What Is the Income Tax in Wisconsin?

Wisconsin’s income tax system impacts individuals earning income within the state. The state employs a progressive tax structure, meaning tax rates increase as taxable income rises. This system helps fund various state services and programs. Understanding how state income tax functions is important for residents and those with Wisconsin-sourced earnings.

Key Aspects of Wisconsin Income Tax

Individuals generally become subject to Wisconsin income tax based on their residency status or income source. Full-year residents must report all income, regardless of where it was earned. Part-year residents are taxed on income earned while a resident, plus any Wisconsin-source income earned during non-residency. Non-residents are typically taxed only on income derived from Wisconsin sources, such as wages from work performed in the state or income from property located there. Residents must file if their gross income in 2024 was above specific thresholds, for example, $13,930 for single filers under age 65. Non-residents and part-year residents are required to file if their gross income from Wisconsin sources is $2,000 or more.

Wisconsin considers many common income types taxable, including wages, salaries, interest, dividends, and income from businesses or capital gains. While most retirement and pension income is taxable, some federal, state, or local government pensions may qualify for exemptions. Social Security benefits and active-duty military pay are exempt from Wisconsin income tax. Investment income is typically taxed as ordinary income.

Calculating Wisconsin Taxable Income

Determining Wisconsin taxable income begins with federal adjusted gross income (AGI), which then undergoes state-level adjustments. Wisconsin utilizes a sliding scale standard deduction that varies based on filing status and income level. This deduction reduces the amount of income subject to tax, with the deduction amount decreasing as income rises. For example, a single person’s deduction amount for 2024 is $6,702 if their annual gross earnings are less than $17,780, and it phases out for higher incomes.

Taxpayers may make additions to or subtractions from their federal AGI to arrive at their Wisconsin AGI. Certain income types are excluded or deducted for Wisconsin tax purposes. Contributions to a Wisconsin state-sponsored college savings account, such as EdVest or Tomorrow’s Scholar, can be subtracted from income, with the maximum deduction for 2024 increasing to $5,000 per beneficiary for joint filers and $2,500 for those filing separately. If federal itemized deductions exceed the Wisconsin standard deduction, taxpayers may be eligible for an itemized deduction credit, which is equal to 5% of the difference between eligible federal itemized deductions and the Wisconsin standard deduction.

Wisconsin Income Tax Rates

Wisconsin operates a progressive individual income tax system with four distinct tax brackets. These brackets feature marginal tax rates that apply to different portions of a taxpayer’s income. For the 2024 tax year, individual income tax rates in Wisconsin range from 3.5% to 7.65%. Income thresholds for each bracket vary depending on the taxpayer’s filing status.

Under this system, only income falling within a particular bracket is taxed at that bracket’s corresponding rate. For instance, a single filer’s income up to $14,320 is taxed at 3.5%, while income between $14,320 and $28,640 is taxed at 4.4%. Income exceeding $315,310 for single filers is taxed at the highest rate of 7.65%.

Wisconsin Tax Credits

Wisconsin offers several tax credits that can directly reduce a taxpayer’s final tax liability. The Homestead Credit assists low-income homeowners and renters by offsetting property tax or rent burdens. To qualify, individuals must generally be a full-year Wisconsin resident, at least 18 years old by year-end, have household income under $24,680, and meet certain earned income, disability, or age requirements. The maximum Homestead Credit for 2024 is $1,168.

The Wisconsin Earned Income Tax Credit (EITC) provides a refundable benefit to working families with at least one qualifying child. This credit is calculated as a percentage of the federal EITC, specifically 4% for one child, 11% for two children, and 34% for three or more children. The Wisconsin Child and Dependent Care Credit has also been enhanced for 2024, with eligible expenses capped at $10,000 for one dependent and $20,000 for two or more. Married couples with taxable earned income in Wisconsin may also be eligible for a Married Couple Credit.

Submitting Your Wisconsin Tax Return

Filing a Wisconsin income tax return requires timely submission and payment. Most taxpayers file electronically through approved tax software or the Wisconsin Department of Revenue’s online portal. Paper filing by mail remains an option. For the 2024 tax year, individual income tax returns are typically due by April 15, 2025, aligning with the federal income tax deadline.

If additional time is needed, Wisconsin automatically grants a six-month extension for filing if a federal extension is obtained. This extends the filing deadline to October 15, but it is crucial to understand that this is an extension to file, not an extension to pay. Any tax owed is still due by the original April 15 deadline, and interest may accrue on unpaid amounts.

Taxpayers have various payment options, including online direct debit, credit/debit cards, Apple Pay, or PayPal through a third-party processor. Payments can also be made by mail using a check or money order with the appropriate payment voucher. After filing, taxpayers can check their refund status online.