Wisconsin Budget Deal Expands Tax Bracket for Middle Incomes

Wisconsin would cut more than $600 million in tax revenue under a budget deal between Gov. Tony Evers (D) and the Republican-led state Legislature that includes income tax reductions for middle earners and retirees.

The agreement, which Evers announced Tuesday, would expand the state’s second-lowest income tax bracket, increasing the amount of income subject to a 4.4% rate for individual filers. The legislation would also create a tax break for people over age 67, allowing single filers in that age group to exclude their first $24,000 of retirement income from state taxes and joint filers to exclude the first $48,000. Together, the provisions would reduce tax collections by more than $1.3 billion over the 2025-2027 budget cycle, according to an analysis by the Wisconsin’s Legislative Fiscal Bureau.

• The deal would increase the amount of income subject to the 4.4% rate by $28,150 for joint filers to $67,300, by $21,110 for single and head-of-household filers to $50,480, and by $14,070 for couples filing separately to $33,650.
• More than 800,000 joint filers would see an average tax reduction of $230 and more than 750,000 non-joint filers would see an average reduction $143 because of the bracket expansion, according to the analysis.
• The budget also would create a $5 million tax credit program for film production.
• The agreement also would eliminate state sales tax on household utility bills, totaling a $178 million cut over two years, Evers said.