Under current law, any individual nominated by the governor or another state officer or agency subject to the advice and consent of the senate, whose confirmation for the office or position is rejected by the senate, may not do any of the following during the legislative session biennium in which his or her nomination is rejected:
1. Hold the office or position for which he or she was rejected.
2. Be nominated again for that office or position.
3. Perform any duties of that office or position.
The bill eliminates those restrictions.
Records and correspondence of legislators
Under current law, the Public Records Board prescribes policies and standards for the retention and disposition of public records made or received by a state officer or agency. However, for purposes of public records retention, the definition of “public records” does not include the records and correspondence of any legislator. The bill eliminates that exception for a legislator’s records and correspondence.
Passive review by JCF; objections to be public
Current law requires that JCF review certain proposed actions before an agency may execute the action. The review required often takes the form of a passive review. In a passive review, the agency must submit the proposed action to JCF and if the cochairpersons of JCF do not notify the agency within a certain period, often 14 days, that a member of JCF has objected to the action, the agency may execute the proposed action. If, however, a member objects, the agency is limited to the action as approved or modified by JCF. The bill specifies that the name of any JCF member who objects to the proposed action, as well as the reason the member objects, must be recorded and made publicly available.
Capitol security
Under current law, DOA is required to submit any proposed changes to security at the capitol, including the posting of a firearm restriction, to JCLO for approval under passive review. The bill eliminates that requirement.
TAXATION
Income taxation
Tax exemption for tips
The bill creates an income tax exemption for cash tips received by an employee from the customers of the employee’s employer.
Earned income tax credit
The bill increases the amount that an individual with fewer than three qualifying children may claim as the Wisconsin earned income tax credit (EITC). Under current law, the Wisconsin EITC is equal to a percentage of the federal EITC. The percentage is 4 percent of the federal EITC if the individual has one qualifying child, 11 percent if the individual has two qualifying children, and 34 percent if the individual has three or more qualifying children. The credit is refundable, which means that if the credit exceeds the individual’s tax liability, he or she will receive the excess as a refund check.
Under the bill, the percentage of the federal EITC that an eligible individual may claim for Wisconsin purposes is 16 percent if the individual has one qualifying child, 25 percent if the individual has two qualifying children, and 34 percent if the individual has three or more qualifying children.
Homestead tax credit expansion
Under current law, the homestead tax credit is a refundable income tax credit that may be claimed by homeowners and renters. The credit is based on the claimant’s household income and the amount of property taxes or rent constituting property taxes on his or her Wisconsin homestead. Because the credit is refundable, if the credit exceeds the claimant’s income tax liability, he or she receives the excess as a refund check. Under current law, there are three key dollar amounts used when calculating the credit:
1. If household income is $8,060 or less, the credit is 80 percent of the property taxes or rent constituting property taxes. If household income exceeds $8,060, the property taxes or rent constituting property taxes are reduced by 8.785 percent of the household income exceeding $8,060, and the credit is 80 percent of the reduced property taxes or rent constituting property taxes.
2. The credit may not be claimed if household income exceeds $24,680.
3. The maximum property taxes or rent constituting property taxes used to calculate the credit is $1,460.
Beginning with claims filed for the 2025 tax year, the bill increases the income phase-out threshold from $8,060 to $19,000, reduces the percentage used for household income above the income phase-out threshold to 7.891 percent, and increases the maximum income amount from $24,680 to $37,500. The bill also indexes the $19,000, $37,500, and $1,460 amounts for inflation during future tax years.
Changing the name of the homestead credit
The bill also renames the homestead income tax credit to the property tax and rent rebate.
Veterans and surviving spouses property tax credit eligibility expansion
The bill reduces the eligibility threshold for an eligible veteran, the spouse of an eligible veteran, and the unremarried surviving spouse of an eligible veteran to claim the veterans and surviving spouses property tax credit under the individual income tax system. Under the bill, a claimant may claim the credit if the service-connected disability rating of the veteran for whom the claimant is claiming the credit is at least 70 percent. Currently, that rating must be 100 percent.
Under the bill, the maximum credit that a claimant may claim is multiplied by the percentage of the service-connected disability rating. The bill does not affect a claimant who claims the credit based on the individual unemployability rating. Under current law, a claimant may also claim the credit if the disability rating based on individual unemployability of the veteran for whom the claimant is claiming the credit is 100 percent.
Rent qualifying for the veterans and surviving spouses property tax credit
Current law does not expressly address the treatment of renters for purposes of claiming the veterans and surviving spouses property tax credit. DOR allows an eligible veteran or surviving spouse who is a renter to claim the credit if he or she is required to pay the property taxes under a written agreement with the landlord and pays the property taxes directly to the municipality.
Under the bill, an eligible veteran or surviving spouse who is a renter may claim the veterans and surviving spouses property tax credit in an amount equal to his or her rent constituting property taxes. The bill defines “rent constituting property taxes” to mean 20 percent of the rent paid during the year for the use of a principal dwelling if heat is included in the rent and 25 percent of the rent if heat is not included.
Adding a fifth income tax bracket
The bill adds a fifth income tax bracket having a rate of 9.80 percent for individuals and married joint filers with taxable income exceeding $1,000,000 and for married separate filers with taxable income exceeding $500,000. Under current law, there are four income tax brackets for single individuals, certain fiduciaries, heads of households, and married persons. The brackets are indexed for inflation.
Under the bill, which first applies to taxable year 2025, there are five income tax brackets for single individuals, certain fiduciaries, heads of households, and married persons. The brackets are indexed for inflation. The rate of taxation under the bill for the five brackets for single individuals, certain fiduciaries, and heads of households, before indexing, is as follows:
1. For taxable income not exceeding $7,500, 3.5 percent.
2. For taxable income exceeding $7,500, but not $15,000, 4.40 percent.
3. For taxable income exceeding $15,000, but not $225,000, 5.3 percent.
4. For taxable income exceeding $225,000, but not $1,000,000, 7.65 percent.
5. For taxable income exceeding $1,000,000, 9.80 percent.
The rates that apply to married joint filers under the bill are the same as the rates that apply to single individuals, fiduciaries, and heads of households, but the income limitations are higher. The lowest bracket applies to taxable income not exceeding $10,000; the second bracket applies to taxable income exceeding $10,000, but not $20,000; the third bracket applies to taxable income exceeding $20,000, but not $300,000; the fourth bracket applies to taxable income exceeding $300,000, but not $1,000,000; and the fifth bracket applies to taxable income exceeding $1,000,000.
Increasing the personal exemption
The bill increases from $700 to $1,200 the income tax personal exemption for taxpayers, their spouses, and their dependents.
Manufacturing and agriculture credit limitation
Currently, a person may claim a tax credit on the basis of the person’s income from manufacturing or agriculture. A taxpayer may claim a credit equal to 7.5 percent of the income derived either from the sale of tangible personal property manufactured in whole or in part on property in this state that is assessed as manufacturing property or from the sale of tangible personal property produced, grown, or extracted in whole or in part from property in this state assessed as agricultural property. If the amount of the credit exceeds the taxpayer’s income tax liability, the taxpayer does not receive a refund, but may apply the balance to the taxpayer’s tax liability in subsequent taxable years.
The 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 does not affect the amount of income from agriculture that may be used as a basis for claiming the credit.
Film production tax credit
The bill creates income and franchise tax credits for film production companies, and the Department of Tourism implements the tax credit. Under the bill, a film production company may claim a credit that is equal to 25 percent of the salary or wages paid to the company’s employees in the taxable year for services rendered in this state to produce a film, video, broadcast advertisement, or television production, as approved by the Department of Tourism, and paid to employees who were residents of this state at the time that they were paid. The total amount of the credits that may be claimed by a taxpayer may not exceed an amount that is equal to the first $250,000 of salary and wages paid to each of the taxpayer’s employees in the taxable year, not including the salary or wages paid to the taxpayer’s two highest-paid employees in the taxable year, for a production with budgeted expenditures of $1,000,000 or more. If the total amount of the credits claimed by a taxpayer exceeds the taxpayer’s tax liability, the state will not issue a refund, but the taxpayer may carry forward any remaining credit to subsequent taxable years.
Under the bill, a film production company may claim an income and franchise tax credit in an amount that is equal to 25 percent of the production expenditures paid by the company in the taxable year to produce a film, video, broadcast advertisement, or television production. If the total amount of the credits claimed by the company exceeds the company’s tax liability, the state will issue a refund.
The bill also allows a film production company to claim an income and franchise tax credit, for the first three taxable years that the company is doing business in this state, in an amount that is equal to 25 percent of the amount that the claimant paid in the taxable year to purchase depreciable tangible personal property or to acquire, construct, rehabilitate, remodel, or repair real property.
Under the bill, a film production company may claim an income and franchise tax credit that is equal to the amount of sales and use taxes that the claimant paid for tangible personal property and taxable services that are used to produce a film, video, broadcast advertisement, or television production in this state.
The bill provides that the Department of Tourism may not allocate more than $10,000,000 in film production and investments tax credits in each fiscal year. The bill also requires the Department of Tourism to annually submit a report to the legislature that specifies the number of persons who submitted credit applications in the previous year and the amount of the credits allocated to each such applicant and to make recommendations on improving the efficiency of the program. Finally, the bill requires the Legislative Audit Bureau to biennially prepare a performance evaluation audit of the program implemented by the Department of Tourism.
Eligibility of nuclear power research for the research credit
Under the bill, beginning in the 2025 tax year, qualified research expenses incurred for research related to nuclear power are eligible for the research income tax credit. Under current law, the research credit is an income and franchise tax credit equal to a specified percentage of the person’s qualified research expenses that exceed 50 percent of the average qualified research expenses for the three taxable years immediately preceding the taxable year for which the person claims the credit. Current law allows a person to receive a refund in an amount not exceeding 25 percent of their allowable claim for the research credit.
Changes to state supplement to federal historic rehabilitation credit
The bill makes the following changes to the state supplement to the federal historic rehabilitation credit: 1) eliminates the requirement for claiming the credit of incurring at least $50,000 in qualified rehabilitation expenditures; 2) eliminates the requirement that the state credit be claimed at the same time as the claimant claims the federal historic rehabilitation credit; and 3) allows partnerships, limited liability companies, and tax-option corporations to claim the credit and prohibits partners of a partnership, members of a limited liability company, and shareholders of a tax-option corporation from claiming the 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 federal law, for certified historic structures on property located in this state and for the rehabilitation expenses for qualified rehabilitated buildings, as defined under federal law, that are not certified historic structures.
Flood insurance premiums
The bill creates a nonrefundable individual income tax credit for flood insurance premiums. The credit is equal to 10 percent of the amount of the premiums that an individual paid in the taxable year for flood insurance, but the amount of the claim may not exceed $60 in any taxable year. Because the credit is nonrefundable, it may be claimed only up to the amount of the individual’s tax liability.
Private school tuition deduction
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.
