Under current law, an individual, when computing income for income tax purposes, may deduct the tuition paid during the year to send his or her dependent child to private school. The maximum deduction is $4,000 for an elementary school pupil and $10,000 for a secondary school pupil.
Under the bill, only individuals whose Wisconsin adjusted gross income is below a threshold amount may claim the deduction for private school tuition. The threshold amount is $100,000 for single individuals and heads of household, $150,000 for married couples filing jointly, and $75,000 for married individuals filing separately.
Increasing disability income subtraction and expanding eligibility
The bill increases and expands the individual state income tax subtraction, or deduction, for disability payments received by a person under the age of 65 who is retired and who is permanently and totally disabled. Under the bill, beginning in tax year 2025, up to $5,500 of disability payments may be subtracted annually from an individual’s taxable income. In addition, the bill expands eligibility for claiming the subtraction to individuals having a federal adjusted gross income under $30,000 or under $60,000 if married.
Under current law, up to $5,000 of disability payments may be subtracted, and to be eligible, a person must have federal adjusted gross income under $20,200 or under $25,400 if married and both spouses are disabled.
Subtraction for labor organization dues
Beginning in 2027, the bill provides an individual income tax subtraction for the amount of membership dues and expenses paid by a person to a labor organization.
Increasing the adoption deduction
The bill increases to $15,000 the maximum deduction allowed for adoption expenses for purposes of the state income tax. Under current law, a full-year resident who is an adoptive parent may deduct from taxable income up to $5,000 of the adoption fees, court costs, or legal fees relating to the adoption of a child paid during the tax year during which the final order of adoption has been entered and paid during the prior two tax years.
Tax credit for installing universal changing stations
The bill creates an income and franchise tax credit for small businesses that install universal changing stations. Under the bill, a “universal changing station” is a floor-mounted or wall-mounted, powered, and height-adjustable adult changing table with a safety rail that can be used for personal hygiene by an individual with a disability of either sex and the individual’s care provider.
The credit applies for taxable years beginning after December 31, 2024. Under the bill, a small business is any entity that, during the preceding taxable year, either had gross receipts of no more than $1,000,000 or employed no more than 30 full-time employees. The credit is equal to 50 percent of the amount the small business paid to install the universal changing station, up to a maximum credit of $5,125. The credit may be claimed only if the universal changing station meets certain requirements relating to size, maneuverability space, weight load, and adjustability.
Dividends received deduction limitation
Current law allows corporations to deduct, for income and franchise tax purposes, the dividends received from related corporations. The dividends must be paid on common stock, and the corporation receiving the dividends must own at least 70 percent of the total combined voting stock of the other corporation. Current law also allows businesses to carry forward net business losses to future taxable years in order to offset income in those years. Under the bill, a business may not take the dividends received deduction into account when determining if it has a net business loss that can be carried forward.
Internal Revenue Code references
The bill adopts, for state income and franchise tax purposes, certain changes made to the Internal Revenue Code by the federal Tax Cuts and Jobs Act, enacted in December 2017. The bill adopts provisions of the act related to the limitation on losses for taxpayers other than corporations; certain special rules for the taxable year of inclusion; the limitation on business-related deduction for interest; the limitation on the deduction by employers of expenses for fringe benefits; the limitation on the deduction for Federal Deposit Insurance Corporation premiums; and the limitation on excessive employee remuneration.
Property taxation
Increasing the school levy property tax credit
The bill increases the appropriation for the school levy property tax credit so that the total amount distributed to claim against property tax liability is $1,400,300,000 in the 2025–26 fiscal year and $1,524,700,000 in the 2026–27 fiscal year. Currently the annual distribution is $1,275,000,000.
Telecom and communication tower exemption
The bill exempts radio, cellular, and telecommunication towers from the property tax. The bill also exempts radio, cellular, and telecommunication towers that are classified as real property from the telephone company tax.
School aid reduction information
The 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 or the Racine choice program or as a result of making payments to private schools under the special needs scholarship program.
Manufacturing property assessment fees
Under current law, DOR assesses manufacturing property for property tax purposes and imposes a fee on each municipality in which the property is located to cover part of the assessment costs. If a municipality does not pay by March 31 of the following year, DOR reduces the municipality’s July and November shared revenue distribution by the amount of the fee. The bill requires the fee to be collected from a reduction in the municipality’s shared revenue distribution, and if DOR is unable to collect the fee in this manner, then the fee is directly imposed on the municipality.
General taxation
Sales tax exemption for electricity and natural gas
Under current law, electricity and natural gas sold during the months of November, December, January, February, March, and April for residential use is exempt from the sales and use tax. The bill exempts from the sales and use tax electricity and natural gas sold for residential use regardless of when it is sold.
Sales tax exemption for over-the-counter drugs
The bill creates a sales and use tax exemption for the sale of over-the-counter drugs.
County and municipality sales and use taxes
Current law allows a county to enact an ordinance to impose sales and use taxes at the rate of 0.5 percent of the sales price or purchase price on tangible personal property and taxable services. The county must use the revenue from the taxes for property tax relief. Under the bill, a county may impose that county sales and use tax at the rate of 0.1, 0.2, 0.3, 0.4, or 0.5 percent. The bill also allows a county, except for Milwaukee County, to impose, by ordinance, an additional sales and use tax at the rate of 0.1, 0.2, 0.3, 0.4, or 0.5 percent of the sales price or purchase price on tangible personal property and taxable services. However, the ordinance does not take effect unless approved by a majority of the voters of the county at a referendum. The revenue from those taxes may be used for any purpose designated by the county board or specified in the ordinance or in the referendum approving the ordinance.
The bill also allows a municipality, except for the City of Milwaukee, with a 2020 population exceeding 30,000 to enact an ordinance to impose sales and use taxes at the rate of 0.1, 0.2, 0.3, 0.4, or 0.5 percent of the sales price or purchase price on tangible personal property and taxable services. The ordinance does not take effect unless approved by a majority of the voters of the municipality at a referendum. The revenue from those taxes may be used for any purpose designated by the governing body of the municipality or specified in the ordinance or in the referendum approving the ordinance.
Sales tax exemption for diapers and feminine hygiene products
The bill creates a sales and use tax exemption for the sale of diapers and feminine hygiene products.
Breastfeeding equipment
The bill creates a sales and use tax exemption for breast pumps, breast pump kits, and breast pump storage and collection supplies.
Sales and use tax exemption for gun safety items
The bill creates a sales and use tax exemption for sales of gun safes, trigger locks, and gun barrel locks.
Prairie and wetland counseling services
Under current law, the sale of landscaping and lawn maintenance services is subject to the sales tax. The bill excludes from taxable landscaping services the planning and counseling services for the restoration, reclamation, or revitalization of prairie, savanna, or wetlands if such services are provided for a separate and optional fee distinct from other services.
Sales tax exemption for energy systems
Current law provides a sales and use tax exemption for a product that has as its power source wind energy, direct radiant energy received from the sun, or gas generated from anaerobic digestion of animal manure and other agricultural waste, if the product produces at least 200 watts of alternating current or 600 British thermal units per day. The sale of electricity or energy produced by the product is also exempt.
The bill modifies current law so that the exemption applies to solar power systems and wind energy systems that produce electrical or heat energy directly from the sun or wind and are capable of continuously producing at least 200 watts of alternating current or 600 British thermal units. In addition, the exemption applies to a waste energy system that produces electrical or heat energy directly from gas generated from anaerobic digestion of animal manure and other agricultural waste and is capable of continuously producing at least 200 watts of alternating current or 600 British thermal units. A system for which the exemption applies includes tangible personal property sold with the system that is used primarily to store or facilitate the storage of the electrical or heat energy produced by the system.
Elimination of sales tax exemption for farm-raised deer
The bill eliminates 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.
Vapor products
Current law imposes a tax on vapor products, which are any noncombustible products that produce vapor or aerosol for inhalation from the application of a heating element to a liquid or other substance that is depleted as the product is used, regardless of whether the liquid or other substance contains nicotine. The tax is imposed at the rate of 5 cents per milliliter of the liquid or other substance based on the volume as listed by the manufacturer.
The bill taxes vapor products at the rate of 71 percent of the manufacturer’s established list price and modifies the definition of “vapor product.” Under the bill, “vapor product” means a 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” is defined to include 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. The bill specifies that any product regulated by the federal Food and Drug Administration as a drug or device is not a vapor product.
Little cigars
The 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 are taxed at the rate of 126 mills per little cigar, regardless of weight. The bill defines “little cigar” to mean a cigar that has an integrated cellulose acetate filter and is wrapped in any substance containing tobacco.
Filing fee increase for petitions to Tax Appeals Commission
The bill increases the filing fee paid by petitioners who file certain petitions for review with the Tax Appeals Commission. Specifically, under the bill, the filing fee increases from $25 to $250 for petitions that do not involve a small claims case. The bill also modifies the definition of “small claims” to a matter in which the amount in controversy is less than or equal to the amount used to determine the applicability of small claims procedure to certain civil actions under current law, which is currently $10,000. Under current law, the definition of “small claims” for cases decided by the Tax Appeals Commission is $2,500, and certain procedures of the Tax Appeals Commission for deciding cases differ between small claims cases and non–small claims cases.
Electronic filing of petitions with Tax Appeals Commission
The bill allows electronic filing of petitions for review to the Tax Appeals Commission and specifies that a petition filed electronically is considered timely filed if submitted by midnight of the last day for filing.
Providing notices for public utility taxes
Under current law, public utility companies, including railroads and air carriers, are exempt from local property taxes and instead are subject to special state taxes. Current law requires DOR to send certain notices regarding these taxes by certified mail. Under the bill, DOR must still provide the notices but is no longer required to send them to public utilities subject to ad valorem taxes by certified mail.
TRANSPORTATION
Highways and local assistance
Enumeration of the I 39/90/94 project
Under current law, major highway projects must be specifically authorized by the legislature and approved by the transportation projects commission before construction on the project may begin. The bill enumerates the I 39/90/94 project, which the bill defines to mean “I 39/90/94 extending approximately 67 miles in Dane, Columbia, Sauk, and Juneau counties from USH 12/18 in Madison to USH 12/STH 16 in Wisconsin Dells, including I 39 from I 90/94 to Levee Road near the city of Portage, and including all interchanges and work on adjacent roadways necessary for the completion of the project.”
Currently, moneys are appropriated to DOT for various purposes relating to state highway facilities. DOT is prohibited from encumbering or expending those moneys for purposes related to the purchase of land, easements, or development rights in land, unless the purchase is in association with a highway project and the land or interest in land is located within one-quarter mile of the highway. The bill exempts the I 39/90/94 project from this prohibition.
Sound barriers on I 894
The bill requires DOT, during the 2025–27 fiscal biennium, to allocate $19,500,000 for the construction of sound barriers on I 894, between 27th street and 76th street, in Milwaukee County.
Contract cost threshold for gubernatorial approval
Under current law, DOT may enter into contracts for services. Certain contracts that exceed a specified cost threshold require the approval of the governor. The bill increases the cost threshold for the following contract types:
1. For engineering, consulting, surveying, or other specialized services, increased from $3,000 to $100,000.
2. For highway improvements, increased from $1,000 to $250,000.
3. For counties to perform highway improvements, increased from $5,000 to $100,000.
4. For performing portions of improvement work affecting railroads or utilities, increased from $5,000 to $100,000.
5. For prompt repair, protection, or preservation of state highways jeopardized by extraordinary conditions or emergency, increased from $10,000 to $100,000.
Requirements for local 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 eliminates all of these requirements.
Traffic calming grants
Under the bill, DOT must develop and administer a local traffic calming grant program. Under the program, DOT must award grants to political subdivisions for infrastructure projects designed to reduce the speed of vehicular traffic.
Mass transit aids
Under current law, DOT provides state aid payments to local public bodies in urban areas served by mass transit systems to assist the local public bodies with the expenses of operating those systems. There are five classes of mass transit systems, and the total amount of state aid payments to four of these classes is limited to a specific amount in each calendar year. The fifth class consists of certain commuter or light rail systems, and no state aid amounts are specified for this class.
The bill modifies the criteria by which mass transit systems are placed into classes, modifying the threshold operating expenses for each class and updating the census by which population-based class distinctions are determined for two of the classes.
For the four classes of mass transit systems for which state aid amounts are specified, the bill does the following to the total amount limits:
1. For mass transit systems having annual operating expenses of $100,000,000 or more, the bill maintains the current limit of $66,787,400 in calendar year 2025 and increases the limit to $69,458,900 in calendar year 2026 and to $72,237,300 in calendar year 2027 and thereafter.
2. For mass transit systems having annual operating expenses of more than $30,000,000 but less than $100,000,000, the bill maintains the current limit of $17,549,500 in calendar year 2025 and increases the limit to $18,251,500 in calendar year 2026 and to $18,981,600 in calendar year 2027 and thereafter.
3. For mass transit systems serving urban areas having a population of at least 50,000 but having annual operating expenses of no more than $30,000,000, the bill maintains the current limit of $25,475,900 in calendar year 2025 and increases the limit to $26,494,900 in calendar year 2026 and to $27,554,700 in calendar year 2027 and thereafter.
4. For mass transit systems serving urban areas having a population of less than 50,000, the bill maintains the current limit of $5,398,600 in calendar year 2025 and increases the limit to $9,800,600 in calendar year 2026 and to $10,192,600 in calendar year 2027 and thereafter.
General transportation aids
Under current law, DOT administers a general transportation aids program that makes aid payments to a county based on a share-of-costs formula, and to a municipality based on the greater of a share-of-costs formula or an aid rate per mile. The aid rate per mile is $2,734 for 2025. The bill increases the aid rate per mile to $2,816 for 2026 and $2,901 for 2027 and thereafter.
Currently, the maximum annual amount of aid that may be paid to counties under the program is $132,276,700. The bill maintains this amount for 2025 and increases this amount to $136,245,000 for 2026 and $140,332,400 for 2027 and thereafter. Currently, the maximum annual amount of aid that may be paid to municipalities under the program is $415,116,200. The bill maintains this amount for 2025 and increases this amount to $427,569,700 for 2026 and $440,396,800 for 2027 and thereafter.
Local road improvement program funding
Under current law, DOT administers the local roads improvement program (LRIP) to assist political subdivisions in improving seriously deteriorating local roads by reimbursing political subdivisions for certain improvements. LRIP has several components, including discretionary grants. Current law specifies dollar amounts that DOT must allocate in each fiscal year to each of three project types that exceed specified cost thresholds: 1) county trunk highway improvements that exceed $250,000; 2) town road improvements that exceed $100,000; and 3) municipal street improvements that exceed $250,000.
The bill increases the amounts that DOT is required to allocate for discretionary grants for the three project types, as follows:
