LRB-2566/1
EKL:amn
2021 - 2022 LEGISLATURE
March 31, 2021 - Introduced by Senators Carpenter, Smith, Bewley, Agard,
Erpenbach, Johnson, Larson, Pfaff, Ringhand, Roth, Roys, L. Taylor and
Wirch, cosponsored by Representatives McGuire, Sinicki, Baldeh, Bowen,
Cabrera, Conley, Doyle, Hebl, Hesselbein, Hong, Milroy, Pope, Shankland,
Shelton, Stubbs, Tusler, Emerson and Drake. Referred to Committee on
Labor and Regulatory Reform.
SB267,1,3 1An Act to amend 71.05 (6) (b) 8.; and to create 71.05 (1) (d) of the statutes;
2relating to: providing a temporary tax exemption for unemployment
3compensation.
Analysis by the Legislative Reference Bureau
This bill exempts, for state income tax purposes in 2020 and 2021, up to $10,200
of the unemployment compensation received by an individual during the year. In the
case of married couples who both receive unemployment compensation and who file
a joint return, the $10,200 limitation applies separately to each spouse. The
exemption applies only if the federal adjusted gross income (AGI) of the individual,
or of both spouses if filing a joint return, is less than $150,000.
Under current federal law, unemployment compensation is generally taxed,
except that the American Rescue Plan Act of 2021 temporarily allows individuals
whose federal AGI is less than $150,000 to exclude up to $10,200 of the
unemployment compensation received in 2020 by the individual or, in the case of
married couples filing a joint return, each spouse. Under current state law,
unemployment compensation is exempt from state tax if the recipient's federal AGI
does not exceed a base amount. The base amount is $12,000 for single individuals
or married individuals filing separate returns who live apart from their spouse for
the entire year, $18,000 for married couples filing joint returns, and zero for married
individuals filing separate returns who live with their spouse during the year. If
federal AGI exceeds the base amount, then the amount subject to tax under current
state law is the lesser of the amount of unemployment compensation received or

one-half of the amount that federal AGI exceeds the base amount. The bill
maintains the existing provision.
Because this bill relates to an exemption from state or local taxes, it may be
referred to the Joint Survey Committee on Tax Exemptions for a report to be printed
as an appendix to the bill.
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:
SB267,1 1Section 1. 71.05 (1) (d) of the statutes is created to read:
SB267,2,52 71.05 (1) (d) Unemployment compensation. 1. For taxable years beginning
3after December 31, 2019, and before January 1, 2021, the unemployment
4compensation received by the individual that is excluded from federal adjusted gross
5income under section 85 (c) of the Internal Revenue Code.
SB267,2,136 2. For taxable years beginning after December 31, 2020, and before January
71, 2022, the unemployment compensation received in the taxable year by the
8individual, limited to $10,200. In the case of married spouses filing a joint return
9who both receive unemployment compensation during the taxable year, the $10,200
10limitation shall apply separately to each spouse. This subdivision does not apply if
11the federal adjusted gross income, as determined under section 85 (c) (2) of the
12Internal Revenue Code, of the individual, or of the individual and his or her spouse
13if married filing a joint return, is $150,000 or more.
SB267,2 14Section 2. 71.05 (6) (b) 8. of the statutes is amended to read:
SB267,3,215 71.05 (6) (b) 8. The difference between the amount included in federal adjusted
16gross income for the current year and the amount calculated under section 85 of the
17internal revenue code Internal Revenue Code (relating to unemployment

1compensation) as that section existed on December 31, 1985 , to the extent that such
2amount is not exempt under sub. (1) (d)
.
SB267,3,33 (End)
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