— The loan is a commercial loan.
— The loan is for five million dollars or less.
— The loan is provided to a person residing or located in Wisconsin.
— The loan is used primarily for a business or agricultural purpose.
The qualifications for what entities may claim the exemption and what loans create qualifying income that can be exempted requires clarification for consistent administration and fairness across the affected industry.
4. Description of existing policies relevant to the rule, new policies proposed to be included in the rule, and an analysis of policy alternatives:
There are no current policies exempting income derived from commercial loans from income taxation. This exemption was adopted as a part of 2023 Wisconsin Act 19, first effective for the 2023 taxable year. The department anticipates creating new policies that clarify what businesses qualify to claim the exemption on their taxes and what loans create qualifying income. The department will consider industry best practices, federal and Wisconsin banking law and regulations, and research from other states with similar exemptions in the process of drafting the rule.
5. Estimate of amount of time that state employees will spend developing the rule and of other resources necessary to develop the rule:
The department estimates it will take approximately 250 hours to develop the rule.
6. List with description of all entities that may be affected by the proposed rule:
Financial institutions, commercial loan borrowers
7. Summary and preliminary comparison with any existing or proposed federal regulation that is intended to address the activities to be regulated by the proposed rule:
There is no existing or proposed federal regulation that is intended to address this new Wisconsin income tax exemption.
8. Anticipated economic impact of implementing the rule (note if the rule is likely to have a significant economic impact on small businesses):
The department does not expect an economic impact to the affected industries as a result of implementing the rule. However, any standards adopted in the rule may affect the types of loans and income eligible for the tax exemption.
This scope statement was approved by the Governor on September 7, 2023.
Contact Person:
Ann DeGarmo
Excise Tax Specialist
Office of Technical Services
608.266.7179
