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 in 2021, the bill reduces the percentage used for
household income over $8,060 from 8.785 to 6.655 percent and increases the

maximum income amount from $24,680 to $30,000. The bill also indexes the $8,060,
$30,000, and $1,460 amounts for inflation, beginning in 2023.
Veterans and surviving spouses property tax credit
Under current law, an eligible veteran or surviving spouse may claim a
refundable income tax credit that equals the amount of property taxes paid during
the year on his or her principal dwelling in Wisconsin. Current law does not
expressly address the treatment of renters. 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 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.
Medical care insurance subtraction
The bill modifies the income tax subtraction for amounts paid for medical care
insurance by self-employed individuals. Under current law, the subtraction may not
exceed the individual's net earnings from a trade or business that are taxable by
Wisconsin. Under the bill, the subtraction may not exceed the individual's wages,
salary, tips, unearned income, and net earnings from a trade or business that are
taxable by Wisconsin.
The bill similarly modifies the provision under current law that prorates the
subtraction for self-employed nonresidents and part-year residents based on the
percentage of the individual's net earnings from a trade or business taxable by
Wisconsin to total net earnings from a trade or business. Under the bill, the
subtraction is prorated based on the percentage of the individual's wages, salary,
tips, unearned income, and net earnings from a trade or business that are taxable
by Wisconsin to total wages, salary, tips, unearned income, and net earnings from a
trade or business. The bill also eliminates obsolete provisions related to the medical
care insurance subtraction for self-employed individuals.
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.
Limitation on capital gains exclusion
Current law allows individuals, when computing their income for state tax
purposes, to subtract 30 percent of the net capital gains realized from the sale of

assets held more than one year or acquired from a decedent. The subtraction is
increased to 60 percent for gains realized from the sale of farm assets held more than
one year or acquired from a decedent.
Under the bill, an individual may not make the 30 percent subtraction if his or
her federal adjusted gross income exceeds $400,000 for a single individual or head
of household filer; $533,000 for a married couple who files jointly; or $266,500 for a
married individual who files separately. The bill creates an exception for individuals
whose federal AGI, after subtracting 30 percent of net capital gains from nonfarm
assets, is below the threshold amount. These individuals may make the subtraction,
subject to the 30 percent limitation, but must reduce the amount subtracted by the
amount that federal AGI exceeds the threshold amount. The bill makes no changes
to the 60 percent subtraction.
Education award subtraction
Under current law, an individual who completes a term of service in the
AmeriCorps program may receive a Segal AmeriCorps education award to pay for
post-secondary educational expenses and to repay student loans. The awards are
subject to federal and state income taxation. Under the bill, an individual may
subtract the amount received as an award during the taxable year when calculating
his or her income for Wisconsin income tax purposes.
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.
Dividends received deduction
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.
Net operating loss carryback
The bill repeals the provision under which an individual may carry back a net
operating loss to the two prior taxable years in order to reduce the amount of income
subject to tax in those years.
Pass-through entities and refundable tax credits
Current law allows businesses operating in this state to claim a number of
income and franchise tax credits to promote job creation and economic development.
The following credits allow a business to receive a refund if the amount of the credit
exceeds its tax liability: the jobs tax credit, the business development credit, the
enterprise zones jobs credit, the electronics and information technology

manufacturing zone credit, and the research credit. Partnerships, limited liability
companies, and tax-option corporations may not claim these credits, but, instead,
the partners, members, and shareholders of the respective entities may claim the
credits in proportion to their ownership interests in the entity. Generally, the entities
determine the aggregate amount of the credits that the partners, members, or
shareholders may claim.
The bill allows partnerships, limited liability companies, and tax-option
corporations to claim the refundable tax credits, not including the electronics and
information technology manufacturing zone credit and the research credit.
Research credit refunds