SB1: Bill Text

SB1,,1 2023 SENATE BILL 1

January 27, 2023 - Introduced by Senators LeMahieu, Ballweg, Bradley, Cabral-Guevara, Feyen, James, Nass, Stroebel, Tomczyk, Hutton, Kapenga and Felzkowski, cosponsored by Representatives Brooks, Allen, Bodden, Brandtjen, Dittrich, Gundrum, Gustafson, Knodl, Magnafici, Murphy, Penterman, Rettinger, Rozar, Spiros, Tusler, Behnke, Schraa, Moses and Donovan. Referred to Committee on Universities and Revenue.

SB1,,2 An Act to repeal 71.06 (1q), 71.06 (1r) (a), 71.06 (1r) (b), 71.06 (1r) (c), 71.06 (2) (i), 71.06 (2) (j), 71.06 (2) (k), 71.06 (2) (km), 71.06 (2) (L), 71.06 (2) (Lm), 71.06 (2) (m), 71.06 (2) (mm), 71.06 (2e) (be), 71.06 (2e) (bm), 71.06 (2e) (bs), 71.06 (2s) (e), 71.06 (2s) (f), 71.06 (2s) (g) and 73.03 (71); to renumber 71.06 (1r) (d); to amend 71.06 (1q) (intro.), 71.06 (1r) (title), 71.06 (2) (i) (intro.), 71.06 (2) (j) (intro.), 71.06 (2e) (a), 71.06 (2e) (b), 71.06 (2m), 71.06 (2s) (d), 71.125 (1), 71.125 (2), 71.17 (6), 71.64 (9) (b) (intro.), 71.67 (5) (a), 71.67 (5m), 73.03 (71) (c) 2. and 73.03 (71) (d) 2.; and to create 71.06 (1r), 71.06 (2) (k), 71.06 (2) (km), 71.06 (2) (L), 71.06 (2) (Lm), 71.06 (2) (m), 71.06 (2) (mm), 71.06 (2) (n), 71.06 (2e) (be), 71.06 (2e) (bm), 71.06 (2e) (bs), 71.06 (2s) (e), 71.06 (2s) (f) and 71.06 (2s) (g) of the statutes; relating to: establishing a flat individual income tax rate.

SB1,,3 Analysis by the Legislative Reference Bureau

Under this bill, beginning in taxable year 2026, all individual taxpayers, regardless of their income, pay the individual income tax at the rate of 3.25 percent. In addition, for taxable years 2023 through 2025, the bill decreases individual income tax rates each year for each tax bracket.

Under current law, there are four income tax brackets for single individuals, certain fiduciaries, heads of households, and married persons, and the brackets are indexed for inflation. The rate of taxation under current law for the lowest bracket for single individuals, certain fiduciaries, heads of households, and married persons is 3.54 percent of taxable income. The rate for the second bracket is 4.65 percent. The rate for the third bracket is 5.3 percent. And the rate for the highest bracket is 7.65 percent. After bracket indexing for taxable year 2022, the four brackets for individuals, certain fiduciaries, and heads of households, to which the above rates apply, are as follows: 1) taxable income from $0 to $12,760; 2) taxable income exceeding $12,760 but not exceeding $25,520; 3) taxable income exceeding $25,520 but not exceeding $280,950; and 4) taxable income exceeding $280,950.

The bill establishes the following rates of taxation for taxable year 2023:

1. For the lowest tax bracket, 3.47 percent.

2. For the second bracket, 4.3 percent.

3. For the third bracket, 4.79 percent.

4. For the highest bracket, 6.55 percent.

The bill establishes the following rates of taxation for taxable year 2024:

1. For the lowest tax bracket, 3.4 percent.

2. For the second bracket, 3.95 percent.

3. For the third bracket, 4.28 percent.

4. For the highest bracket, 5.45 percent.

The bill establishes the following rates of taxation for taxable year 2025:

1. For the lowest tax bracket, 3.32 percent.

2. For the second bracket, 3.6 percent.

3. For the third bracket, 3.76 percent.

4. For the highest bracket, 4.35 percent.

Under the bill, for taxable year 2026 and after, the rate of taxation is 3.25 percent for all taxable income. The bill also requires the Department of Revenue to update, by October 1 before the start of the applicable tax year, the individual income tax withholding tables to reflect the tax rates, brackets, and sliding scale standard deduction that are in effect for taxable years 2024, 2025, and 2026.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

SB1,,4 The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB1,1 Section 1. 71.06 (1q) (intro.) of the statutes is amended to read:

SB1,,6 71.06 (1q) Fiduciaries, single individuals, and heads of households; after 2012 2013 to 2022. (intro.) The tax to be assessed, levied, and collected upon the taxable incomes of all fiduciaries, except fiduciaries of nuclear decommissioning trust or reserve funds, and single individuals and heads of households shall be computed at the following rates for taxable years beginning after December 31, 2012, and before January 1, 2023:

SB1,2 Section 2. 71.06 (1q) of the statutes is repealed.

SB1,3 Section 3. 71.06 (1r) (title) of the statutes, as created by 2023 Wisconsin Act .... (this act), is amended to read:

SB1,,9 71.06 (1r) (title) Fiduciaries, single individuals, and heads of households; after 2022 2025.

SB1,4 Section 4. 71.06 (1r) of the statutes is created to read:

SB1,,11 71.06 (1r) Fiduciaries, single individuals, and heads of households; after 2022. (a) The tax to be assessed, levied, and collected upon the taxable incomes of all fiduciaries, except fiduciaries of nuclear decommissioning trust or reserve funds, and single individuals and heads of households shall be computed at the following rates for taxable years beginning after December 31, 2022, and before January 1, 2024:

SB1,,12 1. On all taxable income from $0 to $7,500, 3.47 percent.

SB1,,13 2. On all taxable income exceeding $7,500 but not exceeding $15,000, 4.30 percent.

SB1,,14 3. On all taxable income exceeding $15,000 but not exceeding $225,000, 4.79 percent.

SB1,,15 4. On all taxable income exceeding $225,000, 6.55 percent.

SB1,,16 (b) The tax to be assessed, levied, and collected upon the taxable incomes of all fiduciaries, except fiduciaries of nuclear decommissioning trust or reserve funds, and single individuals and heads of households shall be computed at the following rates for taxable years beginning after December 31, 2023, and before January 1, 2025:

SB1,,17 1. On all taxable income from $0 to $7,500, 3.40 percent.

SB1,,18 2. On all taxable income exceeding $7,500 but not exceeding $15,000, 3.95 percent.

SB1,,19 3. On all taxable income exceeding $15,000 but not exceeding $225,000, 4.28 percent.

SB1,,20 4. On all taxable income exceeding $225,000, 5.45 percent.

SB1,,21 (c) The tax to be assessed, levied, and collected upon the taxable incomes of all fiduciaries, except fiduciaries of nuclear decommissioning trust or reserve funds, and single individuals and heads of households shall be computed at the following rates for taxable years beginning after December 31, 2024, and before January 1, 2026:

SB1,,22 1. On all taxable income from $0 to $7,500, 3.32 percent.

SB1,,23 2. On all taxable income exceeding $7,500 but not exceeding $15,000, 3.60 percent.

SB1,,24 3. On all taxable income exceeding $15,000 but not exceeding $225,000, 3.76 percent.

SB1,,25 4. On all taxable income exceeding $225,000, 4.35 percent.

SB1,,26 (d) The tax to be assessed, levied, and collected upon the taxable incomes of all fiduciaries, except fiduciaries of nuclear decommissioning trust or reserve funds, and single individuals and heads of households shall be computed at the rate of 3.25 percent for taxable years beginning after December 31, 2025.

SB1,5 Section 5. 71.06 (1r) (a) of the statutes, as created by 2023 Wisconsin Act .... (this act), is repealed.

SB1,6 Section 6. 71.06 (1r) (b) of the statutes, as created by 2023 Wisconsin Act .... (this act), is repealed.

SB1,7 Section 7. 71.06 (1r) (c) of the statutes, as created by 2023 Wisconsin Act .... (this act), is repealed.

SB1,8 Section 8. 71.06 (1r) (d) of the statutes, as created by 2023 Wisconsin Act .... (this act), is renumbered 71.06 (1r).

SB1,9 Section 9. 71.06 (2) (i) (intro.) of the statutes is amended to read:

SB1,,32 71.06 (2) (i) (intro.) For joint returns, for taxable years beginning after December 31, 2012, and before January 1, 2023:

SB1,10 Section 10. 71.06 (2) (i) of the statutes is repealed.

SB1,11 Section 11. 71.06 (2) (j) (intro.) of the statutes is amended to read:

SB1,,35 71.06 (2) (j) (intro.) For married persons filing separately, for taxable years beginning after December 31, 2012, and before January 1, 2023:

SB1,12 Section 12. 71.06 (2) (j) of the statutes is repealed.

SB1,13 Section 13. 71.06 (2) (k) of the statutes is created to read:

SB1,,38 71.06 (2) (k) For joint returns, for taxable years beginning after December 31, 2022, and before January 1, 2024:

SB1,,39 1. On all taxable income from $0 to $10,000, 3.47 percent.

SB1,,40 2. On all taxable income exceeding $10,000 but not exceeding $20,000, 4.30 percent.

SB1,,41 3. On all taxable income exceeding $20,000 but not exceeding $300,000, 4.79 percent.

SB1,,42 4. On all taxable income exceeding $300,000, 6.55 percent.

SB1,14 Section 14. 71.06 (2) (k) of the statutes, as created by 2023 Wisconsin Act .... (this act), is repealed.

SB1,15 Section 15. 71.06 (2) (km) of the statutes is created to read:

SB1,,45 71.06 (2) (km) For married persons filing separately, for taxable years beginning after December 31, 2022, and before January 1, 2024:

SB1,,46 1. On all taxable income from $0 to $5,000, 3.47 percent.

SB1,,47 2. On all taxable income exceeding $5,000 but not exceeding $10,000, 4.30 percent.

SB1,,48 3. On all taxable income exceeding $10,000 but not exceeding $150,000, 4.79 percent.

SB1,,49 4. On all taxable income exceeding $150,000, 6.55 percent.

SB1,16 Section 16. 71.06 (2) (km) of the statutes, as created by 2023 Wisconsin Act .... (this act), is repealed.

SB1,17 Section 17. 71.06 (2) (L) of the statutes is created to read:

SB1,,52 71.06 (2) (L) For joint returns, for taxable years beginning after December 31, 2023, and before January 1, 2025:

SB1,,53 1. On all taxable income from $0 to $10,000, 3.40 percent.

SB1,,54 2. On all taxable income exceeding $10,000 but not exceeding $20,000, 3.95 percent.

SB1,,55 3. On all taxable income exceeding $20,000 but not exceeding $300,000, 4.28 percent.

SB1,,56 4. On all taxable income exceeding $300,000, 5.45 percent.

SB1,18 Section 18. 71.06 (2) (L) of the statutes, as created by 2023 Wisconsin Act .... (this act), is repealed.

SB1,19 Section 19. 71.06 (2) (Lm) of the statutes is created to read:

SB1,,59 71.06 (2) (Lm) For married persons filing separately, for taxable years beginning after December 31, 2023, and before January 1, 2025:

SB1,,60 1. On all taxable income from $0 to $5,000, 3.40 percent.

SB1,,61 2. On all taxable income exceeding $5,000 but not exceeding $10,000, 3.95 percent.

SB1,,62 3. On all taxable income exceeding $10,000 but not exceeding $150,000, 4.28 percent.