Taxes in Wisconsin
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Property taxes will take a significant portion of your savings in Wisconsin, but low sales taxes can help counteract the burden. Below, we explain various Wisconsin state taxes affecting retirement income, such as sales tax, inheritance tax, and property taxes.
For information regarding taxes in other states, see Retirement Taxes by State.
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Wisconsin Tax Rates
|State Sales Tax||5%|
|Avg State/Local Sales Tax||5.43%|
|Gas Tax||$0.31 per gallon|
|Diesel Tax||$0.31 per gallon|
|Cigarette Tax||$2.52 per pack|
|Effective Tax Rate:||6.38%|
|Social Security Tax||None|
|Federal Income Tax Deduction:||None|
Wisconsin State Taxes Explained
Wisconsin Sales Tax
5%. Groceries and prescription drugs are exempt. Local taxes add up to 1.75%.
Wisconsin Income Taxes
Top rate of 7.65% (on taxable income over $280,950 for singles or over $374,600 for married couples).
Wisconsin Property Taxes
The average effective property tax rate in Wisconsin is 1.85%. The median home value is around $180,600 and is taxed $3,344.
Retirees age 62 or older or who are disabled and live in Wisconsin all year qualify for a homestead credit if they have less than $24,680 in household income for 2021. The homestead credit provides tax relief to homeowners and renters.
Wisconsin also has a school property tax credit available to homeowners. This is a credit against Wisconsin income tax liability. Learn more from the Wisconsin Property Guide for Owners.
Wisconsin Retirement Taxes
Wisconsin generally taxes pension and annuity income that is taxable for federal purposes. However, there are differences between some state and federal retirement income taxes. Wisconsin does not tax Social Security benefits, and some state and local government retirees qualify for a tax exemption. Military retirement payments are not taxed, but out-of-state government pensions are fully taxed.
Individuals who receive income from a qualified retirement plan or an individual retirement account (IRA) may be able to subtract up to $5,000 of these retirement benefits from Wisconsin income tax. This tax break is available to those who are at least 65 years of age before December 31 of the tax year. If the individual is single or files as head of household, federal adjusted gross income must be less than $15,000. Married individuals must have a FAGI under $30,000 whether they file individually or jointly.
The subtraction does not apply to retirement benefits that are otherwise exempt from Wisconsin income tax. Wisconsin residents age 65 or older are also allowed an additional $250 personal exemption.
Medical and dental expenses higher than 7.5% of adjusted gross income are deductible. You may elect to use this amount to take advantage of the Wisconsin itemized deduction credit. Wisconsin allows deductions for medical insurance premiums and long-term care insurance. These payments must not be paid from distributions from tax-free retirement plans.
Wisconsin Estate and Inheritance Taxes
Wisconsin does not levy an inheritance or estate tax.