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LRBs0008/1
JK:wlj
2019 - 2020 LEGISLATURE
ASSEMBLY SUBSTITUTE AMENDMENT 1,
TO ASSEMBLY BILL 4
February 5, 2019 - Offered by Representatives Riemer, Doyle, Goyke, Haywood,
Ohnstad and C. Taylor.
AB4-ASA1,1,6 1An Act to amend 71.07 (5n) (c) 1., 71.07 (5n) (d) 2., 71.07 (9e) (aj) (intro.), 71.28
2(5n) (c), 71.28 (5n) (d) 2., 71.28 (5n) (d) 3. a. and 73.03 (73) (f) 1.; and to create
371.07 (5m) (e), 71.07 (5me), 71.07 (5n) (d) 2m., 71.07 (9e) (ak), 71.10 (4) (gye) and
471.28 (5n) (d) 2m. of the statutes; relating to: claiming the manufacturing and
5agriculture credit, increasing the earned income tax credit, creating the middle
6class tax relief credit, and sunsetting the working families tax credit.
Analysis by the Legislative Reference Bureau
Currently, a person may claim a tax credit on the basis of the person's income
from manufacturing or agriculture. This bill limits to $300,000 the amount of income
from manufacturing that a person may use as the basis for claiming the credit. The
bill also provides that the aggregate amount of the credits based on manufacturing
income that may be claimed by all partners of a partnership, all members of a limited
liability company, and all shareholders of a tax-option corporation may not exceed
$22,500 in any taxable year.
The bill creates a new individual income tax credit for taxable years beginning
in 2019. The credit is nonrefundable and may be claimed only up to the amount of
the taxpayer's income tax liability. Under the bill, for a single individual or an

individual who files as a head of household whose adjusted gross income is less than
$80,000, for a married couple filing jointly whose combined AGI is less than
$125,000, or for a married individual filing separately whose AGI is less than
$62,500, the credit is equal to 10 percent of the claimant's net tax liability or $100
($50 for married separate filers), whichever is greater. Net tax liability is a
claimant's income tax liability after the application of most nonrefundable income
tax credits. Under the bill, the credit phases out to zero as a single individual or head
of household filer's AGI increases from $80,000 to $100,000. A similar phaseout
occurs for a married joint filer whose combined AGI increases from $125,000 to
$150,000 and a married separate filer whose AGI increases from $62,500 to $75,000.
Also, under the bill, no new claims for the working families tax credit may be filed
for a taxable year that begins after December 31, 2018.
Under the bill, for taxable years beginning after 2019, an individual who is
eligible to claim the federal earned income tax credit may claim as a credit against
Wisconsin taxes due 11 percent of the amount the claimant may claim under the
federal credit if the claimant has one qualifying child with the same principal place
of abode, 14 percent for two such qualifying children, and 34 percent for three or more
such qualifying children. Currently, for Wisconsin purposes, an individual may
claim 4 percent of the federal credit if the claimant has one qualifying child with the
same principal place of abode, 11 percent for two such qualifying children, and 34
percent for three or more such qualifying children. The credit is refundable, which
means that, if the amount of credit due the claimant exceeds his or her tax liability,
the difference is refunded to the claimant by check.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB4-ASA1,1 1Section 1. 71.07 (5m) (e) of the statutes is created to read:
AB4-ASA1,2,32 71.07 (5m) (e) Sunset. No credit may be claimed under this subsection for
3taxable years beginning after December 31, 2018.
AB4-ASA1,2 4Section 2. 71.07 (5me) of the statutes is created to read:
AB4-ASA1,2,65 71.07 (5me) Middle class tax relief credit. (a) Definitions. In this
6subsection:
AB4-ASA1,2,87 1. “Claimant" means an individual who is eligible to claim the credit under this
8subsection.
AB4-ASA1,2,109 2. “Household" means a claimant and an individual related to the claimant as
10husband or wife.
AB4-ASA1,3,2
13. “Net tax liability" means a claimant's income tax liability after he or she
2completes the computations for nonrefundable credits listed before s. 71.10 (4) (h).
AB4-ASA1,3,63 (b) Filing claims. For taxable years beginning after December 31, 2018, and
4subject to the limitations provided in this subsection, a claimant may claim as a
5credit against the tax imposed under s. 71.02, up to the amount of those taxes, one
6of the following amounts:
AB4-ASA1,3,97 1. If the claimant is single or files as a head of household and his or her adjusted
8gross income is less than $80,000 in the year to which the claim relates, the greater
9of $100 or an amount equal to 10 percent of his or her net tax liability.
AB4-ASA1,3,1210 2. If the claimant is single or files as a head of household and his or her adjusted
11gross income is at least $80,000 but less than $100,000 in the year to which the claim
12relates, an amount that is calculated as follows:
AB4-ASA1,3,1513 a. Calculate the value of a fraction, the denominator of which is $20,000 and
14the numerator of which is the difference between the claimant's adjusted gross
15income and $80,000.
AB4-ASA1,3,1616 b. Subtract from 1.0 the amount that is calculated under subd. 2. a.
AB4-ASA1,3,1717 c. Multiply the amount that is calculated under subd. 2. b. by 10 percent.
AB4-ASA1,3,1918 d. Multiply the amount of the claimant's net income tax liability by the amount
19that is calculated under subd. 2. c.
AB4-ASA1,3,2320 3. If the claimant is married and filing jointly and the sum of the claimant's
21adjusted gross income and his or her spouse's adjusted gross income is less than
22$125,000 in the year to which the claim relates, the greater of $100 or an amount
23equal to 10 percent of the married couple's net tax liability.
AB4-ASA1,4,224 4. If the claimant is married and filing jointly and the sum of the claimant's
25adjusted gross income and his or her spouse's adjusted gross income is at least

1$125,000 but less than $150,000 in the year to which the claim relates, an amount
2that is calculated as follows:
AB4-ASA1,4,53 a. Calculate the value of a fraction, the denominator of which is $25,000 and
4the numerator of which is the difference between the married couple's adjusted gross
5income and $125,000.
AB4-ASA1,4,66 b. Subtract from 1.0 the amount that is calculated under subd. 4. a.
AB4-ASA1,4,77 c. Multiply the amount that is calculated under subd. 4. b. by 10 percent.
AB4-ASA1,4,98 d. Multiply the amount of the married couple's net income tax liability by the
9amount that is calculated under subd. 4. c.
AB4-ASA1,4,1210 5. If the claimant is married and filing separately and his or her adjusted gross
11income is less than $62,500 in the year to which the claim relates, the greater of $50
12or an amount equal to 10 percent of his or her net tax liability.
AB4-ASA1,4,1513 6. If the claimant is married and filing separately and his or her adjusted gross
14income is at least $62,500 but less than $75,000 in the year to which the claim relates,
15an amount that is calculated as follows:
AB4-ASA1,4,1816 a. Calculate the value of a fraction, the denominator of which is $12,500 and
17the numerator of which is the difference between the claimant's adjusted gross
18income and $75,000.
AB4-ASA1,4,1919 b. Subtract from 1.0 the amount that is calculated under subd. 6. a.
AB4-ASA1,4,2020 c. Multiply the amount that is calculated under subd. 6. b. by 10 percent.
AB4-ASA1,4,2221 d. Multiply the amount of the claimant's net income tax liability by the amount
22that is calculated under subd. 6. c.
AB4-ASA1,4,2423 (c) Limitations. 1. No credit may be allowed under this subsection unless it
24is claimed within the period under s. 71.75 (2).
AB4-ASA1,5,2
12. Part-year residents and nonresidents of this state are not eligible for the
2credit under this subsection.
AB4-ASA1,5,43 3. Except as provided in subd. 4., only one credit per household is allowed each
4year.
AB4-ASA1,5,85 4. If a married couple files separately, each spouse may claim the credit
6calculated under par. (b) 5. or 6., except a married person living apart from the other
7spouse and treated as single under section 7703 (b) of the Internal Revenue Code may
8claim the credit under par. (b) 1. or 2.
AB4-ASA1,5,109 5. The credit under this subsection may not be claimed by a person who may
10be claimed as a dependent on the individual income tax return of another taxpayer.
AB4-ASA1,5,1511 (d) Administration. The department of revenue may enforce the credit under
12this subsection and may take any action, conduct any proceeding, and proceed as it
13is authorized in respect to taxes under this chapter. The income tax provisions in this
14chapter relating to assessments, refunds, appeals, collection, interest, and penalties
15apply to the credit under this subsection.
AB4-ASA1,3 16Section 3. 71.07 (5n) (c) 1. of the statutes is amended to read:
AB4-ASA1,6,317 71.07 (5n) (c) 1. Partnerships, limited liability companies, and tax-option
18corporations may not claim the credit under this subsection, but the eligibility for,
19and the amount of, the credit are based on their share of the income described under
20par. (b). A partnership, limited liability company, or tax-option corporation shall
21compute the amount of credit that each of its partners, members, or shareholders
22may claim and shall provide that information to each of them. Partners, members
23of limited liability companies, and shareholders of tax-option corporations may
24claim the credit in proportion to their ownership interests. For taxable years
25beginning after December 31, 2018, the aggregate amount of the credits based on

1income from manufacturing that may be claimed by all partners of a partnership, all
2members of a limited liability company, and all shareholders of a tax-option
3corporation may not exceed $22,500 in any taxable year.
AB4-ASA1,4 4Section 4. 71.07 (5n) (d) 2. of the statutes is amended to read:
AB4-ASA1,6,105 71.07 (5n) (d) 2. For Except as provided in subd. 2m., for purposes of
6determining a claimant's eligible qualified production activities income under this
7subsection, the claimant shall multiply the claimant's qualified production activities
8income from property manufactured by the claimant by the manufacturing property
9factor and qualified production activities income from property produced, grown, or
10extracted by the claimant by the agriculture property factor.
AB4-ASA1,5 11Section 5. 71.07 (5n) (d) 2m. of the statutes is created to read:
AB4-ASA1,6,1612 71.07 (5n) (d) 2m. For taxable years beginning after December 31, 2018, for
13purposes of determining a claimant's eligible qualified production activities income
14from manufacturing under this subsection, the claimant shall multiply the
15claimant's qualified production activities income, not exceeding $300,000, from
16property manufactured by the claimant by the manufacturing property factor.
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