Most people wouldn't consider paying income taxes to be an enjoyable experience, even if our tax dollars are going toward good causes. You may have heard about those other states that don’t have income taxes and wonder why Wisconsin can’t do the same. But what are the actual laws covering our hard-earned tax dollars in Wisconsin? Here's a brief summary of Wisconsin personal income tax laws.
Income Tax Laws in Wisconsin
Most states, including Wisconsin, levy a personal income tax on residents in addition to federal income taxes. The Wisconsin personal income tax law requires individuals, estates, and trusts within the state to pay roughly between 4 to 7 percent on all taxable net income. Certain corporations, partnerships, and trusts may have to pay additional taxes on their income. The basics of Wisconsin personal income tax law are summarized in the following table:
| Code Section | 71.02, et seq. |
| Who is Required to File | Individuals, fiduciaries (except fiduciaries of nuclear decomposing trust or reserve fund), and trusts on net income; nonresident individuals and trusts on income derived from Wisconsin sources; nonresident's and part-year resident's tax liability is prorated according to amount of income derived from Wisconsin sources; Special "recycling surcharges" apply to all Wisconsin individuals, estates, trusts, businesses, and partnerships except those engaged solely in farming |
| Rate | First $11,480, 4.6%; Next $11,480, 6.15%; Next $149,240, 6.5%; Over $172,200, 6.75% |
| Federal Income Tax Deductible | No |
| Federal Income Used as Basis | Yes |
Note: State laws are constantly changing -- contact a Wisconsin tax attorney or conduct your own legal research to verify the state law(s) you are researching.
As noted in the chart, Wisconsin state taxes coexist with federal tax laws. Under basic tax law, both the state and federal government are allowed to tax both unearned and earned income. Earned income includes salary, wages, tips, commissions, bonuses, unemployment benefits, and sick pay. Unearned income includes interest, dividends, profits from asset sales, business and farm income, rent income, royalties, gambling winnings, and alimony. Federal taxes are handled by the Internal Revenue Service (IRS) and are subject to the Internal Revenue Code (IRC). Many IRS forms and publications are available online.
Although a lot of state income tax codes are similar to the federal code, there can be important distinctions in each state that are important to understand before paying your taxes. Most states offer taxpayer assistance programs for those who need help filing their state and federal income tax returns, and many states provide their state tax forms online.
Wisconsin Personal Income Tax Laws: Related Resources
Tax issues can be the most complicated area of the law. For more introductory information on this topic you can visit FindLaw's extensive tax law section. If you would like legal assistance with a tax issue, you can contact a Wisconsin tax attorney in your area to discuss your case.
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