July 2025: 1.02% (C+ grade)

South Dakota inventionINDEX July 2025: 1.02% (C+ 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

Based on the provided historical data for the last 60 months, the South Dakota inventionINDEX demonstrates a pattern of significant fluctuation, yet remains within a generally consistent range. The most recent score for July 2025 stands at 1.02%, earning a C+ rating, which marks a slight decrease from the previous month’s high of 1.09% in May 2025. This recent trend indicates a period of slight moderation following a strong performance. Over the entire five-year period, the scores oscillate between a low of 0.96% (D-) and a high of 1.20% (A+), suggesting that while the state’s innovation engine has moments of exceptional strength, it also faces recurring challenges that temper its overall performance.

Periods of high performance, marked by scores in the A or A+ range, consistently indicate a healthy and robust innovation ecosystem. For example, the exceptional 1.20% score in February 2021 and the numerous A+ ratings since then suggest times when the state’s patent production and intellectual property growth were likely at their peak. A high inventionINDEX score and a corresponding top-tier rating can attract new business investment, foster a culture of technological advancement, and serve as a powerful indicator of future economic growth. These periods reflect a state where research and development efforts are not only active but also successfully translating into valuable, protected intellectual assets.

Conversely, a lower inventionINDEX score carries negative implications for the state’s innovation standing. Scores in the C and D range, such as the 0.96% in February 2023 or the 0.98% in June 2025, suggest potential slowdowns in key areas of innovation. A lower score may point to a decline in new patent applications, a reduced rate of R&D investment, or a weakening pipeline of new inventions. These dips can signal a need for strategic intervention to support inventors and startups, as a sustained low rating could make the state less attractive to high-tech companies and stifle the very economic growth that a strong inventionINDEX score represents.

In summary, the South Dakota inventionINDEX showcases a dynamic but cyclical landscape of innovation over the past five years. While the state has demonstrated its capacity for high-level performance, the frequent oscillations between top and lower grades highlight an opportunity for more consistent growth. The data underscores the importance of maintaining an environment that not only encourages breakthrough invention but also provides the long-term support necessary to sustain a higher average score.

Discussion:

In July, the South Dakota inventionINDEX scored a positive sentiment which was lower than the previous year’s average but outperformed the downward trend for the year. This is similar 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.

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