AB872: Bill Text

Homestead tax credit

Under current law, as created in 2011 Wisconsin Act 32, the homestead tax credit formula factors (maximum income, maximum property taxes, and income threshold) are not indexed for inflation after 2010. The bill repeals those provisions and restores former law. Under the bill, the homestead tax credit formula factors would be indexed for inflation for 2013 and beyond.

Exclusion of capital gains

Under current law, there is an income tax exclusion for individuals, fiduciaries, members of limited liability companies and partnerships, and shareholders of tax-option corporations for 30 percent of the net long-term capital gains realized from the sale of assets held more than one year and the sale of all assets acquired from a decedent, and an exclusion for 60 percent of such gains realized from the sale of farm assets held more than one year and the sale of all farm assets acquired from a decedent.

Under this bill, the exclusion of 30 percent of such net long-term capital gains, and all assets acquired from a decedent, does not apply to taxable years beginning after December 31, 2013. The bill does not affect the exclusion of the gains realized from the sale of farm assets held more than one year and the sale of farm assets acquired from a decedent.

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 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:

AB872,1 Section 1. 71.01 (14) of the statutes is amended to read:

AB872,5,5 71.01 (14) "Wisconsin net operating loss" of persons other than corporations means "federal net operating loss" adjusted as prescribed in s. 71.05 (6) (a) and (b), (7) to (12) and (19) to (21), except s. 71.05 (6) (b) 9., except that no deductions allowable on schedule A for federal income tax purposes are allowable.

AB872,2 Section 2. 71.03 (2) (a) 1. of the statutes is amended to read:

AB872,5,17 71.03 (2) (a) 1. Every individual domiciled in this state during the entire taxable year who has a gross income at or above a threshold amount which shall be determined annually by the department of revenue. The threshold amounts shall be determined for categories of individuals based on filing status and age, and shall include categories for single individuals; individuals who file as a head of household; married couples who file jointly; and married persons who file separately. The threshold amounts shall also be determined by taking into account the exemption amounts in s. 71.05 (23) (b) 1. and 3. and (be). The department of revenue shall establish a threshold amount for each category of individual at an amount at which no individual in that category whose gross income is below that amount has a state income tax liability.

AB872,3 Section 3. 71.05 (6) (a) 25. of the statutes is repealed.

AB872,4 Section 4. 71.05 (6) (b) 9. of the statutes is amended to read:

AB872,6,12 71.05 (6) (b) 9. On assets held more than one year and on all assets acquired from a decedent, 30 percent of the capital gain as computed under the internal revenue code, not including capital gains for which the federal tax treatment is determined under section 406 of P.L. 99-514; not including amounts treated as ordinary income for federal income tax purposes because of the recapture of depreciation or any other reason; and not including amounts treated as capital gain for federal income tax purposes from the sale or exchange of a lottery prize. For purposes of this subdivision, the capital gains and capital losses for all assets shall be netted before application of the percentage. This subdivision does not apply to taxable years that begin after December 31, 2013.

AB872,5 Section 5. 71.05 (6) (b) 9m. of the statutes is amended to read:

AB872,6,24 71.05 (6) (b) 9m. On farm assets held more than one year and on all farm assets acquired from a decedent, to the extent that they are not subtracted under subd. 9. or 10., 60 percent of the capital gain as computed under the Internal Revenue Code, not including capital gains for which the federal tax treatment is determined under section 406 of P.L. 99-514; not including amounts treated as ordinary income for federal income tax purposes because of the recapture of depreciation or any other reason; and not including amounts treated as capital gain for federal income tax purposes from the sale or exchange of a lottery prize. In this subdivision, "farm assets" means livestock, farm equipment, farm real property, and farm depreciable property. For purposes of this subdivision, the capital gains and capital losses for all assets shall be netted before application of the percentage.

AB872,6 Section 6. 71.05 (6) (b) 25. of the statutes is amended to read:

AB872,7,8 71.05 (6) (b) 25. All gains that are not excluded from taxation under subd. 9., on business assets or 9m. on assets used in farming, including shares in a corporation or trust that meets the standards under s. 182.001 (1), or both, held more than one year, that are sold or otherwise disposed of to persons who are related to the seller or transferor by blood, marriage or adoption within the 3rd degree of kinship as determined under s. 990.001 (16), as computed under the Internal Revenue Code, not including amounts treated as ordinary income for federal income tax purposes because of the recapture of depreciation or any other reason.

AB872,7 Section 7. 71.05 (6) (b) 47. b. of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB872,8,6 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. 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.

AB872,8 Section 8. 71.05 (6) (b) 47. c. of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB872,8,19 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. 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.

AB872,9 Section 9. 71.05 (8) (b) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB872,9,11 71.05 (8) (b) A Wisconsin net operating loss may be carried back against Wisconsin taxable income of the previous 2 years and then carried forward against Wisconsin taxable incomes of the next 20 taxable years, if the taxpayer was subject to taxation under this chapter in the taxable year in which the loss was sustained, to the extent not offset against other income of the year of loss and to the extent not offset against Wisconsin modified taxable income of the 2 years preceding the loss and of any year between the loss year and the taxable year for which the loss carry-forward is claimed. In this paragraph, "Wisconsin modified taxable income" means Wisconsin taxable income with the following exceptions: a net operating loss deduction or offset for the loss year or any taxable year before or thereafter is not allowed, the deduction for long-term capital gains under subs. (6) (b) 9. and 9m. and (25) is not allowed, the amount deductible for losses from sales or exchanges of capital assets may not exceed the amount includable in income for gains from sales or exchanges of capital assets and "Wisconsin modified taxable income" may not be less than zero.

AB872,10 Section 10. 71.05 (23) (b) 1. of the statutes is amended to read:

AB872,9,17 71.05 (23) (b) 1. A personal exemption of $700 if the taxpayer is required to file a return under s. 71.03 (2) (a) 1. or 2. and $700 for the taxpayer's spouse, except if the spouse is filing separately or as a head of household. The exemption under this subdivision may not be claimed by a taxpayer who is eligible for, and claims, the exemption under par. (be).

AB872,11 Section 11. 71.05 (23) (be) of the statutes is created to read:

AB872,9,21 71.05 (23) (be) For taxable years beginning after December 31, 2013, a personal exemption calculated as follows if the taxpayer is required to file a return under s. 71.03 (2) (a) 1. or 2.:

AB872,9,25 1. For a single individual who has a Wisconsin adjusted gross income of less than $12,000, an exemption of $4,310. For a single individual who has a Wisconsin adjusted gross income of at least $12,000, the exemption is the amount obtained by subtracting from $4,310 7.52 percent of Wisconsin adjusted gross income in excess of $12,000 but not less than $0, except that if the single individual's Wisconsin adjusted gross income is more than $60,000, the individual may not claim the exemption under this paragraph but the individual may claim the exemption under par. (b).

AB872,10,12 2. For a head of household who has a Wisconsin adjusted gross income of less than $14,000, an exemption of $4,310. For a head of household who has a Wisconsin adjusted gross income of at least $14,000, the exemption is the amount obtained by subtracting from $4,310 6.45 percent of Wisconsin adjusted gross income in excess of $14,000 but not less than $0, except that if the head of household's Wisconsin adjusted gross income is more than $70,000, the individual may not claim the exemption under this paragraph but the head of household may claim the exemption under par. (b).

AB872,10,21 3. For a married couple filing jointly that has an aggregate Wisconsin adjusted gross income of less than $20,000, an exemption of $4,310 for each spouse. For a married couple filing jointly that has an aggregate Wisconsin adjusted gross income of at least $20,000, the exemption is the amount obtained by subtracting, for each spouse, from $4,310 4.51 percent of aggregate Wisconsin adjusted gross income in excess of $20,000 but not less than $0, except that if the married couple's Wisconsin aggregate adjusted gross income is more than $100,000, the couple may not claim the exemption under this paragraph but the married couple may claim the exemption under par. (b).

AB872,11,4 4. For a married individual filing separately who has a Wisconsin adjusted gross income of less than $10,000, an exemption of $4,310. For a married individual filing separately who has a Wisconsin adjusted gross income of at least $10,000, the exemption is the amount obtained by subtracting from $4,310 9.03 percent of Wisconsin adjusted gross income in excess of $10,000 but not less than $0, except that if the individual's Wisconsin adjusted gross income is more than $50,000, the individual may not claim the exemption under this paragraph but the individual may claim the exemption under par. (b).

AB872,12 Section 12. 71.05 (25) (b) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB872,11,12 71.05 (25) (b) For taxable years beginning after December 31, 2015, for an investment in a qualified Wisconsin business made after December 31, 2010, and held for at least 5 uninterrupted years, a claimant may subtract from federal adjusted gross income the amount of the claimant's qualifying gain in the year to which the claim relates, to the extent that it is not subtracted under sub. (6) (b) 9. or 9m.

AB872,13 Section 13. 71.06 (1p) (intro.) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB872,11,20 71.06 (1p) Fiduciaries, single individuals and heads of households; 2001 to 2012 after 2000. (intro.) The tax to be assessed, levied and collected upon the taxable incomes of all fiduciaries, except fiduciaries of nuclear decommissioning trust or reserve funds, and single individuals and heads of households shall be computed at the following rates for taxable years beginning after December 31, 2000, and before January 1, 2013:

AB872,14 Section 14. 71.06 (1p) (a) of the statutes is amended to read:

AB872,11,22 71.06 (1p) (a) On all taxable income from $0 to $7,500, 4.6% 4.40 percent.

AB872,15 Section 15. 71.06 (1p) (b) of the statutes is amended to read:

AB872,11,25 71.06 (1p) (b) On all taxable income exceeding $7,500 but not exceeding $15,000, 6.15% 5.84 percent.

AB872,16 Section 16. 71.06 (1p) (c) of the statutes is amended to read:

AB872,12,3 71.06 (1p) (c) On all taxable income exceeding $15,000 but not exceeding $112,500, 6.5% 6.27 percent.

AB872,17 Section 17. 71.06 (1q) of the statutes, as created by 2013 Wisconsin Act 20, is repealed.

AB872,18 Section 18. 71.06 (2) (g) (intro.) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB872,12,9 71.06 (2) (g) (intro.) For joint returns, for taxable years beginning after December 31, 2000, and before January 1, 2013:

AB872,19 Section 19. 71.06 (2) (g) 1. of the statutes is amended to read:

AB872,12,11 71.06 (2) (g) 1. On all taxable income from $0 to $10,000, 4.6% 4.0 percent.

AB872,20 Section 20. 71.06 (2) (g) 2. of the statutes is amended to read:

AB872,12,14 71.06 (2) (g) 2. On all taxable income exceeding $10,000 but not exceeding $20,000, 6.15% 5.84 percent.

AB872,21 Section 21. 71.06 (2) (g) 3. of the statutes is amended to read:

AB872,12,17 71.06 (2) (g) 3. On all taxable income exceeding $20,000 but not exceeding $150,000, 6.5% 6.27 percent.

AB872,22 Section 22. 71.06 (2) (h) (intro.) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB872,12,21 71.06 (2) (h) (intro.) For married persons filing separately, for taxable years beginning after December 31, 2000, and before January 1, 2013:

AB872,23 Section 23. 71.06 (2) (h) 1. of the statutes is amended to read:

AB872,12,23 71.06 (2) (h) 1. On all taxable income from $0 to $5,000, 4.6% 4.0 percent.

AB872,24 Section 24. 71.06 (2) (h) 2. of the statutes is amended to read:

AB872,13,2 71.06 (2) (h) 2. On all taxable income exceeding $5,000 but not exceeding $10,000, 6.15% 5.84 percent.

AB872,25 Section 25. 71.06 (2) (h) 3. of the statutes is amended to read:

AB872,13,5 71.06 (2) (h) 3. On all taxable income exceeding $10,000 but not exceeding $75,000, 6.5% 6.27 percent.

AB872,26 Section 26. 71.06 (2) (i) of the statutes, as created by 2013 Wisconsin Act 20, is repealed.

AB872,27 Section 27. 71.06 (2) (j) of the statutes, as created by 2013 Wisconsin Act 20, is repealed.

AB872,28 Section 28. 71.06 (2e) (a) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB872,14,7 71.06 (2e) (a) For taxable years beginning after December 31, 1998, and before January 1, 2000, the maximum dollar amount in each tax bracket, and the corresponding minimum dollar amount in the next bracket, under subs. (1m) and (2) (c) and (d), and for taxable years beginning after December 31, 1999, the maximum dollar amount in each tax bracket, and the corresponding minimum dollar amount in the next bracket, under subs. (1n), (1p) (a) to (c), (1q) (a) and (b), and (2) (e), (f), (g) 1. to 3., and (h) 1. to 3., (i) 1. and 2., and (j) 1. and 2., shall be increased each year by a percentage equal to the percentage change between the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August of the previous year and the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August 1997, as determined by the federal department of labor, except that for taxable years beginning after December 31, 2000, and before January 1, 2002, the dollar amount in the top bracket under subs. (1p) (c) and (d), (2) (g) 3. and 4. and (h) 3. and 4. shall be increased by a percentage equal to the percentage change between the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August of the previous year and the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August 1999, as determined by the federal department of labor, except that for taxable years beginning after December 31, 2011, the adjustment may occur only if the resulting amount is greater than the corresponding amount that was calculated for the previous year.

AB872,29 Section 29. 71.06 (2e) (b) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB872,14,21 71.06 (2e) (b) For taxable years beginning after December 31, 2009, the maximum dollar amount in each tax bracket, and the corresponding minimum dollar amount in the next bracket, under subs. (1p) (d), (1q) (c), and (2) (g) 4., and (h) 4., (i) 3., and (j) 3., and the dollar amount in the top bracket under subs. (1p) (e), (1q) (d), and (2) (g) 5., and (h) 5., (i) 4., and (j) 4. , shall be increased each year by a percentage equal to the percentage change between the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August of the previous year and the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August 2008, as determined by the federal department of labor, except that for taxable years beginning after December 31, 2011, the adjustment may occur only if the resulting amount is greater than the corresponding amount that was calculated for the previous year.

AB872,30 Section 30. 71.06 (2m) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB872,15,2 71.06 (2m) Rate changes. If a rate under sub. (1), (1m), (1n), (1p), (1q), or (2) changes during a taxable year, the taxpayer shall compute the tax for that taxable year by the methods applicable to the federal income tax under section 15 of the Internal Revenue Code.

AB872,31 Section 31. 71.06 (2s) (d) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB872,15,17 71.06 (2s) (d) For taxable years beginning after December 31, 2000, with respect to nonresident individuals, including individuals changing their domicile into or from this state, the tax brackets under subs. (1p), (1q), and (2) (g), and (h), (i), and (j) shall be multiplied by a fraction, the numerator of which is Wisconsin adjusted gross income and the denominator of which is federal adjusted gross income. In this paragraph, for married persons filing separately "adjusted gross income" means the separate adjusted gross income of each spouse, and for married persons filing jointly "adjusted gross income" means the total adjusted gross income of both spouses. If an individual and that individual's spouse are not both domiciled in this state during the entire taxable year, the tax brackets under subs. (1p), (1q), and (2) (g), and (h), (i), and (j) on a joint return shall be multiplied by a fraction, the numerator of which is their joint Wisconsin adjusted gross income and the denominator of which is their joint federal adjusted gross income.

AB872,32 Section 32. 71.07 (5n) of the statutes, as affected by 2013 Wisconsin Act 54, is repealed.

AB872,33 Section 33. 71.07 (9e) (af) (intro.) of the statutes is amended to read:

AB872,15,25 71.07 (9e) (af) (intro.) For taxable years beginning after December 31, 1995, and before January 1, 2011, any natural person may credit against the tax imposed under s. 71.02 an amount equal to one of the following percentages of the federal basic earned income credit for which the person is eligible for the taxable year under section 32 (b) (1) (A) to (C) of the Internal Revenue Code:

AB872,34 Section 34. 71.07 (9e) (aj) of the statutes is repealed.

AB872,35 Section 35. 71.10 (4) (cr) of the statutes is repealed.

AB872,36 Section 36. 71.125 (1) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB872,16,8 71.125 (1) Except as provided in sub. (2), the tax imposed by this chapter on individuals and the rates under s. 71.06 (1), (1m), (1n), (1p), (1q), and (2) shall apply to the Wisconsin taxable income of estates or trusts, except nuclear decommissioning trust or reserve funds, and that tax shall be paid by the fiduciary.

AB872,37 Section 37. 71.125 (2) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB872,16,15 71.125 (2) Each electing small business trust, as defined in section 1361 (e) (1) of the Internal Revenue Code, is subject to tax at the highest rate under s. 71.06 (1), (1m), (1n), or (1p), or (1q), whichever taxable year is applicable, on its income as computed under section 641 of the Internal Revenue Code, as modified by s. 71.05 (6) to (12), (19) and (20).

AB872,38 Section 38. 71.17 (6) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB872,16,21 71.17 (6) Funeral trusts. If a qualified funeral trust makes the election under section 685 of the Internal Revenue Code for federal income tax purposes, that election applies for purposes of this chapter and each trust shall compute its own tax and shall apply the rates under s. 71.06 (1), (1m), (1n), or (1p), or (1q).

AB872,39 Section 39. 71.21 (4) (b) of the statutes is repealed.

AB872,40 Section 40. 71.255 (2m) (d) of the statutes is amended to read:

AB872,17,2 71.255 (2m) (d) The department may not shall disregard the tax effect of an election under this subsection, or disallow the election, with respect to any controlled group member or members for any year of the election period , if the department determines that the election has the effect of tax avoidance.

AB872,41 Section 41. 71.255 (6) (a) of the statutes is amended to read:

AB872,17,12 71.255 (6) (a) Except as provided in pars. (b), (bm), and (c) no tax credit, Wisconsin net business loss carry-forward, or other post-apportionment deduction earned by one member of the combined group, but not fully used by or allowed to that member, may be used in whole or in part by another member of the combined group or applied in whole or in part against the total income of the combined group. A member of a combined group may use a carry-forward of a credit, Wisconsin net business loss carry-forward, or other post-apportionment deduction otherwise allowable under s. 71.26 or 71.45, that was incurred by that same member in a taxable year beginning before January 1, 2009.

AB872,42 Section 42. 71.255 (6) (bm) of the statutes is repealed.