Chapter 71

71.05(26)(b)3. 3. After making the investment as described under subd. 2., notifies the department, on a form prepared by the department, that the claimant will not declare on the claimant’s income tax return the gain described under subd. 1. because the claimant has reinvested the capital gain as described under subd. 2. The form shall be sent to the department along with the claimant’s income tax return for the year to which the claim relates.

71.05(26)(bm) (bm) For taxable years beginning after December 31, 2013, a claimant may subtract from federal adjusted gross income any amount of a long-term capital gain if the claimant does all of the following:

71.05(26)(bm)1. 1. Within 180 days after the sale of the asset that generated the gain, invests all of the gain in a qualified Wisconsin business.

71.05(26)(bm)2. 2. After making the investment as described under subd. 1., notifies the department, on a form prepared by the department, that the claimant will not declare the gain on the claimant’s income tax return because the claimant has reinvested the capital gain as described under subd. 1. The form shall be sent to the department along with the claimant’s income tax return for the year to which the claim relates.

71.05(26)(c) (c) The basis of the investment described in par. (b) 2. shall be calculated by subtracting the gain described in par. (b) 1. from the amount of the investment described in par. (b) 2. The basis of the investment described in par. (bm) 1. shall be calculated by subtracting the gain described in par. (bm) 1. from the amount of the investment described in par. (bm) 1.

71.05(26)(d) (d) If a claimant defers the payment of income taxes on a capital gain under this subsection, the claimant may not use the gain to net capital gains and losses, as described under sub. (10) (c).

71.05(26)(e) (e) If a claimant claims the subtraction under this subsection, the claimant may not use the gain described under par. (b) 1. to claim a subtraction under sub. (24).

71.05(26)(f) (f) If a claimant claims a subtraction for a capital gain under par. (b) or (bm), the gain may not be used as a qualifying gain under sub. (25).

71.05 History History: 1987 a. 312; 1987 a. 411 ss. 42, 43, 45, 47 to 49, 51 to 53; 1989 a. 31, 46; 1991 a. 2, 37, 39, 269; 1993 a. 16, 112, 204, 263, 437; 1995 a. 27, 56, 209, 227, 261, 371, 403, 453; 1997 a. 27, 35, 39, 237; 1999 a. 9, 32, 44, 54, 65, 167; 2001 a. 16, 104, 105, 109; 2003 a. 85, 99, 119, 135, 183, 255, 289, 321, 326; 2005 a. 22, 25, 216, 254, 335, 361, 479, 483; 2007 a. 20, 96, 226; 2009 a. 2, 28, 205, 265, 269, 276, 295, 332, 344; 2011 a. 3, 5, 10, 32, 212, 232, 237; 2011 a. 260 ss. 80, 81; 2013 a. 19, 20, 128, 145; 2013 a. 166 s. 76; 2013 a. 173, 227; 2015 a. 55, 60, 84, 195; 2015 a. 197 s. 51; 2015 a. 216, 312; 2017 a. 17, 58, 59, 197, 231, 368; 2019 a. 7, 9, 54, 136; 2021 a. 1, 58, 127, 156, 157, 239; 2021 a. 240 ss. 12, 30; 2023 a. 19, 104, 138, 146, 148, 267; s. 13.92 (1) (bm) 2.

71.05 Annotation Shareholder distributions derived from investments in direct obligations of the federal government are exempt under sub. (6) (b) 1. Capital Preservation Fund, Inc. v. DOR, 145 Wis. 2d 841, 429 N.W.2d 551 (Ct. App. 1988).

71.05 Annotation The fact that federal employees whose service is interrupted can repurchase prior years of employment for benefit determination purposes does not erase their absence from employment on December 31, 1963, so that they may be considered to have been employed on that date under sub. (1) (a). Hafner v. DOR, 2000 WI App 216, 239 Wis. 2d 218, 619 N.W.2d 300, 00-0511.

71.05 Annotation Sub. (6) (a) 1. requires adding to Wisconsin income all types of interest excluded from federal interest. All distributions characterized as interest under federal tax law must be included as interest income. Borge v. Wisconsin Tax Appeals Commission, 2002 WI App 14, 250 Wis. 2d 624, 639 N.W.2d 757, 01-0488.

71.05 Annotation When an agreement is silent on the allocation of a payment between a covenant not to compete and other claims or compensation, the commission may make a reasonable allocation if it is: 1) based on credible evidence; 2) the parties intended a portion of the payment as compensation for the covenant not to compete; and 3) the payment is economically reasonable. Schwartz v. DOR, 2002 WI App 255, 258 Wis. 2d 112, 653 N.W.2d 150, 02-0372.

71.05 Annotation Under sub. (1) (a), if one was a member of one of the listed funds on December 31, 1963, retirement benefits paid on that person’s behalf may not be exempt. Withdrawal of contributions terminated membership and the purchase of previously forfeited years of service did not reinstate the account as of December 31, 1963. Kamps v. DOR, 2003 WI App 106, 264 Wis. 2d 794, 663 N.W.2d 306, 02-2355.

71.05 Annotation Sub. (6) (b) 5. requires that there be a recovery of a federal itemized deduction, for which no tax benefit was received for Wisconsin purposes. The tax benefit rule means that if an amount deducted from gross income in one taxable year is recoverable in a later year, the recovery is income in the later year. Dettwiler v. DOR, 2007 WI App 125, 301 Wis. 2d 512, 731 N.W.2d 663, 06-1660.

71.05 Annotation Adoption Assistance Offers Tax Relief. Franklin. Wis. Law. Feb. 1998.

71.06 71.06 Rates of taxation.

71.06(1) (1) Fiduciaries, single individuals and heads of households; 1986 to 1997. 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 for taxable years beginning on or after August 1, 1986, and before January 1, 1994, and upon the taxable incomes of all fiduciaries, except fiduciaries of nuclear decommissioning trust or reserve funds, and single individuals and heads of households for taxable years beginning after December 31, 1993, and before January 1, 1998, shall be computed at the following rates:

71.06(1)(a) (a) On all taxable income from $0 to $7,500, 4.9 percent.

71.06(1)(b) (b) On all taxable income exceeding $7,500 but not exceeding $15,000, 6.55 percent.

71.06(1)(c) (c) On all taxable income exceeding $15,000, 6.93 percent.

71.06(1m) (1m) Fiduciaries, single individuals and heads of households; 1997 to 1999. 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, 1997, and before January 1, 2000:

71.06(1m)(a) (a) On all taxable income from $0 to $7,500, 4.77 percent.

71.06(1m)(b) (b) On all taxable income exceeding $7,500 but not exceeding $15,000, 6.37 percent.

71.06(1m)(c) (c) On all taxable income exceeding $15,000, 6.77 percent.

71.06(1n) (1n) Fiduciaries, single individuals and heads of households; 2000. 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, 1999, and before January 1, 2001:

71.06(1n)(a) (a) On all taxable income from $0 to $7,500, 4.73 percent.

71.06(1n)(b) (b) On all taxable income exceeding $7,500 but not exceeding $15,000, 6.33 percent.

71.06(1n)(c) (c) On all taxable income exceeding $15,000 but not exceeding $112,500, 6.55 percent.

71.06(1n)(d) (d) On all taxable income exceeding $112,500, 6.75 percent.

71.06(1p) (1p) Fiduciaries, single individuals and heads of households; 2001 to 2012. 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, 2000, and before January 1, 2013:

71.06(1p)(a) (a) On all taxable income from $0 to $7,500, 4.6 percent.

71.06(1p)(b) (b) On all taxable income exceeding $7,500 but not exceeding $15,000, 6.15 percent.

71.06(1p)(c) (c) On all taxable income exceeding $15,000 but not exceeding $112,500, 6.5 percent.

71.06(1p)(d) (d) On all taxable income exceeding $112,500 but not exceeding $225,000, 6.75 percent.

71.06(1p)(e) (e) On all taxable income exceeding $225,000, 7.75 percent.

71.06(1q) (1q) Fiduciaries, single individuals, and heads of households; after 2012. 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:

71.06(1q)(a) (a) On all taxable income from $0 to $7,500, 4.40 percent, except that for taxable years beginning after December 31, 2013, 4.0 percent, less fifty hundredths for taxable years beginning after December 2022.

71.06(1q)(b) (b) On all taxable income exceeding $7,500 but not exceeding $15,000, 5.84 percent, except that for taxable years beginning after December 31, 2018, 5.21 percent, less eighty-one hundredths for taxable years beginning after December 2022.

71.06(1q)(c) (c) On all taxable income exceeding $15,000 but not exceeding $225,000, 6.27 percent, except that for taxable years beginning after December 31, 2020, 5.30 percent.

71.06(1q)(d) (d) On all taxable income exceeding $225,000, 7.65 percent.

71.06(2) (2) Married persons. The tax to be assessed, levied and collected upon the taxable incomes of all married persons shall be computed at the following rates:

71.06(2)(a) (a) For joint returns, for taxable years beginning after July 31, 1986, and before January 1, 1998:

71.06(2)(a)1. 1. On all taxable income from $0 to $10,000, 4.9 percent.

71.06(2)(a)2. 2. On all taxable income exceeding $10,000 but not exceeding $20,000, 6.55 percent.

71.06(2)(a)3. 3. On all taxable income exceeding $20,000, 6.93 percent.

71.06(2)(b) (b) For married persons filing separately, for taxable years beginning after July 31, 1986, and before January 1, 1998:

71.06(2)(b)1. 1. On all taxable income from $0 to $5,000, 4.9 percent.

71.06(2)(b)2. 2. On all taxable income exceeding $5,000 but not exceeding $10,000, 6.55 percent.

71.06(2)(b)3. 3. On all taxable income exceeding $10,000, 6.93 percent.

71.06(2)(c) (c) For joint returns, for taxable years beginning after December 31, 1997, and before January 1, 2000:

71.06(2)(c)1. 1. On all taxable income from $0 to $10,000, 4.77 percent.

71.06(2)(c)2. 2. On all taxable income exceeding $10,000 but not exceeding $20,000, 6.37 percent.

71.06(2)(c)3. 3. On all taxable income exceeding $20,000, 6.77 percent.

71.06(2)(d) (d) For married persons filing separately, for taxable years beginning after December 31, 1997, and before January 1, 2000:

71.06(2)(d)1. 1. On all taxable income from $0 to $5,000, 4.77 percent.

71.06(2)(d)2. 2. On all taxable income exceeding $5,000 but not exceeding $10,000, 6.37 percent.

71.06(2)(d)3. 3. On all taxable income exceeding $10,000, 6.77 percent.

71.06(2)(e) (e) For joint returns, for taxable years beginning after December 31, 1999, and before January 1, 2001:

71.06(2)(e)1. 1. On all taxable income from $0 to $10,000, 4.73 percent.

71.06(2)(e)2. 2. On all taxable income exceeding $10,000 but not exceeding $20,000, 6.33 percent.

71.06(2)(e)3. 3. On all taxable income exceeding $20,000 but not exceeding $150,000, 6.55 percent.

71.06(2)(e)4. 4. On all taxable income exceeding $150,000, 6.75 percent.

71.06(2)(f) (f) For married persons filing separately, for taxable years beginning after December 31, 1999, and before January 1, 2001:

71.06(2)(f)1. 1. On all taxable income from $0 to $5,000, 4.73 percent.

71.06(2)(f)2. 2. On all taxable income exceeding $5,000 but not exceeding $10,000, 6.33 percent.

71.06(2)(f)3. 3. On all taxable income exceeding $10,000 but not exceeding $75,000, 6.55 percent.

71.06(2)(f)4. 4. On all taxable income exceeding $75,000, 6.75 percent.

71.06(2)(g) (g) For joint returns, for taxable years beginning after December 31, 2000, and before January 1, 2013:

71.06(2)(g)1. 1. On all taxable income from $0 to $10,000, 4.6 percent.

71.06(2)(g)2. 2. On all taxable income exceeding $10,000 but not exceeding $20,000, 6.15 percent.

71.06(2)(g)3. 3. On all taxable income exceeding $20,000 but not exceeding $150,000, 6.5 percent.

71.06(2)(g)4. 4. On all taxable income exceeding $150,000 but not exceeding $300,000, 6.75 percent.

71.06(2)(g)5. 5. On all taxable income exceeding $300,000, 7.75 percent.

71.06(2)(h) (h) For married persons filing separately, for taxable years beginning after December 31, 2000, and before January 1, 2013:

71.06(2)(h)1. 1. On all taxable income from $0 to $5,000, 4.6 percent.

71.06(2)(h)2. 2. On all taxable income exceeding $5,000 but not exceeding $10,000, 6.15 percent.

71.06(2)(h)3. 3. On all taxable income exceeding $10,000 but not exceeding $75,000, 6.5 percent.

71.06(2)(h)4. 4. On all taxable income exceeding $75,000 but not exceeding $150,000, 6.75 percent.

71.06(2)(h)5. 5. On all taxable income exceeding $150,000, 7.75 percent.

71.06(2)(i) (i) For joint returns, for taxable years beginning after December 31, 2012:

71.06(2)(i)1. 1. On all taxable income from $0 to $10,000, 4.40 percent, except that for taxable years beginning after December 31, 2013, 4.0 percent, less fifty hundredths for taxable years beginning after December 2022.

71.06(2)(i)2. 2. On all taxable income exceeding $10,000 but not exceeding $20,000, 5.84 percent, except that for taxable years beginning after December 31, 2018, 5.21 percent, less eighty-one hundredths for taxable years beginning after December 2022.

71.06(2)(i)3. 3. On all taxable income exceeding $20,000 but not exceeding $300,000, 6.27 percent, except that for taxable years beginning after December 31, 2020, 5.30 percent.

71.06(2)(i)4. 4. On all taxable income exceeding $300,000, 7.65 percent.

71.06(2)(j) (j) For married persons filing separately, for taxable years beginning after December 31, 2012:

71.06(2)(j)1. 1. On all taxable income from $0 to $5,000, 4.40 percent, except that for taxable years beginning after December 31, 2013, 4.0 percent, less fifty hundredths for taxable years beginning after December 2022.

71.06(2)(j)2. 2. On all taxable income exceeding $5,000 but not exceeding $10,000, 5.84 percent, except that for taxable years beginning after December 31, 2018, 5.21 percent, less eighty-one hundredths for taxable years beginning after December 2022.

71.06(2)(j)3. 3. On all taxable income exceeding $10,000 but not exceeding $150,000, 6.27 percent, except that for taxable years beginning after December 31, 2020, 5.30 percent.