How Much Is Wisconsin’s State Income Tax?
Demystify Wisconsin's state income tax. Learn how your income is assessed and what factors influence your final tax obligation.
Wisconsin’s state income tax system funds various public services, including education, infrastructure, and public safety. The Wisconsin Department of Revenue (DOR) administers this tax, which is levied on income earned by individuals residing in or earning income from sources within the state. Understanding this system helps taxpayers determine their tax obligations.
Wisconsin Income Tax Rates
Wisconsin utilizes a progressive income tax system, meaning higher income levels are subject to higher tax rates. For the 2024 tax year, individual income tax rates in Wisconsin range from 3.50% to 7.65%, varying based on filing status and income. This tiered structure ensures that different portions of a taxpayer’s income are taxed at corresponding rates. For instance, the lowest bracket is taxed at 3.5%, while the highest applies a 7.65% rate to income exceeding certain thresholds.
The specific income brackets for 2024 depend on the taxpayer’s filing status, such as single, head of household, married filing jointly, or married filing separately. For a single filer in 2024, the 3.5% rate applies to income up to $14,320, followed by a 4.4% rate for income between $14,320 and $28,640. Income from $28,640 to $315,310 is taxed at 5.3%, and any income above $315,310 is subject to the highest rate of 7.65%. These brackets are adjusted annually for inflation to reflect changes in the cost of living.
Adjusting Your Taxable Income
Gross income in Wisconsin includes all earnings from wages, salaries, business profits, and other sources. From this amount, various adjustments and deductions are applied to arrive at your taxable income, the figure upon which your tax liability is calculated. Taxable income is generally lower than gross income, as these reductions account for specific expenses or situations.
Wisconsin offers a standard deduction that automatically reduces a taxpayer’s gross income, with the amount varying based on filing status and income level. For 2024, a single taxpayer’s deduction is $13,230, while married couples filing jointly can claim $24,490. While Wisconsin does not allow itemized deductions in the same way as the federal system, it provides an itemized deduction credit for certain federal itemized deductions.
Beyond the standard deduction, taxpayers may qualify for specific subtractions from income that further reduce their taxable amount. Contributions to Wisconsin state-sponsored college savings plans, such as Edvest and Tomorrow’s Scholar, can be deducted, with a maximum of $5,000 per beneficiary for single or married-joint filers in 2024. Tuition and fee expenses paid for higher education, up to $7,333 per student for 2024, can also be subtracted. Certain retirement income, such as military retirement benefits, may be partially or fully excludable from Wisconsin income.
Reducing Your Tax Bill With Credits
Tax credits directly reduce the amount of income tax owed, dollar for dollar. Unlike deductions that lower taxable income, credits reduce the final tax liability. Wisconsin offers several credits to support specific taxpayer circumstances and encourage certain activities.
The Homestead Credit provides property tax relief to homeowners and renters with low or moderate incomes. For 2024, eligible Wisconsin residents could receive up to $1,168 if their household income was less than $24,680 and they met other criteria, such as being over 18 years old and a full-year resident. The Earned Income Tax Credit (EITC) is a percentage of the federal EITC and benefits working families with qualifying children. In 2024, the Wisconsin EITC could be 4% of the federal credit for one child, 11% for two children, and 34% for three or more children.
Wisconsin expanded its Child and Dependent Care Credit for 2024, increasing it to 100% of the federal amount. This credit helps families offset childcare expenses, with maximum eligible expenses of $10,000 for one dependent and $20,000 for two or more dependents. Other available credits include the Renter’s and Homeowner’s School Property Tax Credit and a Blind Worker Transportation Services Credit, which offers up to $1,500 for qualifying blind individuals. Eligibility for these credits depends on meeting specific income thresholds and requirements.