June 2025: 1.00% (C- grade)

South Dakota inventionINDEX June 2025: 1.00% (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).

The South Dakota inventionINDEX score for June 2025 stands at 1.00%, reflecting a slight dip from May’s 1.09% and placing it below the average of the previous 12 months. This score matches April’s performance and sits at the second-lowest point recorded in the last year, just above February’s 0.98%. While the fluctuation is relatively small, the consistent closeness to the 1.00% threshold suggests a level of stagnation in inventive activity that may warrant attention from state policymakers and innovation-focused institutions.

Historically, South Dakota’s inventionINDEX has shown modest but relatively stable performance, ranging between 0.98% and 1.14% over the past year. The highest point, 1.14% in September 2024, signals that there is capacity for stronger inventive activity within the state. Scores above 1.05%, such as those seen in July, August, and December 2024, tend to coincide with broader national or regional R&D efforts, university output cycles, or seasonal patent submission patterns. The June 2025 score, while not a significant outlier, may reflect a lag in innovation pipeline momentum or reduced patent filings in recent quarters.

A higher inventionINDEX score typically indicates a more vibrant innovation environment. It can signal increased patent filings, a more active startup ecosystem, and greater university-industry collaboration. This, in turn, may lead to job creation in STEM fields, increased research funding, and a boost in South Dakota’s competitiveness for technology-driven investment. If future scores begin to rise above the 1.10% mark, it could suggest a strategic shift or investment in innovation infrastructure paying off.

Conversely, if the score remains flat or declines, the state could risk falling behind peer regions in the race for innovation leadership. A persistently low index may discourage investor interest, limit public-private partnerships, and reduce the visibility of South Dakota in national innovation rankings. To mitigate this, stakeholders may need to examine barriers to patent development, expand support for R&D, and strengthen linkages between academic research and commercial application. Continued monitoring of this metric can help guide efforts to foster a more dynamic and resilient innovation ecosystem.

Discussion:

In June, the South Dakota inventionINDEX scored a negative sentiment which was lower than the previous year’s average and underperformed 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. 

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