Wisconsin enacts multiple changes to its tax code

On Thursday, March 21, Wisconsin Gov. Tony Evers signed into law many bills that affect a broad range of Wisconsin tax types.

The following is a brief introduction to these newly enacted Wisconsin tax law changes:

Income tax credits

• Child and dependent care credit increases (Wisconsin Act 101): Effective March 6, 2024, and applicable to tax years beginning after December 31, 2023, Wisconsin increases the child and dependent care credit to 100% of the federal amount (formerly 50%). The act also increases the amount of eligible expenses to $10,000 for one qualified child/dependent and $20,000 for two or more qualifying children/dependents.
• Business development tax credit and enterprise zone jobs tax credit changes (Wisconsin Act 143): Effective March 23, 2024, and applicable to tax years beginning after December 31, 2023, Wisconsin adopts many changes to these credits, including:
  • Offering eligible taxpayers a 15% benefit for investments in housing and childcare programs for employees.
  • Allowing taxpayers to qualify for a credit for continued investment in their business if the total number of people employed is stable yearly.
  • Allowing taxpayers to carry forward credits including unused amounts from closed awards.

• Early-stage business investment program criteria changes (Wisconsin Act 144): Effective March 23, 2024, Wisconsin changes the definition of a qualified new business venture for the early-stage business investment program. It creates new criteria calling for a commitment to or engagement in the innovation of technology, products, services or production processes that differentiate the business from others in the marketplace.
• Angel investment tax credits become transferable (Wisconsin Act 145): Effective March 23, 2024, Wisconsin offers individuals, fiduciaries, corporations and insurance companies subject to tax an option to sell and/or transfer the angel investment tax credit to another person or entity eligible to claim the credit. An individual credit can only be sold or transferred once in a 12-month period.

Personal income tax

• Section 529 deduction increase (Wisconsin Act 148): Effective March 23, 2024, and applicable to tax years beginning after December 31, 2023, Wisconsin increases the amount that can be deducted by taxpayers for contributions to Section 529 college savings plans. The maximum deduction per beneficiary for those filing a joint return is $5,000 (formerly $3,860). The maximum deduction per beneficiary for those filing separate returns is $2,500 (formerly $1,930). Moving forward, the deductible amount will be indexed to inflation.
• Wisconsin/Minnesota reciprocity study (Wisconsin Act 147): Effective March 23, 2024, the Wisconsin Department of Revenue is directed to study the impact of personal income tax reciprocity with Minnesota. Under such an agreement, tens of thousands of employees who live in one of these states but work in the other would be exempt from withholding on their wages, salaries, tips and/or commissions for services performed in the work state under certain conditions and would only file a personal income tax return in the state where they live. Minnesota and Wisconsin had a reciprocal agreement through 2009, but in 2010 Minnesota ended the program due to delayed payments from Wisconsin.
• Capital gains exclusion expanded to farm asset sales (Wisconsin Act 146): Effective March 23, 2024, Wisconsin extends the exclusion of capital gains to certain family members inheriting business or farm assets held in a partnership.

Wisconsin qualified opportunity funds

• Annual certification deadline extension (Wisconsin Act 146): Effective with the 2020 tax year, in addition to conforming to the federal qualified opportunity zone (QOZ) exclusion, Wisconsin has provided a subtraction from income or a basis adjustment for investments in a Wisconsin qualified opportunity fund (WQOF). Historically, WQOFs have been required to annually certify their eligibility by filing Wisconsin Form WQOF by January 31 after the close of the fund’s fiscal year. Effective March 23, 2024, the deadline for filing Form WQOF is extended to the due date, including extensions, of the fund’s corresponding Wisconsin income or franchise tax return.

Sales tax changes

• New exemption for portable machinery and equipment used for roads and commercial lot construction and resurfacing (Wisconsin Act 146): Effective June 1, 2024, Wisconsin creates a sales tax exemption for the sale or use of portable machinery and equipment, including accessories, used primarily to crush, mill, produce or pulverize asphalt, concrete, gravel, rock or aggregate base for road or commercial surface lot construction or resurfacing.
• New exemption for MLS memberships (Wisconsin Act 141): Effective June 1, 2024, Wisconsin creates a sales tax exemption for multiple listing service (MLS) memberships sold to licensed real estate brokers.
• New exemption for metal bullion (Wisconsin Act 149): Effective March 23, 2024, Wisconsin provides a sales and use tax exemption for precious metal bullion. The act clarifies that the exemption does not extend to any other items that may contain precious metal bullion, such as jewelry or works of art.
• Sales tax permits required for remote cigar/tobacco sellers (Wisconsin Act 150): Effective January 1, 2025, Wisconsin requires retailers who make remote sales of cigars and pipe tobacco to obtain a remote retail sellers permit and collect sales and use tax and tobacco products tax on these sales.

Property tax

• Telephone company property exempt (Wisconsin Act 140): Effective January 1, 2027, Wisconsin creates an exemption from personal property taxes for telephone companies.

Interest rates

• Interest rate reduction — vetoed (AB 1089): Wisconsin currently has some of the highest interest rates in the country. Since 1981, nondelinquent taxes have been subject to a 12% annual interest rate, with refunds paid at a 3% rate, and delinquent taxes have been subject to an 18% interest rate, with discretionary reduction to 12%. AB 1089 would have changed these interest rates to 6%. On March 29, 2024, however, Gov. Evers vetoed AB 1089, likely because it would have reduced annual state revenues by nearly $78 million.

Unclaimed property

• Voluntary disclosure agreement (VDA) program reinstated (Wisconsin Act 138): Effective June 15, 2024, Wisconsin permanently reinstates the state’s VDA program regarding unclaimed property. The act also retroactively, effective November 7, 2021, includes “financial organization loyalty cards,” tax-deferred retirement accounts and tax-exempt retirement accounts as property that can become abandoned and reported.

How Wipfli can help

If you have questions on how any of these changes affect your personal or business taxes, please consult with one of our Wisconsin tax specialists. Our state and local tax advisors stay up to date on all the latest developments in the constantly changing tax landscape to help keep you informed and prepare for the future. Learn more about our state and local tax services.

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