What Is Sales Tax in Wisconsin? Rates & How It Works

Sales tax is a consumption tax applied to the sale of certain goods and services, used by governments to generate revenue for public services. When consumers purchase items, the tax is added to the price at the point of sale. Wisconsin, like many states, imposes its own sales tax on various transactions within its borders.

Understanding Wisconsin Sales Tax Basics

Wisconsin’s sales tax applies to the retail sale, lease, or rental of tangible personal property and certain services. Consumers pay this tax, but sellers are responsible for collecting and remitting the funds to the Wisconsin Department of Revenue. This revenue supports state and local government operations and services.

Taxable Sales and Services in Wisconsin

Wisconsin sales tax applies to tangible personal property and specific services. Tangible personal property includes physical items like clothing, computers, office equipment, electricity, gas, and water. Certain digital goods, such as prewritten computer software (whether delivered physically or via download), are also taxable.

Wisconsin also taxes specific services. These include admission to amusement, athletic, entertainment, or recreational events, and the use of amusement devices. Other taxable services are boat docking and storage, cable television, contracts for future performance (like service contracts and warranties), landscaping, lawn maintenance, laundry, dry cleaning, and repair services for tangible personal property.

Key Exemptions from Sales Tax

Several categories of goods and services are exempt from sales tax in Wisconsin. These include most food products for home consumption, prescription medications, and qualifying medical devices like wheelchairs and prosthetics. Certain agricultural items, such as seeds, fertilizers, and livestock feed, are also exempt if used directly in farming activities.

Exemptions also apply to certain entities or transactions. Goods purchased for resale by retailers or wholesalers are exempt with a valid resale certificate. Nonprofit organizations and government entities are exempt from sales tax on purchases for their organizational or official purposes. Occasional sales, defined as sales by individuals or businesses not regularly engaged in selling taxable goods, may also be exempt under specific conditions.

Wisconsin Sales Tax Rates and Calculation

The statewide Wisconsin sales tax rate is 5%. This base rate is supplemented by local sales tax rates imposed by counties, cities, or special districts. For example, 68 Wisconsin counties impose an additional 0.5% tax. As of January 1, 2024, Milwaukee County’s tax increased to 0.9%, and the city of Milwaukee implemented a 2% city sales and use tax.

To calculate the total sales tax, the combined rate (state plus any local rates) is multiplied by the selling price. For instance, if an item costs $100 and the combined rate is 5.5%, the sales tax is $5.50. Sellers round the calculated tax to the nearest whole cent. Wisconsin is a destination-based sales tax state, meaning the rate applied is based on the location where the item is delivered or the service is performed.

Wisconsin Use Tax Explained

Wisconsin’s use tax complements the sales tax, ensuring taxable purchases are taxed even if sales tax was not collected at the time of sale. It applies to tangible personal property or services purchased outside Wisconsin for use, storage, or consumption within the state, where Wisconsin sales tax was not charged. This often occurs with online purchases from out-of-state vendors not registered to collect Wisconsin sales tax.

The use tax prevents consumers from avoiding sales tax by purchasing items from out-of-state retailers. Consumers are directly responsible for reporting and paying use tax to the Wisconsin Department of Revenue when the seller has not collected it. The use tax rate is the same as the combined sales tax rate that would have applied if the purchase had been made within Wisconsin. For example, if a taxable item is purchased online and shipped to a county with a combined 5.5% sales tax rate, the consumer owes 5.5% use tax if the seller did not collect it.