What Is the Wisconsin Sales Tax and How Does It Work?

Wisconsin sales tax is a consumption tax applied to the sale of goods and certain services within the state. This tax is added to the purchase price at the point of sale, making it a direct cost for consumers. Its primary purpose is to generate revenue, which supports various state and local government services.

State and Local Sales Tax Rates

Wisconsin imposes a statewide sales tax rate of 5% on retail sales of tangible personal property and specific services. Many counties across Wisconsin also levy an additional local sales tax, with most adding a 0.5% rate.

Some areas have unique local taxes. For instance, Milwaukee County’s sales and use tax rate increased to 0.9% beginning January 1, 2024, and the City of Milwaukee introduced a 2% city sales and use tax on the same date. These local rates are added to the state rate, resulting in combined sales tax rates ranging from 5% up to 7.9% in some localities, such as the City of Milwaukee.

Taxable Sales and Services

Wisconsin sales tax applies to the retail sale of tangible personal property. This includes items like clothing, electronics, furniture, appliances, and computers. Certain digital goods, such as prewritten computer software, are also subject to sales tax, whether delivered physically or downloaded. When a retailer charges for delivery of taxable products or services, these delivery charges are also considered part of the taxable sale.

Specific services are subject to Wisconsin sales tax. These include admissions and access privileges to amusement, athletic, entertainment, or recreational events, and the use of amusement devices. Other taxable services include:
Boat docking and storage
Cable television services
Landscaping and lawn maintenance
Laundry and dry cleaning
Parking services for motor vehicles
Photographic services
Repair or service of tangible personal property

A complementary tax, known as “use tax,” applies to taxable items purchased outside Wisconsin but used, stored, or consumed within the state, where Wisconsin sales tax was not collected by the seller. The use tax rate is equivalent to the combined state and local sales tax rate that would have applied had the purchase been made in Wisconsin.

Common Exemptions

Several categories of sales are exempt from Wisconsin sales tax. Most food products purchased for home consumption are exempt, though exceptions apply to items such as candy, soft drinks, dietary supplements, and prepared food. Prescription medications and many medical devices, including durable medical equipment like wheelchairs and prosthetics, are also exempt.

Specific agricultural items are exempt when used directly in farming activities, such as seeds, fertilizers, livestock feed, and machinery. Purchases made for resale by businesses are exempt, provided the buyer furnishes a valid exemption certificate, such as Form S-211. Manufacturing machinery and equipment used directly in the production of goods for sale are also exempt. Certain organizations like government entities and qualifying non-profits are exempt from paying sales tax on their purchases.

Understanding Collection and Use

Businesses operating in Wisconsin are required to collect sales tax from their customers on behalf of the state. These collected funds are then remitted to the Wisconsin Department of Revenue. The process involves businesses registering with the department, accurately calculating the tax due, and filing regular returns. Online filing is required for sales tax returns.

The revenue generated from sales and use taxes is a source of funding for Wisconsin. These funds are allocated to support public services and programs. This includes investments in education, maintaining and developing infrastructure, and ensuring public safety initiatives. The system ensures that the tax burden is distributed among consumers who benefit from the state’s resources and services.