2025 - 2026 LEGISLATURE
LRB-5517/1
EKL:ajk
November 26, 2025 - Introduced by Representative Swearingen, cosponsored by Senator Felzkowski. Referred to Committee on Ways and Means.
AB685,1,2
1An Act to amend 71.07 (5) (a) 3.; to create 71.05 (6) (b) 57. of the statutes; 2relating to: individual income tax subtraction for certain theft losses. Analysis by the Legislative Reference Bureau
This bill allows taxpayers to subtract certain theft losses when calculating their income for individual income tax purposes, beginning with taxable year 2024.
Under the bill, a taxpayer may subtract a theft loss if the loss is deductible in the taxable year as an itemized deduction under federal law, regardless of whether the individual claims the federal deduction. Under federal law, the deduction is limited to losses that are related to a profit-seeking activity or connected to a federally declared disaster (or, beginning next year, a state declared disaster). Federal law imposes additional conditions, including that there be no reasonable chance of recovering the money or property, and generally provides that a theft loss is claimed in the year in which the taxpayer discovers the loss.
The bill also provides that taxpayers who make the subtraction under the bill may not include the theft loss in the amount used to claim the itemized deductions tax credit. Under current law, that credit is based on the amount of specified itemized deductions a taxpayer is eligible to claim for federal tax purposes.
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:
AB685,1
1Section 1. 71.05 (6) (b) 57. of the statutes is created to read: AB685,2,4271.05 (6) (b) 57. For taxable years beginning after December 31, 2023, the 3amount of any loss arising from theft to the extent that the theft loss is deductible 4in the taxable year under section 165 (c) (2) or (3) of the Internal Revenue Code. AB685,25Section 2. 71.07 (5) (a) 3. of the statutes is amended to read: AB685,2,10671.07 (5) (a) 3. Casualty and theft deductions under section 165 (c) (3) of the 7internal revenue code Internal Revenue Code, except for casualty losses that are 8directly related to a presidentially declared disaster under 26 USC section 7508A of 9the Internal Revenue Code. No addition may be made under this subdivision for 10any amount for which a subtraction is made under s. 71.05 (6) (b) 57.
