Wisconsin income tax rates range from 4.4% to 7.65% over four income tax brackets. Recent changes to Wisconsin’s state income tax rates have only reinforced the growing wealth disparity between the richest residents and most other Wisconsinites. In 2012, Wisconsin reached a milestone of inequality with the top 1% of Wisconsin resident’s taking home almost $1 in every $5 of income in the state. Between 2009 and 2012, the top 1% of Wisconsin’s residents enjoyed an average 26.7% income increase, while the remaining 99% of income earners only saw a 2.1% increase. Even more alarmingly, Wisconsin’s lowest income earners experienced a decrease in their average annual income.
The 2013-2015 budget reduced income tax rates across all income brackets,. These tax cuts disproportionately benefited Wisconsin’s wealthiest residents. At the time these cuts were proposed, the Legislative Fiscal Bureau estimated that Wisconsinites earning above $300,000 would receive $1,440 annually in reduced taxes, earners between $100,000 and $150,000 would receive $272 annually, and earners below $50,000 annually would receive only $45 annually.
The Governor’s budget does not include any across-the-board changes to the state income tax.
Joint Finance Committee Proposed Changes to the 2015-2017 Budget
The Joint Finance committee changed the policy on the state Alternative Minimum Tax to make it consistent with federal law. The Alternative Minimum Tax is a method of taxation meant to ensure that high-income taxpayers with significant tax deductions and exclusions pay at least a minimum level of income tax. According to the Wisconsin Budget Project, this tax cut affected 1 out of 400 Wisconsin taxpayers earning $100,000 or less, and 1 in 3 of every Wisconsin taxpayers earning $200,000 or more. As a result of this new policy, a tax break of approximately $6 million dollars in 2016-2017, $25 million in 2017-2018, and $30 million will largely go to higher-income earners. For more information, check out this post from the Wisconsin Budget Project.
Final 2015-2017 State Income Tax Budget
The Legislature approved the changes made to the Alternative Minimum Tax by the Joint Committee on Finance.
Impact on Wisconsin Women and Girls
Unfortunately, tax breaks passed by the Legislature in the previous two legislative sessionsare already costing the state significant amounts of revenue, which in turn contributed to a budget deficit of approximately $2 billion for the current budget cycle. These revenue shortfalls are now being used as a justification to reduce spending to crucial public programs, ranging from K-12 education to safety net programs that our state’s most vulnerable citizens rely on in order to achieve a minimum of economic security. Many of these budget cuts and their impact on Wisconsin’s women and girls are discussed in other sections contained in this report.
For more information and resources about the state income tax, please follow these links: