3. Tax-advantaged first-time home buyer accounts
This bill creates a tax-advantaged first-time home buyers savings account.
Under the bill, an individual may create the account and must designate a
beneficiary of the account, which may be the account holder. The beneficiary must
be an individual who is a first-time home buyer, which is defined as someone who
resides in this state and has not owned or purchased a single-family residence
during the 36 months before the month in which the individual purchases the
residence in this state. An account holder may withdraw funds from the account to
pay the down payment and eligible closing costs for the purchase of a single-family
residence in this state by the beneficiary or to reimburse the beneficiary for eligible
costs. The account holder may not use funds from the account to pay any expenses
he or she incurs in administering the account, although the financial institution may
deduct a service fee from the account.
Beginning in taxable year 2020, annually, an account holder may subtract from
his or her federal adjusted gross income (FAGI) up to $5,000, or $10,000 if the account
holder files a joint income tax return, of the amount he or she contributes to an
account, as well as any gain that is redeposited into the account. An account holder
may not claim a subtraction for more than a total of $50,000 of deposits into an
account for each beneficiary.
4. Increase the earned income tax credit
Under this bill, for taxable years beginning after 2018, 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 that the claimant may claim under the
federal credit if the claimant has one qualifying child with the same residence, 14
percent if the claimant has two such qualifying children, and 34 percent if the
claimant has three or more such qualifying children. Currently, the percentage of
the federal credit that an individual may claim for Wisconsin purposes is 4 if the
claimant has one qualifying child with the same residence, 11 if the claimant has two
such qualifying children, and 34 if the claimant has 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.
5. Homestead tax credit changes to indexing provisions and increasing the
maximum income
Under current law, the homestead income tax credit is not allowed to claimants
whose household income exceeds $24,680. Under this bill, that maximum income
threshold is increased to $30,000 for claims filed in 2020 and thereafter.
Under current law, the homestead tax credit formula factors, which are
maximum income, maximum property taxes, and income threshold, are not indexed
for inflation. This bill amends those provisions and restores the indexing provisions
of the former law. Under the bill, the homestead tax credit formula factors would be
indexed for inflation for taxable year 2020 and beyond, except that the maximum
income will not be indexed for taxable year 2020.
6. Repeal of the private school tuition subtraction
The bill repeals the subtraction for private school tuition expenses that an
individual may claim when determining his or her income for income tax purposes.
7. Child and dependent care tax credit
This bill creates a nonrefundable individual income tax credit based on the
federal tax credit for expenses for household and dependent care services necessary
for gainful employment. Under the bill, an individual who is eligible for and claims
the federal tax credit for expenses for household and dependent care services may
claim 50 percent of the same amount as a nonrefundable credit on his or her
Wisconsin income tax return. Under the bill, the Wisconsin credit may not be
claimed by a part-year resident or nonresident of this state.
This bill also sunsets the current law individual income tax subtract
modification that allows a taxpayer a deduction for the same expenses for which the
credit may be claimed.
Generally, the federal credit is a nonrefundable individual income tax credit
that may be claimed by an individual for employment-related expenses for
household services and dependent care services for a qualifying individual. Because
the credit is nonrefundable, it may be claimed only up to the amount of a taxpayer's
tax liability. Under federal law, a qualifying individual is someone who has the same
principal place of abode as the claimant for more than one-half the year, is the
claimant's dependent, and is a) a child 12 or under; b) a child 13 or older who is
incapable of self-care; or c) the claimant's spouse who is incapable of self-care.
The federal credit may be claimed for expenses to enable the claimant to be
gainfully employed or actively search for gainful employment. Generally, allowable
expenses for a qualifying individual under federal law include costs for in-home care
or daycare, nursery school or preschool programs, and before-school and
after-school care for school-age children. Depending on the claimant's adjusted
gross income, the credit may be worth between 20 percent and 35 percent of the
claimant's allowable expenses, up to a maximum annual amount of $3,000 if there
is one qualifying individual and up to $6,000 if there are two or more qualifying
individuals.
8. Moving expense deduction
Under current law, a business may deduct from its income or franchise tax
liability all expenses that the business paid to move its operations from one location
to another, including expenses paid to relocate outside the state. Under this bill, a
business may not deduct expenses paid to move outside the state or outside the
United States.
9. Research credit
Current law allows a person to claim a tax credit equal to a percentage of the
person's expenses to conduct research in this state. For example, a person may claim
11.5 percent of the amount of the expenses that exceed 50 percent of the person's
average research expenses for the previous three years on research involving
engines or hybrid-electric vehicles. The credit is partially refundable. If the credit
exceeds the amount of the person's tax liability, the person receives a refund in an
amount not exceeding 10 percent of the person's claim. Any amount not used to offset
the person's tax liability or paid as a refund may be claimed as a credit against the
person's tax liability in subsequent years.
This bill increases the amount that a person may receive as a refund. Under
the bill, a person may receive a refund in an amount not exceeding 20 percent of the
person's claim. However, the bill prohibits a person certified to claim the electronics
and information technology manufacturing zone credit from receiving the refund.
10. Historical rehabilitation credit
Current law authorizes WEDC to certify a person to receive a tax credit equal
to 20 percent of the qualified rehabilitation expenses, as defined under the federal
Internal Revenue Code, for certified historic structures on property located in this
state. WEDC may also certify a person to receive a similar credit for the
rehabilitation expenses for qualified rehabilitated buildings, as defined under the
federal Internal Revenue Code, that are not certified historic structures. Finally,
current law prohibits WEDC from certifying persons to claim more than $3,500,000
in all such credits for all projects undertaken on the same parcel.
This bill eliminates the credit for qualified rehabilitated buildings and
prohibits WEDC from certifying persons to claim more than $3,500,000 in tax credits
for any project involving the rehabilitation of certified historic structures, regardless
of the number of parcels on which the project is undertaken.
11. Repeal of net operating loss carryback
This bill repeals the provision under which an individual may carry back a net
operating loss to the two prior taxable years in order to reduce the amount of income
subject to tax in those years.
12. Broadcaster's income apportionment
Under current law, a broadcaster's gross royalties and other gross receipts
received for the use or license of intangible property are apportioned to this state for
income and franchise tax purposes only if the commercial domicile of the purchaser
or licensee is in this state and the purchaser or licensee has a direct connection or
relationship with the broadcaster pursuant to a contract under which the royalties
or receipts are derived. This bill eliminates that provision. As a result, a
broadcaster's gross royalties and other gross receipts received for the use or license
of intangible property are apportioned in the same manner as those of other
taxpayers. In general, such royalties and receipts are apportioned to this state if the
purchaser or licensee uses the property at a location in this state, is billed for the
purchase or license at a location in this state, or has its commercial domicile in this
state.
13. Addition of low-income housing tax credit to income
Under this bill, a business that claims the low-income housing credit must
include the amount of the credit in income when computing its income or franchise
tax liability.
14. Modification to medical care insurance subtraction
This bill changes how nonresidents and part-year residents calculate the
subtraction for medical care insurance premiums that self-employed individuals
may claim for income tax purposes. Under current law, the subtraction is prorated
based on the individual's share of income earned from a trade or business that is
taxable in Wisconsin. Under the bill, the subtraction is prorated based on the
individual's share of total income that is taxable in Wisconsin, not just the earnings
from a trade or business. The bill also repeals several provisions that provided a
subtraction for medical care insurance premiums but are no longer operable.
15. Family and individual reinvestment income tax credit
This bill creates a new family and individual reinvestment 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.
16. Capital gains exclusion limitation
Under current law, there is an income tax exclusion for individuals, fiduciaries,
members of limited liability companies and partnerships, and shareholders of
tax-option corporations for 30 percent of the net long-term capital gains realized
from the sale of assets held more than one year and the sale of all assets acquired
from a decedent, and an exclusion for 60 percent of such gains realized from the sale
of farm assets held more than one year and the sale of all farm assets acquired from
a decedent.
Under this bill, for individuals, the exclusion of 30 percent of such net
long-term capital gains, and all assets acquired from a decedent, does not apply to
taxable years beginning after December 31, 2018, if the taxpayer's federal adjusted
gross income exceeds specified threshold amounts. These amounts are $100,000 for
a single individual or head of household filer; $150,000 for a married couple who files
jointly; and $75,000 for a married individual who files separately. The bill also
provides that for a taxpayer whose FAGI, before adjustment for net capital gains, is
below the specified threshold amounts, such a taxpayer may claim the current law
capital gains exclusion for nonfarm assets to the extent that the sum of the taxpayer's
noncapital gains adjusted FAGI and the taxpayer's net federal capital gains does not
exceed the threshold amount. The bill does not affect the exclusion of the gains
realized from the sale of farm assets held more than one year and the sale of farm
assets acquired from a decedent.
17. WHEFA bonds exemption
This bill exempts from individual income and corporate income and franchise
taxation interest earned on bonds or notes issued by WHEFA, provided that the bond
or notes are issued in an amount totaling $35,000,000 or less, and to the extent that
the interest income is not otherwise exempt from taxation.
18. Internal Revenue Code references
This bill adopts, for state income and franchise tax purposes, changes made to
the Internal Revenue Code by the Bipartisan Budget Act and Consolidated
Appropriations Act of 2018. The federal act retroactively extended, through the end
of 2017, a variety of federal tax benefits for individuals and businesses, including the
tuition expense deduction, the exclusion from income for forgiven mortgage debt, and
tax incentives for businesses to invest in mine safety equipment or in certain
communities. These provisions have always been temporary under federal law,
generally expiring every one or two years, and had expired at the end of 2016. The
federal act also includes several permanent provisions of limited scope, such as one
allowing certain whistleblowers to fully deduct attorney fees.
Property taxation
Dark property and leased property tax assessments
This bill requires that real property be assessed for property tax purposes at its
highest and best use and provides that real property includes any leases, rights, and
privileges pertaining to the property, including assets that are inextricably
intertwined with it. The bill also requires that an assessor determine the value of
leased property by considering the lease provisions and actual rent if the provisions
and rent are the result of an arm's-length transaction. In so doing, the bill reverses
a 2008 decision by the Wisconsin Supreme Court that held a property tax assessment
of leased retail property using the income approach must be based on market rent,
which is what a person would pay based on similar rentals, rather than the actual
rent. See, Walgreen Company v. City of Madison, 2008 WI 80, 752 N.W.2d 689 (2008).
The bill also requires an assessor, when determining the value of property using
generally accepted appraisal methods, to consider property as comparable to the
property being assessed if the properties have the same or similar highest and best
use or share certain characteristics, such as age, condition, and location. Under the
bill, a property is not comparable to the property being assessed if the property is
dark property or if the seller has placed restrictions on its highest and best use or that
prohibit competition, and the property being assessed is not dark property or subject
to similar restrictions. The bill defines “dark property” as property that is vacant or
unoccupied beyond the normal period for property in the same real estate market
segment.
2. School aid reduction information
This bill requires that a person's property tax bill include information from the
school district where the property is located regarding the amount of any gross
reduction in state aid to the district as a result of pupils enrolled in the statewide
choice program, the Racine Parental Choice Program, or the Milwaukee Parental
Choice Program or as a result of making payments to private schools under the
Special Needs Scholarship Program.
3. School levy and first dollar property tax credits
This bill eliminates the school levy and first dollar property tax credits.
Currently, each municipality receives payments from the state to use for the credits,
and the municipalities apply those credits to each person's property tax liability. For
the school levy credit, each municipality receives a payment equal to its
proportionate share of the sum of average school levies for all municipalities.
Currently, the total amount of the school levy credit that is distributed each year is
$940,000,000. For the first dollar credit, each municipality receives a payment
determined by multiplying the school tax rate by the estimated fair market value of
every parcel with improvements, such as a building, that is located in the
municipality. Currently, the total amount of the first dollar credit that is distributed
each year is $150,000,000. Under the bill, the last distribution of both credits occurs
in 2020.
General taxation
Motor vehicle fuel tax increase
This bill increases the current motor vehicle fuel tax rate from 30.9 cents per
gallon to 38.9 cents per gallon beginning on October 1, 2019. The rate has remained
unchanged since 2006 when it was increased from 29.9 cents to 30.9 cents.
2. Motor vehicle fuel tax annual adjustment
Prior to 2007, DOR annually adjusted the motor vehicle fuel tax rate to
incorporate the percentage change in the consumer price index. This bill restores the
annual adjustment of the motor vehicle fuel tax rate based on the change in the
consumer price index beginning with the rate that takes effect on April 1, 2020.
Under current law, and under the bill, DOR publishes the rate by April 1 of each year.
3. Excise tax on vapor products
The bill imposes the tobacco products tax on vapor products at the rate of 71
percent of the manufacturer's list price. Under the bill, “vapor product" is defined
as any noncombustible product that employs a heating element, power source,
electronic circuit, or other electronic, chemical, or mechanical means that can be used
to produce vapor from a solution or other substance, regardless of whether the
product contains nicotine. A “vapor product” includes an electronic cigarette,
electronic cigar, electronic cigarillo, electronic pipe, or similar product or device, as
well as any container of a solution or other substance that is intended to be used with
these items. Under the bill, any product regulated by the federal Food and Drug
Administration as a drug or device is exempt from the tax.
4. Excise tax on little cigars
This bill taxes little cigars at the same rate as the excise tax imposed on
cigarettes. Under current law, all cigars are taxed at the rate of 71 percent of the
manufacturer's established list price, limited to 50 cents per cigar. Under the bill,
little cigars weighing no more than three pounds per thousand are taxed at the rate
of 126 mills per little cigar and all other little cigars are taxed at the rate of 252 mills
per little cigar. The bill defines “little cigar” to mean a cigar that has an integrated
cellulose acetate filter and is wrapped in any substance containing tobacco.
5. Collection of sales tax by marketplace providers
This bill requires that marketplace providers collect and remit sales and use tax
on sales facilitated on behalf of marketplace sellers. For purposes of the bill, a
“marketplace provider” is a person who contracts with a seller to facilitate the sale
of the seller's products through a physical or electronic marketplace operated by the
person and who engages in certain activities with respect to the seller's products,
such as providing services for payment processing, order taking, or fulfillment and
storage. Additionally, the person must engage, directly or through an affiliated
person, in activities related to the marketplace's operation, such as transmitting the
offer or acceptance between the marketplace seller and a buyer, providing a virtual
currency used to purchase products from the marketplace seller, or developing
software for the marketplace. The bill defines “marketplace seller” to mean a seller
who sells products through a physical or electronic marketplace operated by a
marketplace provider, regardless of whether the seller is required to be registered
with DOR.
6. Repeal of sales tax exemption for farm-raised deer
The bill repeals the sales and use tax exemption that applies to the sale of
farm-raised deer to a person operating a hunting preserve or game farm in this state.
7. Repeal of sales tax exemption for game birds and clay pigeons
This bill repeals the sales and use tax exemption that applies to the sale of live
game birds and clay pigeons to qualifying bird hunting preserves and shooting
facilities.
8. Modifications to state debt collection programs
This bill modifies the programs under which DOR is authorized to collect debt
owed to state agencies, municipalities, and counties by offsetting tax refunds and
other state payments due the debtor. The bill consolidates provisions under which
a state agency, municipality, or county refers a debt to DOR for collection and
includes the State of Wisconsin in the definition of “state agency” for purposes of the
debt collection programs. Under the bill, any legal action contesting the validity of
a debt must be brought against the unit of government that referred the debt. The
bill repeals the requirement that DOR provide quarterly status updates to a state
agency, municipality, or county regarding the debt collection. Under the bill, DOR
may provide, upon request, information to a state agency, municipality, or county
about each debt's status and may provide weekly reports of the amounts collected
and payments disbursed. The bill replaces the current requirement that DOR charge
debtors for administration expenses with a requirement that debtors pay a collection
fee, and repeals the requirement that DOR annually review its prior year's
administrative costs and adjust the charges accordingly.
9. Offsetting lottery payments for debt owed to state
This bill modifies the program under which DOR is authorized to collect debt
owed to state agencies by offsetting tax refunds and other state payments due to the
debtor. The bill provides that lottery prizes of at least $600 and compensation or
payments owed to lottery retailers are offsettable refunds for purposes of the debt
collection program.
10. Real estate transfer fee exemption
Current law provides an exemption to the real estate transfer fee for a
conveyance by a subsidiary corporation to its parent for no consideration. This bill
clarifies that both the subsidiary and the parent must be a corporation. The bill also
modifies the real estate transfer fee exemption for a conveyance made solely in order
to provide or release security for a debt or obligation so that the exemption does not
apply if the debt or obligation was incurred as the result of a conveyance.
TRANSPORTATION
Highways
Transportation projects
Under current law, for certain highway projects for which DOT spends federal
money, federal money must make up at least 70 percent of the funding for those
projects. DOT is required to notify political subdivisions receiving aid for local
projects whether the aid includes federal moneys and how those moneys must be
spent. For certain projects that receive no federal money, DOT may not require
political subdivisions to comply with any portion of DOT's facilities development
manual other than design standards. Any local project funded with state funds
under the surface transportation program or the local bridge program must be let
through competitive bidding and by contract to the lowest responsible bidder. The
bill repeals all of these requirements.
2. Bridge bonding authorizations
Current law authorizes the state to contract up to $245,000,000 in public debt
in the form of general obligation bonds to fund major interstate bridge projects. A
“major interstate bridge project” is defined to mean “a project involving the
construction or reconstruction of a bridge on the state trunk highway system,
including approaches, that crosses a river forming a boundary of the state and for
which this state's estimated cost share is at least $100,000,000.” This bill increases
the general obligation bonding authorization for major interstate bridge projects to
$272,000,000.
Under current law, the state may contract up to $216,800,000 for DOT to fund
high-cost state highway bridge projects. This bill reduces this general obligation
bonding limit to $206,800,000.
3. Interstate bridge design funding
Under current law, this state's share of costs for any major interstate bridge
project, including preliminary design work for the project, may be funded only from
specified appropriations. This bill eliminates the reference to preliminary design
work being a part of a major interstate bridge project that may be funded only from
specified appropriations.
4. Increased bonding authorization for Zoo interchange
Under current law, a southeast Wisconsin freeway megaproject is “any project
on a southeast Wisconsin freeway having a total cost of more than $500 million,” as
adjusted annually for inflation by DOT. DOT may not provide funding for
construction of these projects without legislative approval. Currently, the
legislature has approved only the I 94 north-south corridor project and the Zoo
interchange project. Among the available funding sources for these projects are
proceeds from general obligation bonds.
This bill authorizes the state to contract an additional $65,000,000 in public
debt in the form of general obligation bonds to fund the Zoo interchange project.
5. Transportation revenue bonds
Under current law, the Building Commission may issue revenue bonds for
major highway projects and transportation administrative facilities in a principal
amount that may not exceed $4,055,372,900. This bill increases the revenue bond
limit to $4,197,627,500.
6. Enumeration of I 43 project
Current law requires that a major highway project receive the approval of the
Transportation Projects Commission (TPC) and the legislature before the project
may be constructed. This bill adds a project on I 43 between Silver Spring Drive in
the city of Glendale and STH 60 in the city of Grafton in Milwaukee and Ozaukee
counties, which has been approved by TPC, to the current list of statutorily
enumerated projects approved for construction.
7. Sunset of intelligent transportation systems appropriations
Under current law, state, federal, and local appropriations authorize DOT
expenditures for the installation, replacement, or rehabilitation of traffic control
signals and intelligent transportation systems. Under current law, no moneys from
these appropriations may be encumbered after June 30, 2021. This bill removes from
each appropriation the prohibition on encumbering moneys after June 30, 2021.
Drivers and motor vehicles
Driver's cards
