May 2026: 1.09% (A+ grade)

South Dakota inventionINDEX May 2026: 1.09% (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 South Dakota inventionINDEX registered a score of 1.09% with an A+ rating in May 2026, demonstrating strong momentum as the first half of the year comes to a close. This current figure marks a notable improvement from the 1.04% score and B+ rating recorded in April 2026, and it continues a steady upward trajectory that began after a minor low point of 1.02% in January 2026. When measured against the 60-month historical baseline, the May 2026 performance sits comfortably above the state’s long-term average, which typically hovers around 1.05%. This positioning places the current period among the upper tier of South Dakota’s historical data, matching previous strong showings such as May 2025 and February 2024.

A broader evaluation of the historical timeline from May 2021 to the present highlights an innovation ecosystem characterized by moderate fluctuations within a relatively stable, compressed range. The index reached its absolute historical peak in September 2024, when it climbed to 1.14% with an A+ rating. Conversely, the historical floor occurred in February 2023, when the index dipped to 0.96%, receiving a D- rating. Another significant drop was observed in October 2025 at 0.97%. Despite these occasional pullbacks, the index has shown a strong capacity for rapid recovery, frequently transitioning from low-tier grades back into premium brackets within a matter of months.

Achieving a higher score and a premium grade like the current A+ yields several positive outcomes for South Dakota’s economic and technological landscape. An elevated score indicates a highly efficient innovation pipeline, characterized by increased patent applications, robust startup activity, and healthy capital deployment. This peak operational state acts as a strong signal to out-of-state investors, enhancing regional credibility and attracting venture capital to local enterprises. Furthermore, a thriving index promotes closer collaboration between academic institutions and private industries, fostering an environment that creates high-value jobs and retains skilled technical talent within the state.

On the other hand, a transition to lower scores and depressed ratings carries clear negative implications for the state’s competitive position. When the index falls toward the D or C ranges, it often points to underlying friction within the entrepreneurial ecosystem, such as reduced risk tolerance, funding bottlenecks, or regulatory delays. A prolonged period of low performance can chill investor enthusiasm, making it more challenging for early-stage ventures to secure necessary seed capital. Additionally, a sluggish local innovation climate risks triggering a migration of talent to more aggressive technological markets, which can slow down industrial modernization and hinder long-term economic diversification.

Discussion:

In May, 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.