LRB-5675/1
JK:cdc&emw
2023 - 2024 LEGISLATURE
January 30, 2024 - Introduced by Senators Cabral-Guevara, Wimberger,
Ballweg, Bradley, Jagler, Felzkowski, Feyen, Marklein, Nass, Quinn,
Stroebel, Testin and Wanggaard, cosponsored by Representatives Steffen,
Kitchens, Allen, Armstrong, August, Behnke, Binsfeld, Born, Brandtjen,
Dittrich, Donovan, Edming, Goeben, Green, Gundrum, Hurd, Katsma, Krug,
Kurtz, Macco, Magnafici, Maxey, Melotik, Moses, Murphy, Mursau, Myers,
Nedweski, O'Connor, Oldenburg, Penterman, Petryk, Plumer, Rettinger,
Schmidt, Schraa, Schutt, Snyder, Sortwell, Spiros, Tranel, Wichgers and
Wittke. Referred to Joint Committee on Finance.
SB978,1,4
1An Act to amend 71.05 (1) (am), 71.05 (1) (an), 71.05 (6) (b) 4. (intro.), 71.05 (6)
2(b) 54. (intro.) and 71.83 (1) (a) 6.; and
to create 71.05 (6) (b) 54m. and 71.05
3(6) (b) 54mn. of the statutes;
relating to: increasing and expanding the
4retirement income subtraction.
Analysis by the Legislative Reference Bureau
This bill increases and expands the individual state income tax subtraction for
payments or distributions received from qualified retirement plans under the
Internal Revenue Code or from certain individual retirement accounts. Under the
bill, beginning in tax year 2024, up to $75,000 of payments or distributions received
from qualified retirement plans or certain individual retirement accounts may be
subtracted annually from an individual's taxable income, if the individual is at least
65 years of age. If the individual and individual's spouse are both at least 65 years
of age, the sum of the amount that the couple may subtract annually from their
combined taxable income may not exceed $150,000.
Under current law, up to $5,000 of payments or distributions received by
certain individuals from qualified retirement plans or from certain individual
retirement accounts may be subtracted. To be eligible, the individual must be at least
65 years old and have federal adjusted gross income under $15,000, or under $30,000
if married.
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:
SB978,1
1Section 1
. 71.05 (1) (am) of the statutes is amended to read:
SB978,2,42
71.05
(1) (am)
Military retirement systems. All retirement payments received
3from the U.S. military employee retirement system, to the extent that such payments
4are not exempt under par. (a)
or sub. (6) (b) 54.
SB978,2
5Section 2
. 71.05 (1) (an) of the statutes is amended to read:
SB978,2,106
71.05
(1) (an)
Uniformed services retirement benefits. All retirement payments
7received from the U.S. government that relate to service with the coast guard, the
8commissioned corps of the national oceanic and atmospheric administration, or the
9commissioned corps of the public health service, to the extent that such payments are
10not exempt under par. (a) or (am)
or sub. (6) (b) 54.
SB978,3
11Section 3
. 71.05 (6) (b) 4. (intro.) of the statutes is amended to read:
SB978,3,312
71.05
(6) (b) 4. (intro.) Disability payments other than disability payments that
13are paid from a retirement plan, the payments from which are exempt under
subd. 1454. and sub. (1) (am) and (an), if the individual either is single or is married and files
15a joint return and is under 65 years of age before the close of the taxable year to which
16the subtraction relates, retired on disability, and, when the individual retired, was
17permanently and totally disabled. In this subdivision, “permanently and totally
18disabled" means an individual who is unable to engage in any substantial gainful
19activity by reason of any medically determinable physical or mental impairment that
20can be expected to result in death or which has lasted or can be expected to last for
21a continuous period of not less than 12 months. An individual shall not be considered
1permanently and totally disabled for purposes of this subdivision unless proof is
2furnished in such form and manner, and at such times, as prescribed by the
3department. The exclusion under this subdivision shall be determined as follows:
SB978,4
4Section 4
. 71.05 (6) (b) 54. (intro.) of the statutes is amended to read:
SB978,3,115
71.05
(6) (b) 54. (intro.) Except for a payment that is exempt under sub. (1) (a),
6(am), or (an), or that is exempt as a railroad retirement benefit,
and except as
7provided under subds. 54m. and 54mn., for taxable years beginning after December
831, 2020, up to $5,000 of payments or distributions received each year by an
9individual from a qualified retirement plan under the Internal Revenue Code or from
10an individual retirement account established under
26 USC 408, if all of the
11following conditions apply:
SB978,5
12Section 5
. 71.05 (6) (b) 54m. of the statutes is created to read:
SB978,3,1913
71.05
(6) (b) 54m. a. Except for a payment that is exempt under sub. (1) (a),
14(am), or (an), or that is exempt as a railroad retirement benefit, and except as
15provided under subd. 54mn., for taxable years beginning after December 31, 2023,
16the amount, up to the limit specified in subd. 54m. b., c., or d., whichever is
17applicable, of the payments or distributions received each year from a qualified
18retirement plan under the Internal Revenue Code or from an individual retirement
19account established under
26 USC 408.
SB978,3,2220
b. If the individual is at least 65 years of age before the close of the taxable year
21to which the subtraction relates, the amount claimed by the individual under this
22subdivision may not exceed $75,000 for that taxable year.
SB978,4,223
c. If the individual is married and is a joint filer, and both spouses are at least
2465 years of age before the close of the taxable year to which the subtraction relates,
1the total amount claimed by the spouses under this subdivision may not exceed
2$150,000 for that taxable year.
SB978,4,63
d. If the individual is married and files a separate return and is at least 65 years
4of age before the close of the taxable year to which the subtraction relates, the
5amount claimed by each spouse as a subtraction under this subdivision may not
6exceed $75,000 for that taxable year.
SB978,4,97
e. The individual has not claimed any credit listed under s. 71.10 (4) for the
8same taxable year for which the individual claimed the subtraction under this
9subdivision.
SB978,6
10Section 6
. 71.05 (6) (b) 54mn. of the statutes is created to read:
SB978,4,1811
71.05
(6) (b) 54mn. For taxable years beginning after December 31, 2023, for
12an individual who is a part-year resident of this state, the amount that is calculated
13by multiplying the applicable amount under subd. 54m. b., c., or d. by a fraction the
14numerator of which is the individual's wages, salary, tips, unearned income, and net
15earnings from a trade or business that are taxable by this state and the denominator
16of which is the individual's total wages, salary, tips, unearned income, and net
17earnings from a trade or business. A nonresident of this state is not eligible to claim
18the subtraction under subd. 54m.
SB978,7
19Section 7
. 71.83 (1) (a) 6. of the statutes is amended to read:
SB978,5,220
71.83
(1) (a) 6. `Retirement plans.' Any natural person who is liable for a
21penalty for federal income tax purposes under section
72 (m) (5), (q), (t), and (v),
4973,
224974,
4975, or
4980A of the Internal Revenue Code is liable for 33 percent of the
23federal penalty unless the income received is exempt from taxation under s. 71.05
24(1) (a) or (6) (b) 54.
, 54m., or 54mn. The penalties provided under this subdivision
1shall be assessed, levied, and collected in the same manner as income or franchise
2taxes.