LRB-0279/1
MES:jld:pg
2007 - 2008 LEGISLATURE
January 24, 2007 - Introduced by Representatives Lothian, Owens, Nass, J.
Fitzgerald, Ziegelbauer, Jeskewitz, Kerkman, Gundrum, Pridemore,
Gunderson, Hahn, Musser, Nerison, Hines, Vukmir, Suder, Cullen, Van Roy,
Zipperer, Davis, Vos, LeMahieu, Nygren, Albers, Ballweg, Petrowski,
Townsend, Bies, Ott, Tauchen, Roth, Kramer, Murtha, Petersen
and M.
Williams
, cosponsored by Senators Kedzie, Roessler, Darling, Harsdorf,
Schultz, Kanavas, A. Lasee
and Lazich. Referred to Committee on Ways and
Means.
AB28,1,3 1An Act to create 71.07 (6f) and 71.10 (4) (cf) of the statutes; relating to: creating
2an individual income tax credit for retirement plan income received by an
3individual.
Analysis by the Legislative Reference Bureau
Under current law, the pension benefits of certain public employees are exempt
from state taxation. The pensions that are exempt include payments received from
the U.S. civil service retirement system, the U.S. military employee retirement
system, the Milwaukee city and county retirement systems, the Police Officer's
Annuity and Benefit Fund of Milwaukee, the Milwaukee Public School Teachers'
Retirement Fund, the Wisconsin State Teachers' Retirement Fund, and the Sheriff's
Annuity and Benefit Fund of Milwaukee County. For most of these pension plans,
the exemption applies only to persons who were members of or retired from the plans
as of December 31, 1963, although this limitation does not apply to retirement
payments received from the U.S. military employee retirement system or from
payments received from the U.S. government that relate to service with the U.S.
Coast Guard, the commissioned corps of the National Oceanic and Atmospheric
Administration, or the commissioned corps of the U.S. Public Health Service.
This bill creates a nonrefundable individual income tax credit that is calculated
by multiplying the claimant's marginal tax rate by the amount of pension income
received by the claimant each year from a qualified retirement plan under the
Internal Revenue Code, except that the credit may not be based on pension income
that is already exempt from taxation. The bill first applies to taxable year 2008, and

limits the maximum amount of pension income on which the credit may be
calculated. For taxable year 2008, the maximum allowable pension income is $2,500.
The maximum amount of pension income increases each year from $2,500 to $5,000
in 2009, $10,000 in 2010, $15,000 in 2011, and $20,000 in 2012 and thereafter.
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:
AB28, s. 1 1Section 1. 71.07 (6f) of the statutes is created to read:
AB28,2,22 71.07 (6f) Pension income tax credit. (a) Definitions. In this subsection:
AB28,2,33 1. "Claimant" means an individual who claims a credit under this subsection.
AB28,2,74 2. "Pension income" means any amount of payment or distribution received by
5a claimant, in the year to which the claim relates, from a qualified retirement plan
6under the Internal Revenue Code, other than a payment that is exempt under s.
771.05 (1) (a), (am), or (an), or that is exempt as a railroad retirement benefit.
AB28,2,118 (b) Filing claims. Subject to the limitations provided in this subsection, a
9claimant may claim as a credit against the tax imposed under s. 71.02 or 71.08, up
10to the amount of those taxes, the amount of pension income received by the claimant,
11multiplied by the claimant's marginal tax rate.
AB28,2,1412 (c) Limitations. 1. The maximum amount of pension income that a claimant
13may use in calculating the claimant's credit under par. (b) is one of the following
14amounts:
AB28,2,1615 a. For taxable years beginning after December 31, 2007, and before January
161, 2009, $2,500.
AB28,2,1817 b. For taxable years beginning after December 31, 2008, and before January
181, 2010, $5,000.
AB28,3,2
1c. For taxable years beginning after December 31, 2009, and before January
21, 2011, $10,000.
AB28,3,43 d. For taxable years beginning after December 31, 2010 and before January 1,
42012, $15,000.
AB28,3,55 e. For taxable years beginning after December 31, 2011, $20,000.
AB28,3,76 2. No credit may be allowed under this subsection unless it is claimed within
7the time period under s. 71.75 (2).
AB28,3,168 3. For a claimant who is a nonresident or part-year resident of this state and
9who is a single person, multiply the credit for which the claimant is eligible under
10par. (b) by a fraction, the numerator of which is the individual's Wisconsin adjusted
11gross income and the denominator of which is the individual's federal adjusted gross
12income. If a claimant is married and files a joint return, and if the claimant or the
13claimant's spouse, or both, are nonresidents or part-year residents of this state,
14multiply the credit for which the claimant is eligible under par. (b) by a fraction, the
15numerator of which is the couple's joint Wisconsin adjusted gross income and the
16denominator of which is the couple's joint federal adjusted gross income.
AB28,3,1817 (d) Administration. Subsection (9e) (d), to the extent that it applies to the credit
18under that subsection, applies to the credit under this subsection.
AB28, s. 2 19Section 2. 71.10 (4) (cf) of the statutes is created to read:
AB28,3,2020 71.10 (4) (cf) The pension income tax credit under s. 71.07 (6f).
AB28,3,2121 (End)
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