Chapter 71

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.

71.06(2)(j)4. 4. On all taxable income exceeding $150,000, 7.65 percent.

71.06(2e) (2e) Bracket indexing.

71.06(2e)(a) (a) For taxable years beginning after December 31, 1998, and before January 1, 2000, the maximum dollar amount in each tax bracket, and the corresponding minimum dollar amount in the next bracket, under subs. (1m) and (2) (c) and (d), and for taxable years beginning after December 31, 1999, the maximum dollar amount in each tax bracket, and the corresponding minimum dollar amount in the next bracket, under subs. (1n), (1p) (a) to (c), (1q) (a) and (b), and (2) (e), (f), (g) 1. to 3., (h) 1. to 3., (i) 1. and 2., and (j) 1. and 2., shall be increased each year by a percentage equal to the percentage change between the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August of the previous year and the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August 1997, as determined by the federal department of labor, except that for taxable years beginning after December 31, 2000, and before January 1, 2002, the dollar amount in the top bracket under subs. (1p) (c) and (d), (2) (g) 3. and 4. and (h) 3. and 4. shall be increased by a percentage equal to the percentage change between the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August of the previous year and the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August 1999, as determined by the federal department of labor, except that for taxable years beginning after December 31, 2011, the adjustment may occur only if the resulting amount is greater than the corresponding amount that was calculated for the previous year.

71.06(2e)(b) (b) For taxable years beginning after December 31, 2009, the maximum dollar amount in each tax bracket, and the corresponding minimum dollar amount in the next bracket, under subs. (1p) (d), (1q) (c), and (2) (g) 4., (h) 4., (i) 3., and (j) 3., and the dollar amount in the top bracket under subs. (1p) (e), (1q) (d), and (2) (g) 5., (h) 5., (i) 4., and (j) 4., shall be increased each year by a percentage equal to the percentage change between the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August of the previous year and the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August 2008, as determined by the federal department of labor, except that for taxable years beginning after December 31, 2011, the adjustment may occur only if the resulting amount is greater than the corresponding amount that was calculated for the previous year.

71.06(2e)(c) (c) Each amount that is revised under this subsection shall be rounded to the nearest multiple of $10 if the revised amount is not a multiple of $10 or, if the revised amount is a multiple of $5, such an amount shall be increased to the next higher multiple of $10. The department of revenue shall annually adjust the changes in dollar amounts required under this subsection and incorporate the changes into the income tax forms and instructions.

71.06(2m) (2m) Rate changes. If a rate under sub. (1), (1m), (1n), (1p), (1q), or (2) changes during a taxable year, the taxpayer shall compute the tax for that taxable year by the methods applicable to the federal income tax under section 15 of the Internal Revenue Code.

71.06(2s) (2s) Nonresidents and part-year residents.

71.06(2s)(a) (a) For taxable years beginning after December 31, 1996, and before January 1, 1998, with respect to nonresident individuals, including individuals changing their domicile into or from this state, the tax brackets under subs. (1) and (2) shall be multiplied by a fraction, the numerator of which is Wisconsin adjusted gross income and the denominator of which is federal adjusted gross income. In this paragraph, for married persons filing separately “adjusted gross income” means the separate adjusted gross income of each spouse, and for married persons filing jointly “adjusted gross income” means the total adjusted gross income of both spouses. If an individual and that individual’s spouse are not both domiciled in this state during the entire taxable year, the tax brackets under subs. (1) and (2) on a joint return shall be multiplied by a fraction, the numerator of which is their joint Wisconsin adjusted gross income and the denominator of which is their joint federal adjusted gross income.

71.06(2s)(b) (b) For taxable years beginning after December 31, 1997, and before January 1, 2000, with respect to nonresident individuals, including individuals changing their domicile into or from this state, the tax brackets under subs. (1m) and (2) (c) and (d) shall be multiplied by a fraction, the numerator of which is Wisconsin adjusted gross income and the denominator of which is federal adjusted gross income. In this paragraph, for married persons filing separately “adjusted gross income” means the separate adjusted gross income of each spouse, and for married persons filing jointly “adjusted gross income” means the total adjusted gross income of both spouses. If an individual and that individual’s spouse are not both domiciled in this state during the entire taxable year, the tax brackets under subs. (1m) and (2) (c) and (d) on a joint return shall be multiplied by a fraction, the numerator of which is their joint Wisconsin adjusted gross income and the denominator of which is their joint federal adjusted gross income.

71.06(2s)(c) (c) For taxable years beginning after December 31, 1999, and before January 1, 2001, with respect to nonresident individuals, including individuals changing their domicile into or from this state, the tax brackets under subs. (1n) and (2) (e) and (f) shall be multiplied by a fraction, the numerator of which is Wisconsin adjusted gross income and the denominator of which is federal adjusted gross income. In this paragraph, for married persons filing separately “adjusted gross income” means the separate adjusted gross income of each spouse, and for married persons filing jointly “adjusted gross income” means the total adjusted gross income of both spouses. If an individual and that individual’s spouse are not both domiciled in this state during the entire taxable year, the tax brackets under subs. (1n) and (2) (e) and (f) on a joint return shall be multiplied by a fraction, the numerator of which is their joint Wisconsin adjusted gross income and the denominator of which is their joint federal adjusted gross income.

71.06(2s)(d) (d) For taxable years beginning after December 31, 2000, with respect to nonresident individuals, including individuals changing their domicile into or from this state, the tax brackets under subs. (1p), (1q), and (2) (g), (h), (i), and (j) shall be multiplied by a fraction, the numerator of which is Wisconsin adjusted gross income and the denominator of which is federal adjusted gross income. In this paragraph, for married persons filing separately “adjusted gross income” means the separate adjusted gross income of each spouse, and for married persons filing jointly “adjusted gross income” means the total adjusted gross income of both spouses. If an individual and that individual’s spouse are not both domiciled in this state during the entire taxable year, the tax brackets under subs. (1p), (1q), and (2) (g), (h), (i), and (j) on a joint return shall be multiplied by a fraction, the numerator of which is their joint Wisconsin adjusted gross income and the denominator of which is their joint federal adjusted gross income.