April 2026: 1.04% (B+ grade)

South Dakota inventionINDEX April 2026: 1.04% (B+ 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 South Dakota inventionINDEX for April 2026 stands at 1.04 percent, carrying a B plus rating. This performance indicates a slight cooling following a strong surge at the start of the year, where March and February achieved scores of 1.08 percent and 1.07 percent respectively. Despite this minor dip, the current rating remains superior to the 1.02 percent recorded in January 2026. This stability suggests that the state’s innovation ecosystem is maintaining a solid baseline as it moves into the second quarter of the year, avoiding the deeper contractions seen in previous autumn cycles.

Taking a broader view of the last sixty months, South Dakota’s innovation metrics reveal a pattern of persistent, narrow-band fluctuation. The current score is situated comfortably between the five-year peak of 1.14 percent reached in September 2024 and the historical low of 0.96 percent observed in February 2023. While the state frequently touches the A plus threshold, it also experiences periodic descents into the D range, such as the 0.97 percent recorded in October 2025. This long-term trend highlights a resilient but sensitive environment where small shifts in percentage points can lead to significant changes in the overall rating and perceived economic momentum.

Achieving a higher grade, particularly in the A to A plus range, generates several beneficial outcomes for the South Dakota economic landscape. Elevated index scores serve as a primary indicator of a healthy research and development sector, often leading to increased confidence from private equity and venture capital firms. When the state demonstrates peak innovation performance, it fosters a more robust pipeline for patent applications and the commercialization of new technologies. Furthermore, these high-tier ratings help the state attract and retain top-tier scientific and engineering talent, which is vital for long-term industrial diversification and growth.

Conversely, a lower index score carries distinct negative implications for the state’s future competitive standing. Ratings in the C or D range often signal a slowdown in the development of intellectual property or a bottleneck in the funding of early-stage startups. If the score remains depressed, it may result in a more cautious approach from institutional lenders and a potential loss of momentum in high-growth sectors. Over time, sustained lower grades risk placing South Dakota at a disadvantage compared to regional competitors, potentially leading to a migration of innovative projects and personnel to areas with more dynamic and highly rated ecosystems.

Discussion:

In April, the South Dakota inventionINDEX scored a positive sentiment which was higher than the previous year’s average but underperformed 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.