What Wisconsin Tax Deductions Can I Claim?

For Wisconsin state income tax purposes, deductions and other adjustments lower your taxable income, which in turn reduces the amount of state tax you owe. The state offers its own set of rules for these reductions, which can differ from federal regulations. This guide provides an overview of the options available to Wisconsin taxpayers. It covers the standard deduction, the itemized deduction credit, and a separate category of subtractions from income.

The Wisconsin Standard Deduction

The Wisconsin standard deduction is a fixed-dollar amount that taxpayers can subtract from their income. The specific amount a taxpayer can claim depends on their filing status and income level, decreasing as income rises.

For the 2024 tax year, the standard deduction is based on a sliding scale. For single filers and heads of household, the deduction is $13,230 for those with adjusted gross income under $19,070, and it phases out completely for those with income of $109,810 or more.

Married couples filing a joint return can claim a standard deduction of $24,490 if their income is below $25,420; this phases out entirely at an income of $124,990 or more. For those who are married but file separately, the deduction is $11,630 for incomes under $12,080 and phases out completely at an income of $59,360 or more.

The Wisconsin Itemized Deduction Credit

Unlike the federal system, Wisconsin does not allow taxpayers to deduct itemized expenses directly from their income. Instead, it offers a nonrefundable itemized deduction credit that directly reduces the amount of tax you owe. It can be claimed on Wisconsin Schedule A.

You may benefit from this credit if the total of your allowable federal itemized deductions is greater than your Wisconsin standard deduction. The credit is calculated as 5% of the amount by which your federal itemized deductions exceed your Wisconsin standard deduction. Common expenses that contribute to this credit include large charitable contributions, significant medical and dental expenses, home mortgage interest, and the sales tax paid on a major purchase like a vehicle.

Key Subtractions from Wisconsin Income

Subtractions are distinct from the standard deduction or itemized credit because they are taken directly from your Wisconsin adjusted gross income. A key feature of subtractions is that they can be claimed regardless of whether a taxpayer chooses the standard deduction or the itemized deduction credit. These subtractions are reported on Wisconsin Schedule SB.

One subtraction is for contributions to Wisconsin’s college savings accounts, such as the Edvest or Tomorrow’s Scholar 529 plans. For the 2024 tax year, taxpayers can subtract up to $5,000 in contributions per beneficiary. For those who are married and file separately, the limit is $2,500 per beneficiary. Contributions exceeding the annual maximum can be carried forward to be deducted in future years.

Wisconsin also offers a subtraction for higher education expenses. For the 2024 tax year, taxpayers can subtract up to $7,333 per eligible student for tuition and mandatory fees paid to universities, colleges, and technical colleges in Wisconsin. This also applies to certain Minnesota institutions under a reciprocity agreement.

A separate subtraction is available for private school tuition for dependent children. Taxpayers can subtract up to $4,000 for each child in kindergarten through 8th grade and up to $10,000 for each child in grades 9 through 12.

Other subtractions include:

• Interest paid on student loans can be subtracted from Wisconsin income. Wisconsin has its own rules and calculations that differ from the federal deduction.
• Eligible taxpayers who are 65 or older can subtract up to $5,000 of retirement income. To qualify, the taxpayer’s federal adjusted gross income must be below certain thresholds, which are $15,000 for single filers and $30,000 for married couples filing jointly.
• U.S. Government interest, which is taxable at the federal level but is exempt from Wisconsin state income tax.
• Amounts paid for medical care insurance and long-term care insurance may be subtracted.
• Certain adoption-related expenses, including adoption fees, court costs, and legal fees, may be subtracted.

How to Claim Deductions on Your Return

For subtractions from income, you will use Wisconsin Schedule SB. After calculating the total subtractions on this form, you will carry that amount over to the appropriate line on Form 1, the main Wisconsin tax return.

If you choose to claim the itemized deduction credit, you will need to complete Wisconsin Schedule A to calculate your credit. The resulting credit amount is then transferred to the designated line on Form 1. If you are filing a paper return, you must include physical copies of Schedule SB and Schedule A with your Form 1.