Reed hosts daily free webinars and provides free IRS CE and CPE credits for CPAs.  For more information please visit us at www.swansonreed.com/free-webinars or contact your usual Swanson Reed representative.