June 2026: 1.08% (A+ grade)

South Dakota inventionINDEX June 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).

Historical South Dakota inventionINDEX Scores

The South Dakota inventionINDEX score for the past 12 months is shown in the table below.

The South Dakota inventionINDEX has demonstrated remarkable consistency and strength in recent months, culminating in a robust score of 1.08% and a top-tier A+ rating in June 2026. This performance aligns closely with the prior month of May 2026, which registered a slightly higher score of 1.09%, and reflects a substantial recovery from the lower 1.02% score observed at the start of the year in January 2026. When compared against the broader historical trend, the current metrics highlight a period of elevated productivity that places the state well above its long-term baseline. This steady rise throughout the spring of 2026 demonstrates a resilient pattern of growth, signaling that recent regional initiatives and investments in research and development are yielding highly favorable returns compared to more volatile periods in the past.

A deeper evaluation of the historical data reveals that the index has navigated several distinct cyclical fluctuations over the last five years, maintaining a historical average of approximately 1.05%. The current score of 1.08% compares favorably to major historical benchmarks, standing well above the lowest recorded dip of 0.96% in February 2023, which yielded a D- rating. While the current score does not quite match the historical peak of 1.14% achieved in September 2024, it indicates a healthy stabilization within the upper tier of the index’s historical range. This long-term perspective underscores the fact that South Dakota is presently maintaining a position of competitive advantage, successfully avoiding the prolonged down-cycles that characterized late 2021 and early 2023.

Achieving a higher grade and elevated score on the index carries several positive outcomes that are vital for the regional economic landscape. Superior ratings, such as the consecutive A+ grades observed in mid-2026, reflect an expanding innovation ecosystem characterized by high levels of patent activity, technological advancement, and entrepreneurial engagement. These favorable marks serve as a powerful signal to venture capitalists, corporate partners, and skilled professionals, enhancing the state’s capacity to attract external investment and high-value talent. Furthermore, an elevated index level correlates with increased productivity, commercialization potential for new technologies, and long-term job creation, thereby solidifying South Dakota’s economic resilience and industrial diversity.

Conversely, the negative implications of a lower score and depressed ratings present significant challenges for the state’s economic development. When the index falls into the lower tiers, as seen during the historical contractions below the 1.00% threshold in October 2025 or February 2023, it implies a stagnation or decline in inventive output and localized research. Such declines can discourage capital allocators, leading to reduced funding for startup enterprises and slowed commercial development of emerging technologies. Additionally, persistent lower scores risk creating a competitive gap between South Dakota and neighboring states, potentially leading to a migration of intellectual talent and a slower pace of industrial modernization that could hinder future economic expansion.

Discussion:

In June, 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.