South Dakota inventionINDEX September 2026: 1.07% (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 for September 2026 reached 1.07% with an A rating, consolidating a period of exceptional performance across the state’s innovation pipeline. This latest mark follows an impressive peak in August 2026, where the score climbed to 1.17% with an A+ rating, representing the highest single measurement recorded over the entire 60-month dataset. Throughout mid-2026, South Dakota sustained a remarkable surge, securing top-tier A+ grades across May (1.09%), June (1.08%), July (1.09%), and August (1.17%). This extended rally highlights a powerful growth trajectory following the minor deceleration observed at the start of the year in January 2026 (1.02%, C+).

Examining the historical data from September 2021 through September 2026 reveals a distinct cyclical pattern around a five-year average score of approximately 1.05%. The current 1.07% score positions South Dakota comfortably above its historical baseline and significantly ahead of prior low points in the timeline. The dataset records notable contractions in February 2023, when the index dipped to an all-time low of 0.96% (Grade D-), and in October 2025, when it fell to 0.97% (Grade D). While previous years experienced impressive isolated peaks—such as September 2024 at 1.14% and August 2023 at 1.13%—the sustained momentum achieved in 2026 reflects greater overall stability and higher baseline output than in earlier reporting cycles.

Sustaining a high score and securing A or A+ ratings brings substantive advantages to South Dakota’s economic and research landscape. Scores exceeding 1.07% indicate a thriving ecosystem driven by robust patent filings, high commercialization rates, and active research initiatives across regional institutions. A strong score serves as a positive indicator for external investors, helping attract venture capital, federal research grants, and corporate investment into the region. Furthermore, top-tier ratings bolster the state’s reputation as a growing technology hub, encouraging local talent retention and attracting skilled professionals to regional industries.

Conversely, a decline into lower score thresholds introduces notable strategic and operational challenges. Historical periods where the score dropped below 1.00%—such as June 2023, February 2025, and October 2025—signal contraction in inventive activity, potential delays in commercialization pipelines, or broader macroeconomic headwinds affecting R&D expenditure. Prolonged periods of lower scores risk diminishing South Dakota’s competitive edge relative to neighboring regional economies, potentially leading to reduced venture capital inflows and reduced institutional funding. Monitoring these fluctuations enables policymakers and industry leaders to deploy targeted incentives, support research infrastructure, and address underlying barriers to local innovation.

Discussion:

In September, 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 similar to the prior 12 months, which experienced a slight upward 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.