Wisconsin Biennial Budget Bill Updates

The Wisconsin governor signed the 2021-2023 biennial budget bill that makes some changes to personal income tax, corporate income tax, partnership changes, sales tax, and property tax.

The changes to personal income taxes are as follows:

A rate reduction for income tax brackets.  Effective for taxable years beginning after December 31, 2020, the personal income tax rate is reduced from 6.27% to 5.3% for individuals earning between $23,930 to $263,480, married couples filing taxes jointly who earn between $31,910 and $351,310, and married persons filing separately who earn between $10,000 and $150,000. 

Additional Child and Dependent care tax credit.  For the taxable years beginning after December 31, 2021, a Wisconsin resident may claim a credit against the personal income tax, an amount equal to 50% of the federal child and dependent care tax credit claimed on their federal income tax return for that taxable year.

Active Duty pay subtraction.  For the taxable years beginning after December 31, 2020, any amount of basic, special, or incentive pay income received from the federal government by an individual who is on active duty in the U.S. armed forces, including the Wisconsin national guard, may be subtracted from the federal adjusted gross income to calculate Wisconsin adjusted gross income.

Research expense credit: For years beginning on or after December 31, 2020, up to 15% of the Wisconsin research expense credit is refundable, and this is up from 10% previously.

The changes to corporate income tax, partnership income tax, and others are as follows:

There was one change to the corporate income tax regarding the research expense credit.  For tax years beginning on or after December 31, 2020, the Wisconsin research expense credit increased from 10% to 15% that is refundable.

There was also a change for Partnerships; For taxable years beginning after December 31, 2020, partnerships, limited liability companies, and tax-option S corporations may elect to claim the jobs, enterprise zone, and business development tax credits at the entity level if the credit results from a contract entered with the Wisconsin Economic Development Corporation before December 22, 2017. The election must be made for each taxable year on the original return, and the election cannot be subsequently revoked. If a partnership, limited liability company, or tax-option S corporation elects to claim the credit, the partners, members, and shareholders cannot claim the same credit.

Regarding the property tax change, an exemption is created for a vacant parcel of land owned by a church or religious association that is no more than 0.8 acres and located in a first-class city that is less than a quarter-mile from the shoreline of Lake Michigan and that is adjacent or contiguous to a city incorporated in 1951.

Sales tax change.  Effective October 1, 2021, there is a sales tax exemption for sweetened dried fruit.  They also modified the definition of “candy” to exclude a preparation that has as its predominant ingredient dried or partially dried fruit.

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