JR4 AB1: Bill Text

Individual Income tax rates

Under current law, there are four income tax brackets for single individuals, certain fiduciaries, heads of households, and married persons. The brackets are indexed for inflation. The rate of taxation under current law for the lowest bracket for single individuals, certain fiduciaries, heads of households, and married persons is 4.40 percent of taxable income; the rate for the second bracket is 5.84 percent; the rate for the third bracket is 6.27 percent; and the rate for the highest bracket is 7.65 percent. Before applying bracket indexing, the four brackets for individuals, certain fiduciaries, and heads of households, to which the above rates apply, are as follows: taxable income from $0 to $7,500; taxable income exceeding $7,500 but not exceeding $15,000; taxable income exceeding $15,000 but not exceeding $225,000; and taxable income exceeding $225,000.

This rate and bracket structure first applies to taxable year 2013, and was enacted in 2013 Wisconsin Act 20, the state budget bill.

For taxable years beginning after December 31, 2013, this bill lowers the rate of taxation for the lowest tax bracket. Under the bill, the rate of taxation for the lowest bracket for single individuals, certain fiduciaries, heads of households, and married persons is 4.0 percent of taxable income.

technical college system

This bill provides property tax relief aid to technical college districts, distributed annually to each district on the basis of its equalized value as compared to the equalized value of all technical college districts as of January 2014. The first distribution is in February 2015.

The bill eliminates the current limit on a technical college district's tax levy and imposes, instead, a revenue limit. Under the bill, with certain exceptions, a district board's revenue (defined as the sum of its tax levy for operations and the amount of property tax relief aid it receives) in the 2014-15 school year or any school year thereafter may not exceed its revenue in the previous school year increased by the district's valuation factor, which is the percentage change in the district's equalized value due to new construction, less improvements removed.

net operating losses

Under current law, for income tax purposes, under certain circumstances, a taxpayer may claim a Wisconsin net operating loss against Wisconsin taxable income of the two years preceding the year in which the taxpayer sustained the loss. This bill clarifies that a taxpayer need not make an offset against Wisconsin modified taxable income of the two years preceding the loss, if the taxpayer chooses not to carry back the net operating loss to the two years preceding the loss.

tax credits

Under current law, a person may claim the jobs tax credit if the Wisconsin Economic Development Corporation certifies the person to receive the tax credit, the person increases net employment in the person's business, and the person provides certain wages or job training to its full-time employees. This bill specifies that to be eligible for the jobs tax credit a person must increase net employment in the person's business in this state. Therefore, under the bill, a person may qualify for the jobs tax credit by relocating existing jobs to this state even if the number of individuals the person's business employs nationwide does not increase. Similarly, under the bill, a person does not qualify for the jobs tax credit by increasing the number of individuals the person's business employs nationwide if the number of individuals the person's business employs in this state does not increase.

Under current law, for income and franchise tax purposes, a taxpayer may not claim a relocated business deduction or tax credit for taxable years beginning after December 31, 2013. Under this bill, a taxpayer who is first eligible to claim a relocated business deduction or tax credit for a taxable year beginning after December 31, 2012, and before January 1, 2014, may claim the deduction or credit in the following taxable year.

The bill also provides that the manufacturing and agriculture credit, the research credit, and the state historic rehabilitation credit may be claimed against the alternative minimum tax.

Finally, the bill makes technical changes to the electronic medical records tax credit and to the sales and use tax exemption for tangible personal property used in commercial printing.

For further information see the state and local 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:

AB1,1 Section 1. 20.292 (1) (dp) of the statutes is created to read:

AB1,3,4 20.292 (1) (dp) Property tax relief aid. A sum sufficient equal to the amount necessary to distribute the property tax relief aid to technical college districts under s. 38.16 (4).

AB1,2 Section 2. 38.16 (title) of the statutes is amended to read:

AB1,3,6 38.16 (title) District tax levy; revenue limit; property tax relief aid.

AB1,3 Section 3. 38.16 (3) (a) 1m. of the statutes is created to read:

AB1,4,2 38.16 (3) (a) 1m. "Equalized value" excludes the value of tax incremental districts.

AB1,4 Section 4. 38.16 (3) (a) 2. of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB1,4,6 38.16 (3) (a) 2. "Excess levy revenue" means the amount by which a district board's tax levy revenue exceeds the limit under this subsection.

AB1,5 Section 5. 38.16 (3) (a) 2w. of the statutes is created to read:

AB1,4,9 38.16 (3) (a) 2w. "Revenue" means the sum of the tax levy and property tax relief aid under sub. (4).

AB1,6 Section 6. 38.16 (3) (b) of the statutes is repealed.

AB1,7 Section 7. 38.16 (3) (be) of the statutes, as created by 2013 Wisconsin Act 20, is amended to read:

AB1,4,16 38.16 (3) (be) Notwithstanding sub. (1), no district board may increase its tax levy revenue in 2013 the 2014-15 school year or in any school year thereafter by a percentage that exceeds the district's valuation factor, except as provided in pars. (bg) and (br).

AB1,8 Section 8. 38.16 (3) (bg) 2. of the statutes, as created by 2013 Wisconsin Act 20, is amended to read:

AB1,5,2 38.16 (3) (bg) 2. If a district board's allowable levy revenue under this subsection in 2013 the 2014-15 school year, or any school year thereafter, is greater than its actual levy revenue in that school year, the limit otherwise applicable to the district board under this subsection in the succeeding school year is increased by the difference between the prior school year's allowable levy revenue and the prior school year's actual levy revenue, as determined by the department of revenue, up to a maximum increase of 0.5 percent of the actual levy revenue in that prior school year, if the district board approves the increase by a three-fourths vote.

AB1,9 Section 9. 38.16 (3) (br) 1. of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB1,5,17 38.16 (3) (br) 1. If a district board wishes to exceed the limit otherwise applicable to the district under this subsection, it shall adopt a resolution supporting inclusion in the final district budget of an amount equal to the proposed excess levy revenue. The resolution shall be filed as provided in s. 8.37. Within 10 days after adopting the resolution, the district board shall notify the board of the scheduled date of the referendum and submit a copy of the resolution to the board. The district board shall call a special referendum for the purpose of submitting the resolution to the electors of the district for approval or rejection. In lieu of a special referendum, the district board may specify that the referendum be held at the next succeeding spring primary or election or partisan primary or general election, if such election is to be held not sooner than 70 days after the filing of the resolution of the district board. The district board shall certify the results of the referendum to the board within 10 days after the referendum is held.

AB1,10 Section 10. 38.16 (3) (br) 2. of the statutes is amended to read:

AB1,5,23 38.16 (3) (br) 2. The district board shall publish type A, B, C, D, and E notices of the referendum under s. 10.01 (2). Notwithstanding s. 10.01 (2) (a), the type A notice shall include a statement of the amount of the excess levy revenue specified in subd. 1. and a copy of the resolution under subd. 1. Section 5.01 (1) applies in the event of failure to comply with the notice requirements of this subdivision.

AB1,11 Section 11. 38.16 (3) (c) (intro.) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB1,6,3 38.16 (3) (c) (intro.) Except as provided in par. (d), if the board determines that a district board imposed an excess levy exceeded its limit under this subsection, the board shall do all of the following:

AB1,12 Section 12. 38.16 (3) (c) 1. of the statutes is amended to read:

AB1,6,7 38.16 (3) (c) 1. Reduce the amount of state aid payments to the district board in the school year in which the district board imposed the excess levy exceeded its limit by an amount equal to the amount of the excess levy revenue.

AB1,13 Section 13. 38.16 (3) (c) 3. of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB1,6,12 38.16 (3) (c) 3. Ensure that the amount of the excess levy revenue is not included in determining the limit under this subsection for the district board for the following year.

AB1,14 Section 14. 38.16 (3) (c) 4. of the statutes is amended to read:

AB1,6,17 38.16 (3) (c) 4. Ensure that, if a district board's excess levy revenue exceeds the amount of state aid that may be reduced under subd. 1., the excess amount is subtracted from state aid payments in the following years until the total amount of the excess levy revenue is subtracted from the state aid payments.

AB1,15 Section 15. 38.16 (3) (d) of the statutes is amended to read:

AB1,6,22 38.16 (3) (d) The department may issue a finding that a district board is not liable for a penalty that would otherwise be imposed under par. (c) if the department determines that the district board's excess levy revenue is caused by one of the following clerical errors:

AB1,7,2 1. The department, through mistake or inadvertence, has assessed to any county or taxation district, in the current year or in the previous year, a greater or lesser valuation for any year than should have been assessed, causing the district board's levy to be erroneous in a way that directly causes an excess levy revenue.

AB1,7,5 2. A taxation district clerk or a county clerk, through mistake or inadvertence in preparing or delivering the tax roll, causes a district board's levy to be erroneous in a way that directly causes an excess levy revenue.

AB1,16 Section 16. 38.16 (4) of the statutes is created to read:

AB1,7,9 38.16 (4) On February 20, 2015, and annually thereafter on the 3rd Friday in February, the board shall distribute to each district board, from the appropriation under s. 20.292 (1) (dp), the amount determined as follows:

AB1,7,12 (a) For the payment in 2015, divide the district's equalized value as of January 1, 2014, by the total equalized value of all districts as of January 1, 2014, and multiply the quotient by $406,000,000.

AB1,7,14 (b) For the payment in 2016 and annually thereafter, the amount determined under par. (a).

AB1,17 Section 17. 71.05 (6) (b) 47. am. of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB1,7,25 71.05 (6) (b) 47. am. For taxable years beginning after December 31, 2010, and before January 1, 2014, for 2 consecutive taxable years beginning with the taxable year in which the claimant's business locates to this state from another state or another country and begins doing business in this state, as defined in s. 71.22 (1r), and subject to the limitations provided under subd. 47. d., dm., and e., the profit or loss from a trade or business as reported on federal income tax return schedules C and F or their equivalents, plus ordinary gain or loss on the sale of business assets, as determined under s. 71.01 (6), but not less than zero, multiplied by the apportionment fraction determined in s. 71.04 (4) and subject to s. 71.04 (7).

AB1,18 Section 18. 71.05 (6) (b) 47. b. of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB1,8,23 71.05 (6) (b) 47. b. With respect to partners and members of limited liability companies, for taxable years beginning after December 31, 2010, and before January 1, 2014, for 2 consecutive taxable years beginning with the taxable year in which the partnership's or limited liability company's business locates to this state from another state or another country and begins doing business in this state, as defined in s. 71.22 (1r), and subject to the limitations provided under subd. 47. d., dm., and e., the partner's or member's distributive share of taxable income as calculated under section 703 of the Internal Revenue Code; plus the items of income and gain under section 702 of the Internal Revenue Code, including taxable state and municipal bond interest and excluding nontaxable interest income or dividend income from federal government obligations; minus the items of loss and deduction under section 756702 702 of the Internal Revenue Code, except items that are not deductible under s. 71.21; plus guaranteed payments to partners under section 707 (c) of the Internal Revenue Code; plus the credits claimed under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), (2dy), (3g), (3h), (3n), (3p), (3q), (3r), (3rm), (3rn), (3s), (3t), (3w), (5e), (5f), (5g), (5h), (5i), (5j), (5k), (5r), (5rm), and (8r); and plus or minus, as appropriate, transitional adjustments, depreciation differences, and basis differences under s. 71.05 (13), (15), (16), (17), and (19), multiplied by the apportionment fraction determined in s. 71.04 (4) and subject to s. 71.04 (7) or by separate accounting. No amounts subtracted under this subd. 47. b. may be included in the modification under par. (b) 9. or 9m.

AB1,19 Section 19. 71.05 (6) (b) 47. c. of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB1,9,11 71.05 (6) (b) 47. c. With respect to shareholders of a tax-option corporation, for taxable years beginning after December 31, 2010, and before January 1, 2014, for 2 consecutive taxable years beginning with the taxable year in which the tax-option corporation's business locates to this state from another state or another country and begins doing business in this state, as defined in s. 71.22 (1r), and subject to the limitations provided under subd. 47. d., dm., and e., the shareholder's distributive share of the entity's net income or loss as determined under this chapter, including interest income from federal, state, and municipal government obligations, multiplied by the apportionment fraction determined in s. 71.25 (6m) and subject to s. 71.25 (9) or by separate accounting. No amounts subtracted under this subdivision may be included in the modification under par. (b) 9. or 9m.

AB1,20 Section 20. 71.05 (6) (b) 47. dm. of the statutes is created to read:

AB1,9,17 71.05 (6) (b) 47. dm. No person may claim a deduction under this subdivision for taxable years beginning after December 31, 2013, except that a claimant who is first eligible to claim a deduction under this subdivision for a taxable year beginning after December 31, 2012, and before January 1, 2014, may claim the deduction the following taxable year.

AB1,21 Section 21. 71.05 (8) (b) of the statutes, as affected by 2013 Wisconsin Act 20, is renumbered 71.05 (8) (b) 1.

AB1,22 Section 22. 71.05 (8) (b) 2. of the statutes is created to read:

AB1,9,24 71.05 (8) (b) 2. The taxpayer need not make the offset against Wisconsin modified taxable income of the 2 years preceding the loss, as provided under subd. 1., if the taxpayer chooses not to carry back the net operating loss to the 2 years preceding the loss.

AB1,23 Section 23. 71.05 (8) (c) of the statutes is created to read:

AB1,10,2 71.05 (8) (c) The department shall not pay interest on any overpayment that results from the carry-back of a net operating loss.

AB1,24 Section 24. 71.06 (1q) (a) of the statutes, as created by 2013 Wisconsin Act 20, is amended to read:

AB1,10,6 71.06 (1q) (a) On all taxable income from $0 to $7,500, 4.40 percent, except that for taxable years beginning after December 31, 2013, 4.0 percent.

AB1,25 Section 25. 71.06 (2) (i) 1. of the statutes, as created by 2013 Wisconsin Act 20, is amended to read:

AB1,10,10 71.06 (2) (i) 1. On all taxable income from $0 to $10,000, 4.40 percent, except that for taxable years beginning after December 31, 2013, 4.0 percent.

AB1,26 Section 26. 71.06 (2) (j) 1. of the statutes, as created by 2013 Wisconsin Act 20, is amended to read:

AB1,10,14 71.06 (2) (j) 1. On all taxable income from $0 to $5,000, 4.40 percent, except that for taxable years beginning after December 31, 2013, 4.0 percent.

AB1,27 Section 27. 71.07 (4k) (b) 1. of the statutes, as created by 2013 Wisconsin Act 20, is amended to read:

AB1,11,11 71.07 (4k) (b) 1. Subject to the limitations provided in this subsection, and except as provided in subds. 2. and 3., for taxable years beginning after December 31, 2012, an individual, a partner of a partnership, a shareholder of a tax-option corporation, or a member of a limited liability company may claim a credit against the tax imposed under s. 71.02 or 71.08, as allocated under par. (d), an amount equal to 5 percent of the amount obtained by subtracting from the individual's, partnership's, tax-option corporation's, or limited liability company's qualified research expenses, as defined in section 41 of the Internal Revenue Code, except that "qualified research expenses" includes only expenses incurred by the individual, partnership, tax-option corporation, or the limited liability company, incurred for research conducted in this state for the taxable year, except that a taxpayer may elect the alternative computation under section 41 (c) (4) of the Internal Revenue Code and that election applies until the department permits its revocation, except as provided in par. (c), and except that "qualified research expenses" does not include compensation used in computing the credit under subs. (2dj) and (2dx), the entity's base amount, as defined in section 41 (c) of the Internal Revenue Code, except that gross receipts used in calculating the base amount means gross receipts from sales attributable to Wisconsin under ss. 71.04 (7) (b) 1. and 2., (df), (dh), (dj), and (dk). Section 41 (h) of the Internal Revenue Code does not apply to the credit under this subdivision.

AB1,28 Section 28. 71.07 (5i) (c) 3. of the statutes is created to read:

AB1,11,14 71.07 (5i) (c) 3. No credit may be claimed under this subsection based on an amount paid under par. (b) after December 31, 2013.

AB1,29 Section 29. 71.07 (5m) (a) 4. of the statutes is amended to read:

AB1,11,17 71.07 (5m) (a) 4. "Net tax liability" means a claimant's income tax liability after he or she completes the computations listed in s. 71.10 (4) (a) to (dr) (d).

AB1,30 Section 30. 71.07 (5n) (b) (intro.) of the statutes is amended to read:

AB1,11,23 71.07 (5n) (b) Filing claims. (intro.) Subject to the limitations provided in this subsection, a claimant may claim as a credit against the tax imposed under s. ss. 71.02 and 71.08, up to the amount of the tax, an amount equal to one of the following percentages of the claimant's eligible qualified production activities income in the taxable year:

AB1,31 Section 31. 71.07 (9r) (a) of the statutes is amended to read:

AB1,12,10 71.07 (9r) (a) For taxable years beginning on or after August 1, 1988, any natural person may credit against taxes otherwise due under s. 71.02 or 71.08 an amount equal to 25% of the costs of preservation or rehabilitation of historic property located in this state, including architectural fees and costs incurred in preparing nomination forms for listing in the national register of historic places in Wisconsin or the state register of historic places, if the nomination is made within 5 years prior to submission of a preservation or rehabilitation plan under par. (b) 3. b., and if the physical work of construction or destruction in preparation for construction begins after December 31, 1988, except that the credit may not exceed $10,000, or $5,000 for married persons filing separately, for any preservation or rehabilitation project.

AB1,32 Section 32 . 71.08 (1) (intro.) of the statutes, as affected by 2013 Wisconsin Act 62, is amended to read:

AB1,12,22 71.08 (1) Imposition. (intro.) If the tax imposed on a natural person, married couple filing jointly, trust, or estate under s. 71.02, not considering the credits under ss. 71.07 (1), (2dd), (2de), (2di), (2dj), (2dL), (2dr), (2ds), (2dx), (2dy), (3m), (3n), (3p), (3q), (3r), (3rm), (3rn), (3s), (3t), (3w), (5b), (5d), (5e), (5f), (5h), (5i), (5j), (5n), (6), (6e), (8r), (9e), and (9m), 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1dy), (2m), (3), (3n), (3t), and (3w), 71.47 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1dy), (2m), (3), (3n), (3t), and (3w), 71.57 to 71.61, and 71.613 and subch. VIII and payments to other states under s. 71.07 (7), is less than the tax under this section, there is imposed on that natural person, married couple filing jointly, trust or estate, instead of the tax under s. 71.02, an alternative minimum tax computed as follows:

AB1,33 Section 33 . 71.08 (1) (intro.) of the statutes, as affected by 2013 Wisconsin Acts 62 and .... (this act), is amended to read:

AB1,13,10 71.08 (1) Imposition. (intro.) If the tax imposed on a natural person, married couple filing jointly, trust, or estate under s. 71.02, not considering the credits under ss. 71.07 (1), (2dd), (2de), (2di), (2dj), (2dL), (2dr), (2ds), (2dx), (2dy), (3m), (3n), (3p), (3q), (3r), (3rm), (3rn), (3s), (3t), (3w), (4k), (5b), (5d), (5e), (5f), (5h), (5i), (5j), (5n), (6), (6e), (8r), (9e), and (9m), and (9r), 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1dy), (2m), (3), (3n), (3t), and (3w), 71.47 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1dy), (2m), (3), (3n), (3t), and (3w), 71.57 to 71.61, and 71.613 and subch. VIII and payments to other states under s. 71.07 (7), is less than the tax under this section, there is imposed on that natural person, married couple filing jointly, trust or estate, instead of the tax under s. 71.02, an alternative minimum tax computed as follows:

AB1,34 Section 34. 71.10 (4) (cr) of the statutes is renumbered 71.10 (4) (fn).

AB1,35 Section 35. 71.10 (4) (dr) of the statutes is renumbered 71.10 (4) (fp).

AB1,36 Section 36. 71.10 (4) (er) of the statutes, as created by 2013 Wisconsin Act 20, is renumbered 71.10 (4) (fr).