Analysis by the Legislative Reference Bureau
This bill creates a nonrefundable individual income tax credit for taxpayers
with Wisconsin taxable income (WTI) below certain income thresholds. The credit
phases out for taxpayers with WTI above these thresholds. Income thresholds and
phase-out rates vary by filing status as follows:
1. For an individual who files as a single individual or head of household, the
maximum credit amount is $200 if the claimant's WTI in the year to which the claim
relates is less than $75,000. The maximum credit phases out from $200 to zero as
the claimant's WTI increases from $75,000 to $112,500.
2. For a married couple that files a joint return, the maximum credit amount
is $200 if the sum of the claimant's WTI and his or her spouse's WTI in the year to
which the claim relates is less than $100,000. The maximum credit phases out from
$200 to zero as the couple's household WTI increases from $100,000 to $150,000. For
a married couple that files separately, the maximum credit amount is $100 if the

claimant's WTI in the year to which the claim relates is less than $50,000. The
maximum credit phases out from $100 to zero as the claimant's WTI increases from
$50,000 to $75,000. Generally, both spouses of a married couple may claim the credit
if they file separate returns.
Because the credit is nonrefundable, no refund is paid if the amount of the
credit exceeds the taxpayer's tax liability. Part-year and nonresidents of this state
may not claim the credit.
The bill also creates a fifth individual income tax bracket and a new tax rate
for this bracket. For those who file as a single individual, fiduciary, or head of
household, the new top rate is 8.88 percent on taxable income above $750,000. For
married joint filers, the new 8.88 percent rate applies to taxable income above
$1,000,000, and this new rate applies to married separate filers on taxable income
above $500,000. As is the case under the current law brackets, the new bracket
amounts are indexed for inflation.
The bill first applies to taxable years beginning on January 1, 2017.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB172,1 1Section 1. 71.06 (1q) (intro.) of the statutes is amended to read:
AB172,2,72 71.06 (1q) Fiduciaries, single individuals, and heads of households; after
32012
to 2016. (intro.) The tax to be assessed, levied, and collected upon the taxable
4incomes of all fiduciaries, except fiduciaries of nuclear decommissioning trust or
5reserve funds, and single individuals and heads of households shall be computed at
6the following rates for taxable years beginning after December 31, 2012, and before
7January 1, 2017
:
AB172,2 8Section 2. 71.06 (1r) of the statutes is created to read:
AB172,2,139 71.06 (1r) Fiduciaries, single individuals, and heads of households; after
102016.
The tax to be assessed, levied, and collected upon the taxable incomes of all
11fiduciaries, except fiduciaries of nuclear decommissioning trust or reserve funds, and
12single individuals and heads of households shall be computed at the following rates
13for taxable years beginning after December 31, 2016:
AB172,3,1
1(a) On all taxable income from $0 to $11,230, 4.0 percent.
AB172,3,32 (b) On all taxable income exceeding $11,230 but not exceeding $22,470, 5.84
3percent.
AB172,3,54 (c) On all taxable income exceeding $22,470 but not exceeding $247,350, 6.27
5percent.
AB172,3,76 (d) On all taxable income exceeding $247,350 but not exceeding $750,000, 7.65
7percent.
AB172,3,88 (e) On all taxable income exceeding $750,000, 8.88 percent.
AB172,3 9Section 3. 71.06 (2) (i) (intro.) of the statutes is amended to read:
AB172,3,1110 71.06 (2) (i) (intro.) For joint returns, for taxable years beginning after
11December 31, 2012, and before January 1, 2017:
AB172,4 12Section 4. 71.06 (2) (j) (intro.) of the statutes is amended to read:
AB172,3,1413 71.06 (2) (j) (intro.) For married persons filing separately, for taxable years
14beginning after December 31, 2012, and before January 1, 2017:
AB172,5 15Section 5. 71.06 (2) (k) of the statutes is created to read:
AB172,3,1716 71.06 (2) (k) For joint returns, for taxable years beginning after
17December 31, 2016:
AB172,3,1818 1. On all taxable income from $0 to $14,980, 4.0 percent.
AB172,3,2019 2. On all taxable income exceeding $14,980 but not exceeding $29,960, 5.84
20percent.
AB172,3,2221 3. On all taxable income exceeding $29,960 but not exceeding $329,810, 6.27
22percent.
AB172,3,2423 4. On all taxable income exceeding $329,810 but not exceeding $1,000,000,7.65
24percent.
AB172,3,2525 5. On all taxable income exceeding $1,000,000, 8.88 percent.
AB172,6
1Section 6. 71.06 (2) (L) of the statutes is created to read:
AB172,4,32 71.06 (2) (L) For married persons filing separately, for taxable years beginning
3after December 31, 2016:
AB172,4,44 1. On all taxable income from $0 to $7,490, 4.0 percent.
AB172,4,65 2. On all taxable income exceeding $7,490 but not exceeding $14,980, 5.84
6percent.
AB172,4,87 3. On all taxable income exceeding $14,980 but not exceeding $164,900, 6.27
8percent.
AB172,4,109 4. On all taxable income exceeding $164,900 but not exceeding $500,000, 7.65
10percent.
AB172,4,1111 5. On all taxable income exceeding $500,000, 8.88 percent.
AB172,7 12Section 7. 71.06 (2e) (a) of the statutes is amended to read:
AB172,5,813 71.06 (2e) (a) For taxable years beginning after December 31, 1998, and before
14January 1, 2000, the maximum dollar amount in each tax bracket, and the
15corresponding minimum dollar amount in the next bracket, under subs. (1m) and (2)
16(c) and (d), and for taxable years beginning after December 31, 1999, and before
17January 1, 2017,
the maximum dollar amount in each tax bracket, and the
18corresponding minimum dollar amount in the next bracket, under subs. (1n), (1p) (a)
19to (c), (1q) (a) and (b), and (2) (e), (f), (g) 1. to 3., (h) 1. to 3., (i) 1. and 2., and (j) 1. and
202., shall be increased each year by a percentage equal to the percentage change
21between the U.S. consumer price index for all urban consumers, U.S. city average,
22for the month of August of the previous year and the U.S. consumer price index for
23all urban consumers, U.S. city average, for the month of August 1997, as determined
24by the federal department of labor, except that for taxable years beginning after
25December 31, 2000, and before January 1, 2002, the dollar amount in the top bracket

1under subs. (1p) (c) and (d), (2) (g) 3. and 4. and (h) 3. and 4. shall be increased by a
2percentage equal to the percentage change between the U.S. consumer price index
3for all urban consumers, U.S. city average, for the month of August of the previous
4year and the U.S. consumer price index for all urban consumers, U.S. city average,
5for the month of August 1999, as determined by the federal department of labor,
6except that for taxable years beginning after December 31, 2011, the adjustment may
7occur only if the resulting amount is greater than the corresponding amount that was
8calculated for the previous year.
AB172,8 9Section 8. 71.06 (2e) (b) of the statutes is amended to read:
AB172,5,2110 71.06 (2e) (b) For taxable years beginning after December 31, 2009, and before
11January 1, 2017,
the maximum dollar amount in each tax bracket, and the
12corresponding minimum dollar amount in the next bracket, under subs. (1p) (d), (1q)
13(c), and (2) (g) 4., (h) 4., (i) 3., and (j) 3., and the dollar amount in the top bracket under
14subs. (1p) (e), (1q) (d), and (2) (g) 5., (h) 5., (i) 4., and (j) 4., shall be increased each year
15by a percentage equal to the percentage change between the U.S. consumer price
16index for all urban consumers, U.S. city average, for the month of August of the
17previous year and the U.S. consumer price index for all urban consumers, U.S. city
18average, for the month of August 2008, as determined by the federal department of
19labor, except that for taxable years beginning after December 31, 2011, the
20adjustment may occur only if the resulting amount is greater than the corresponding
21amount that was calculated for the previous year.
AB172,9 22Section 9. 71.06 (2e) (bg) of the statutes is created to read:
AB172,6,623 71.06 (2e) (bg) For taxable years beginning after December 31, 2016, the dollar
24amount in each tax bracket under subs. (1r) and (2) (k) and (L) shall be increased each
25year by a percentage equal to the percentage change between the U.S. consumer

1price index for all urban consumers, U.S. city average, for the month of August of the
2previous year and the U.S. consumer price index for all urban consumers, U.S. city
3average, for the month of August 2015, as determined by the federal department of
4labor, except that for taxable years beginning after December 31, 2017, the
5adjustment may occur only if the resulting amount is greater than the corresponding
6amount that was calculated for the previous year.
AB172,10 7Section 10. 71.06 (2m) of the statutes is amended to read:
AB172,6,118 71.06 (2m) Rate changes. If a rate under sub. (1), (1m), (1n), (1p), (1q), (1r),
9or (2) changes during a taxable year, the taxpayer shall compute the tax for that
10taxable year by the methods applicable to the federal income tax under section 15 of
11the Internal Revenue Code.
AB172,11 12Section 11. 71.06 (2s) (d) of the statutes is amended to read:
AB172,7,213 71.06 (2s) (d) For taxable years beginning after December 31, 2000, with
14respect to nonresident individuals, including individuals changing their domicile
15into or from this state, the tax brackets under subs. (1p), (1q), (1r), and (2) (g), (h),
16(i), and (j), (k), and (L) shall be multiplied by a fraction, the numerator of which is
17Wisconsin adjusted gross income and the denominator of which is federal adjusted
18gross income. In this paragraph, for married persons filing separately “ adjusted
19gross income" means the separate adjusted gross income of each spouse, and for
20married persons filing jointly “adjusted gross income" means the total adjusted gross
21income of both spouses. If an individual and that individual's spouse are not both
22domiciled in this state during the entire taxable year, the tax brackets under subs.
23(1p), (1q), (1r), and (2) (g), (h), (i), and (j), (k), and (L) on a joint return shall be
24multiplied by a fraction, the numerator of which is their joint Wisconsin adjusted

1gross income and the denominator of which is their joint federal adjusted gross
2income.
AB172,12 3Section 12. 71.07 (6i) of the statutes is created to read:
AB172,7,54 71.07 (6i) Low- and moderate-income tax credit. (a) Definitions. In this
5subsection:
AB172,7,66 1. “Claimant” means an individual who claims a credit under this subsection.
AB172,7,87 2. “Household income” means the sum of the income of a claimant and the
8income of an individual related to the claimant as husband or wife.
AB172,7,109 3. “Income” means Wisconsin taxable income in the year to which the claim
10relates.
AB172,7,1411 (b) Filing claims. Subject to the limitations provided in this subsection, for
12taxable years beginning after December 31, 2016, a claimant may claim as a credit
13against the tax imposed under s. 71.02, up to the amount of those taxes, one of the
14following amounts:
AB172,7,1615 1. If the claimant files as a single individual or a head of household and the
16claimant's income is less than $75,000, $200
AB172,7,1917 2. If the claimant files as a single individual or a head of household and the
18claimant's income is at least $75,000, but less than $112,500, an amount that is
19calculated as follows:
AB172,7,2120 a. Calculate the value of a fraction, the denominator of which is $37,500 and
21the numerator of which is the difference between the claimant's income and $75,000.
AB172,7,2222 b. Subtract from 1.0 the amount that is calculated under subd. 2. a.
AB172,7,2323 c. Multiply $200 by the amount that is calculated under subd. 2. b.
AB172,7,2524 3. If the claimant is married and files a joint return and the claimant's
25household income is less than $100,000, $200.
AB172,8,3
14. If the claimant is married and files a joint return and the claimant's
2household income is at least $100,000 but less than $150,000, an amount that is
3calculated as follows:
AB172,8,64 a. Calculate the value of a fraction, the denominator of which is $50,000 and
5the numerator of which is the difference between the claimant's household income
6and $100,000.
AB172,8,77 b. Subtract from 1.0 the amount that is calculated under subd. 4. a.
AB172,8,88 c. Multiply $200 by the amount that is calculated under subd. 4. b.
AB172,8,109 5. If the claimant is married and files a separate return and the claimant's
10household income less than $50,000, $100.
AB172,8,1311 6. If the claimant is married and files a separate return and the claimant's
12household income at least $50,000, but less than $75,000, an amount that is
13calculated as follows:
AB172,8,1614 a. Calculate the value of a fraction, the denominator of which is $25,000 and
15the numerator of which is the difference between the claimant's household income
16and $50,000.
AB172,8,1717 b. Subtract from 1.0 the amount that is calculated under subd. 6. a.
AB172,8,1818 c. Multiply $100 by the amount that is calculated under subd. 6. b.
AB172,8,2019 (c) Limitations. 1. An individual may not claim the credit under this subsection
20if any of the following applies:
AB172,8,2221 a. The individual files as a single individual or a head of household and the
22individual's income is at least $112,500.
AB172,8,2423 b. The individual is married and files a joint return and the individual's
24household income is at least $150,000.
AB172,9,2
1c. The individual is married and files a separate return and the individual's
2income is at least $75,000.
AB172,9,43 2. Part-year residents and nonresidents of this state are not eligible for the
4credit under this subsection.
AB172,9,65 3. No credit may be allowed under this subsection unless it is claimed within
6the time period under s. 71.75 (2).
AB172,9,107 4. If a married couple files separately, each spouse may claim the credit
8calculated under par. (b) 5. or 6., except a married person living apart from the other
9spouse and treated as single under section 7703 (b) of the Internal Revenue Code may
10claim the credit under par. (b) 1. or 2.
AB172,9,1311 5. No credit may be allowed under this subsection for a taxable year covering
12a period of less than 12 months, except for a taxable year closed by reason of the death
13of the taxpayer.
AB172,9,1514 (d) Administration. Subsection (9e) (d), to the extent that it applies to the credit
15under that subsection, applies to the credit under this subsection
AB172,13 16Section 13. 71.10 (4) (cs) of the statutes is created to read:
AB172,9,1717 71.10 (4) (cs) Low- and moderate-income tax credit under s. 71.07 (6i).
AB172,14 18Section 14. 71.125 (1) of the statutes is amended to read:
AB172,9,2219 71.125 (1) Except as provided in sub. (2), the tax imposed by this chapter on
20individuals and the rates under s. 71.06 (1), (1m), (1n), (1p), (1q), (1r), and (2) shall
21apply to the Wisconsin taxable income of estates or trusts, except nuclear
22decommissioning trust or reserve funds, and that tax shall be paid by the fiduciary.
AB172,15 23Section 15. 71.125 (2) of the statutes is amended to read:
AB172,9,2524 71.125 (2) Each electing small business trust, as defined in section 1361 (e) (1)
25of the Internal Revenue Code, is subject to tax at the highest rate under s. 71.06 (1),

1(1m), (1n), (1p), or (1q), or (1r), whichever taxable year is applicable, on its income
2as computed under section 641 of the Internal Revenue Code, as modified by s. 71.05
3(6) to (12), (19) and (20).
AB172,16 4Section 16. 71.17 (6) of the statutes is amended to read:
AB172,10,85 71.17 (6) Funeral trusts. If a qualified funeral trust makes the election under
6section 685 of the Internal Revenue Code for federal income tax purposes, that
7election applies for purposes of this chapter and each trust shall compute its own tax
8and shall apply the rates under s. 71.06 (1), (1m), (1n), (1p), or (1q), or (1r).
AB172,17 9Section 17. 71.64 (9) (b) (intro.) of the statutes is amended to read:
AB172,10,1310 71.64 (9) (b) (intro.) The department shall from time to time adjust the
11withholding tables to reflect any changes in income tax rates, any applicable surtax
12or any changes in dollar amounts in s. 71.06 (1), (1m), (1n), (1p), (1q), (1r), and (2)
13resulting from statutory changes, except as follows:
AB172,18 14Section 18. 71.67 (5) (a) of the statutes is amended to read:
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