Wisconsin Tax Guide 2026

Income tax — 4 brackets

2026 single brackets (Wis. Stat. §71.06): • 3.50% — first $14,680 • 4.40% — $14,680–$29,370 • 5.30% — $29,370–$323,290 • 7.65% — over $323,290 MFJ thresholds roughly double. Standard deduction phases out as income rises (Wis. Stat. §71.05(22)): begins phasing at ~$22k single / $32k MFJ; fully phased out by ~$117k single / $134k MFJ. High earners get NO standard deduction. WI does NOT conform to QBI §199A — federal deduction added back. Federal NOL carryforwards must be recomputed on a Wisconsin basis. WI does conform to federal capital gains classifications (LT/ST) before applying the 30% exclusion.

30% long-term capital gains exclusion

Wis. Stat. §71.05(6)(b)9.a: subtract 30% of the net long-term capital gain (assets held > 1 year) from federal AGI when calculating Wisconsin taxable income. The exclusion has been a longstanding pillar of WI tax policy — preserved through reform discussions. Qualifying farm assets (Wisconsin-situated active farm property): 60% exclusion. Effective WI rate at top bracket on LTCG: 7.65% × (1 − 30%) = 5.36% (regular assets); 7.65% × (1 − 60%) = 3.06% (qualifying farm). Qualified Wisconsin Business (QWB) program: 100% capital gains exclusion on stock held 5+ years in qualified Wisconsin businesses meeting employee and asset-location requirements (Wis. Stat. §71.05(6)(b)51). Modeled loosely on federal §1202 but Wisconsin-specific. Applied at AGI computation — so the 30% exclusion also reduces the base on which Wisconsin standard-deduction phaseout, manufacturer/agriculture credits, and other adjustments are calculated.

Manufacturing & Agriculture Credit (M&A Credit)

Wis. Stat. §71.07(5n) — 7.5% non-refundable credit against tax on qualifying production gross receipts from Wisconsin-located manufacturing or agriculture. The credit effectively zeros out Wisconsin income tax on qualifying activity: Qualifying income × 7.5% credit ≈ Top WI marginal rate × Qualifying income, so the manufacturer pays approximately 0% net WI tax on M&A-qualifying portions of income. Applies to C-corps, S-corps (passed through), partnerships (passed through), and sole proprietors of manufacturing/farming operations. Definition of manufacturing follows IRC §263A (uniform capitalization) tradition. This is a powerful incentive — for a Wisconsin manufacturer with $1M of qualifying income, the M&A Credit eliminates ~$76,500 of WI tax that would otherwise apply at the top bracket.

Sales tax

State rate 5% (Wis. Stat. §77.52). County tax: optional 0.5% (adopted by 69 of 72 counties — exceptions: Manitowoc, Racine, Winnebago). Milwaukee County: additional 0.9% (effective Jan 2024). Stadium districts: 0.1% in Milwaukee/Brown counties for the Brewers/Bucks stadium financing (sunsetting at different dates). Combined typical: 5.5% statewide; Milwaukee city ~5.9%; Madison 5.5%. Exemptions: groceries, prescription drugs, most services. Manufacturing machinery and consumables broadly exempt. Economic nexus (post-Wayfair, Wis. Stat. §77.51(13gm)): $100,000 in WI sales OR 200 transactions. Marketplace facilitator law: Wis. Stat. §77.523.

PTET (Pass-Through Entity Tax)

Wisconsin PTET (Wis. Stat. §71.21(6) for partnerships, §71.365(4m) for S-corps, enacted 2017 — among the earliest US PTETs): S-corps and partnerships elect to pay tax at the entity level at the C-corp rate (7.9%). Owners receive a credit equal to their proportionate share. The credit is NON-REFUNDABLE but carries forward 20 years. Owners do NOT include the PTET-elected income on their personal returns — the PTET-elected entity becomes the taxpayer for that portion. Election: due by the original due date of the entity return (April 15 calendar-year, or 15th day of 3rd month after fiscal year-end). Annual; can be made retroactively up to 4 years prior under amended-return provisions. Federal SALT-cap benefit: 37% × $79,000 (on $1M of K-1 income through PTET) = ~$29,230 federal tax savings per high-bracket owner. Qualified Wisconsin Business owners should compare PTET vs personal-level filing carefully — the 7.9% PTET rate is HIGHER than the 5.36% effective rate on LTCG with the 30% exclusion, so for capital-gain-heavy years personal filing may be preferable.

Property tax — high by Midwest standards

Statewide effective average ~1.61% — among the higher Midwest rates, materially above Illinois (~2.05%) is competing with WI in some metro areas. Milwaukee County ~2.4%, Dane (Madison) ~1.93%, Waukesha ~1.78%, Brown (Green Bay) ~1.71%, Outagamie (Appleton) ~1.65%. WI lottery and gaming credit: small offset (~$130/year) for owner-occupied homesteads. Property tax bills are dominantly funded by school districts (~45% of typical bill) followed by county/municipal/technical college. Levy limits (Wis. Stat. §66.0602) constrain annual municipal growth to net new construction plus voter-approved overrides.

Self-employed considerations

LLC formation: $130 online / $170 paper. Annual Report: $25 (Wisconsin Department of Financial Institutions). No state-mandated paid family leave. Unemployment: 0% (new account) to 12% on first $14,000 wage base. M&A Credit is the major opportunity for WI-based self-employed in qualifying industries (food production, manufacturing assembly, equipment fabrication). For service-sector self-employed (consulting, professional services), no equivalent credit — 5.30%–7.65% marginal applies. Wisconsin Retirement System (WRS) participation not available to self-employed; federal Solo 401(k) / SEP-IRA / SIMPLE planning unchanged from federal norms.

Worked example: Karl Schmidt, Madison-based software consultant + part-time farmer (single, 2026)

Karl runs an LLC (taxed as S-corp) with $185,000 software consulting profit. He also sold inherited farmland for $400,000 LTCG (qualifying farm asset).

Federal: ordinary federal + LTCG at 20% bracket on the farmland. Wisconsin: Software income: $185,000 (no M&A Credit — consulting doesn't qualify). LTCG on farmland: $400,000 → 60% exclusion (qualifying farm) → WI taxable LTCG: $160,000. Combined WI AGI: $185,000 + $160,000 = $345,000. Standard deduction: $0 (fully phased out above ~$133k). Taxable: $345,000. Tax: ~$22,400 (blended through brackets to top 7.65%). Note: had the LTCG been on regular (non-farm) assets, the 30% exclusion would yield: $400k × 70% = $280k WI taxable LTCG → $305k + $185k = $490k total → ~$31,800 WI tax. Qualified Wisconsin Business considerations: Karl's S-corp could elect PTET — paying 7.9% × $185k = $14,615 at entity level (federally deductible, saving ~$5,400 federal at 37%). But Karl's regular WI rate on the $185k consulting income is ~5.30% blended ($9,800), so PTET at 7.9% loses ~$4,800 on the WI side vs personal filing — federal savings ($5,400) almost wash. Marginal: review annually with CPA.

Statute references

• Personal income tax brackets — Wis. Stat. §71.06
• 30% LTCG exclusion (60% farm) — Wis. Stat. §71.05(6)(b)9.a
• Qualified Wisconsin Business gain exclusion — Wis. Stat. §71.05(6)(b)51
• Pass-Through Entity Tax (partnerships) — Wis. Stat. §71.21(6)
• Pass-Through Entity Tax (S-corps) — Wis. Stat. §71.365(4m)
• Manufacturing & Agriculture Credit — Wis. Stat. §71.07(5n)
• Sales tax economic nexus — Wis. Stat. §77.51(13gm)

Related pages

• Capital Gains Tax →
• PTET Analyzer →
• State Tax Comparison →