Wisconsin has a state income tax, and it applies to wages, self-employment income, and investment gains

Wisconsin taxes your income at rates that range from 3.54% to 7.65%, depending on how much you earn. The state uses a progressive tax system, meaning higher earners pay a higher percentage. Unlike some states, Wisconsin does not have a flat tax rate — your rate climbs as your income increases.

The state also taxes capital gains (profit from selling stocks or property), retirement account withdrawals in certain cases, and business income. If you work in Wisconsin or live there, you will owe state income tax on most types of income. The one major exception is Social Security benefits, which Wisconsin does not tax.

Key Takeaways

  • Wisconsin income tax rates range from 3.54% to 7.65% depending on your income level, with higher earners paying a larger percentage.
  • You owe Wisconsin income tax on wages, self-employment income, investment gains, and most retirement withdrawals.
  • Social Security benefits are not taxed by Wisconsin, even if you have other income.
  • Wisconsin residents who work out of state may owe tax to both Wisconsin and their work state, though a credit can reduce double taxation.
  • You file Wisconsin taxes using Form 1040-WI, which mirrors your federal return and is due on the same date as your federal taxes.

Wisconsin income tax brackets and rates for 2024

Wisconsin uses four tax brackets for single filers and four for married couples filing jointly. The brackets change slightly each year because they are adjusted for inflation. For 2024, a single filer in the lowest bracket pays 3.54% on income up to roughly $15,000, while someone in the highest bracket pays 7.65% on income above roughly $300,000. Married couples filing jointly have higher income thresholds before moving to the next bracket.

The exact dollar amounts shift annually, so you should check the Wisconsin Department of Revenue website or your tax software for the current year's brackets. Your employer withholds tax from your paycheck based on these rates and the W-4 form you file with them. If too much is withheld, you get a refund when you file your state return; if too little is withheld, you owe the difference.

What income is taxed and what is not

Wisconsin taxes W-2 wages, self-employment income, interest, dividends, capital gains, rental income, and most retirement account withdrawals. If you own a business or are self-employed, you owe Wisconsin income tax on your net profit after business expenses. Retirement account withdrawals from traditional IRAs and 401(k)s are taxed as ordinary income in the year you withdraw them.

Social Security benefits are not taxed by Wisconsin, even if you have substantial other income. Roth IRA withdrawals of contributions (the money you put in) are not taxed, though earnings on those contributions are taxed when withdrawn. Some military pensions and federal employee pensions receive special treatment under Wisconsin law, so check the Department of Revenue website if you receive a government pension.

How to file Wisconsin state taxes

You file Wisconsin taxes using Form 1040-WI, the Wisconsin Individual Income Tax Return. This form is filed at the same time as your federal return — the important date is April 15 unless you request an extension. You can file by mail, through tax software, or through a tax preparer. Wisconsin accepts e-filing through most major tax software providers.

Your Wisconsin return mirrors your federal return in most ways. You report the same income, take similar deductions, and claim the same dependents. However, Wisconsin has some deductions and credits that differ from federal rules. For example, Wisconsin allows a property tax credit for homeowners and renters with lower incomes, and a earned income tax credit that is separate from the federal version. If you are unsure whether you may have access to for a Wisconsin-specific credit, the Department of Revenue publishes a guide each year listing all available credits.

Working in Wisconsin but living in another state

If you live in another state but work in Wisconsin, you owe Wisconsin income tax on the wages you earn there. You will also owe tax to your home state on the same income in most cases. To prevent paying tax twice on the same dollar, Wisconsin offers a credit for taxes paid to other states. You claim this credit on your Wisconsin return, which reduces your Wisconsin tax by the amount you paid to your home state.

The credit is limited to the lesser of what you paid to the other state or what you would owe Wisconsin on that income. Some states have reciprocal agreements with Wisconsin that simplify this process — Illinois, Indiana, Kentucky, Michigan, and Minnesota have agreements that may reduce or eliminate your Wisconsin tax obligation. Check with both your home state and Wisconsin if you work across state lines, because the rules vary depending on which states are involved.

Deductions and credits available to Wisconsin residents

Wisconsin allows a standard deduction similar to the federal standard deduction, or you can itemize deductions if they exceed the standard amount. The standard deduction amount changes each year and depends on your filing status and age. You can also deduct contributions to traditional IRAs, student loan interest, and educator expenses, following federal rules.

Wisconsin offers several credits that reduce your tax dollar-for-dollar. The property tax credit is available to homeowners and renters with household income below a certain threshold — the credit amount depends on your income and property taxes paid. The earned income tax credit (EITC) is available to low- to moderate-income workers and families with children. Wisconsin's EITC is a percentage of the federal EITC, so if you may have access to for the federal credit, you likely may have access to for Wisconsin's as well. The Department of Revenue website lists all available credits and the income limits for each.

When you might owe more tax or get a refund

If your employer withholds too much tax from your paycheck, you will receive a refund when you file your return. If too little is withheld, you will owe the difference. The amount withheld depends on the W-4 form you complete with your employer and your actual tax liability for the year. Life changes like marriage, divorce, a second job, or a large bonus can throw off your withholding, so you may want to adjust your W-4 mid-year.

Self-employed people and those with investment income often owe more tax than is withheld from paychecks, because no withholding happens automatically. If you expect to owe more than $500 in state tax, Wisconsin requires you to make estimated tax payments four times per year. These payments are due in April, June, September, and January. Missing estimated payments can result in penalties and interest, even if you ultimately pay all the tax you owe when you file your return.

Frequently Asked Questions

Does Wisconsin tax retirement income differently than wages?

Most retirement income is taxed the same as wages — at your regular income tax rate. Social Security is the major exception and is not taxed. Some military pensions and federal employee pensions receive special treatment. Check the Wisconsin Department of Revenue website if you receive a government pension to see if it qualifies for an exemption.

What if I moved to Wisconsin partway through the year?

You owe Wisconsin tax only on income earned while you were a resident. When you file, you report your move date and calculate your Wisconsin tax based on the months you lived there. Your federal return covers the full year, but your Wisconsin return is prorated to reflect only the time you were a state resident.

Can I deduct my student loan payments on my Wisconsin taxes?

Yes, if you meet the income limits. Wisconsin allows a deduction for student loan interest paid during the year, following federal rules. The deduction is limited to $2,500 per year and phases out at higher income levels. You claim this deduction on your Wisconsin return the same way you claim it on your federal return.

Do I have to file a Wisconsin return if I only have Social Security income?

No. Since Wisconsin does not tax Social Security benefits, you do not have to file a state return if Social Security is your only income. However, if you have other income like wages, pensions, or investment gains, you must file even if your total income is below the filing threshold.

What happens if I do not file my Wisconsin taxes?

The Wisconsin Department of Revenue can assess penalties and interest on unpaid taxes. If you owe a refund but do not file, you lose the money after a certain period. It is better to file even if you cannot pay when ready — the penalty for not filing is steeper than the penalty for late payment, and you can set up a payment plan with the state.