Wisconsin 2023-2024 Regular Session

Wisconsin Assembly Bill AB1136 Compare Versions

Only one version of the bill is available at this time.

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3	3	2023 - 2024 LEGISLATURE
4	4	2023 ASSEMBLY BILL 1136
5	5	March 6, 2024 - Introduced by Representatives ANDRACA, JACOBSON, RATCLIFF,
6	6	JOERS, SHANKLAND, SUBECK, EMERSON, CONLEY, SINICKI, MOORE OMOKUNDE,
7	7	HONG, BARE, OHNSTAD and PALMERI, cosponsored by Senators AGARD and
8	8	SMITH. Referred to Committee on Ways and Means.
9	9	*AUTHORS SUBJECT TO CHANGE*
10	10	AN ACT to amend 71.05 (6) (b) 4. (intro.), 71.05 (6) (b) 54. (intro.) and 71.83 (1)
11	11	(a) 6.; and to create 71.05 (1) (ad) of the statutes; relating to: tax exemption
12	12	for certain retirement benefits received from the Wisconsin Retirement
13	13	System.
14	14	Analysis by the Legislative Reference Bureau
15	15	This bill provides an income tax exemption for pension payments received from
16	16	the Wisconsin Retirement System by protective occupation participants, as defined
17	17	under current law with respect to the WRS, correctional officers, and frontline
18	18	workers. The bill defines “frontline worker” to mean an individual who was a state,
19	19	county, or municipal employee with regular job duties that, as determined by the
20	20	Employment Relations Commission in consultation with the Department of
21	21	Revenue, included interacting with members of the public or with large populations
22	22	of people or directly involved the maintenance of public works. Elected state officials,
23	23	constitutional officers, agency heads, and legislative staff are excluded from the
24	24	definition of “frontline worker.”
25	25	Under the bill, 25 percent of the pension payment received in 2024 is exempt;
26	26	50 percent of the payment received in 2025 is exempt; 75 percent of the payment
27	27	received in 2026 is exempt; and 100 percent of the payment received in 2027 and
28	28	thereafter is exempt. The bill provides that the amount exempted may not exceed
29	29	the portion of the pension payment that is attributable to the period of time during
30	30	which the individual was a protective occupation participant or frontline worker.
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36	36	ASSEMBLY BILL 1136
37	37	Under current law, payments received from the U.S. Civil Service Retirement
38	38	System, the Milwaukee City and County Retirement Systems, the police officer's
39	39	annuity and benefit fund of Milwaukee, the Milwaukee public school teachers'
40	40	retirement fund, the Wisconsin state teachers' retirement fund, and the sheriff's
41	41	annuity and benefit fund of Milwaukee County are exempt from tax for individuals
42	42	who were members of or retired from the systems as of December 31, 1963. Current
43	43	law also provides an exemption for payments received from the U.S. Military
44	44	Employee Retirement System and retirement payments that relate to service with
45	45	the U.S. Coast Guard, the commissioned corps of the National Oceanic and
46	46	Atmospheric Administration, and the commissioned corps of the U.S. Public Health
47	47	Service. Also under current law, an individual may subtract up to $5,000 of
48	48	payments or distributions received from a qualified retirement plan or individual
49	49	retirement account if the individual is at least 65 years old and has federal adjusted
50	50	gross income of less than $15,000, or $30,000 if married.
51	51	Because this bill relates to an exemption from state or local taxes, it may be
52	52	referred to the Joint Survey Committee on Tax Exemptions for a report to be printed
53	53	as an appendix to the bill.
54	54	For further information see the state fiscal estimate, which will be printed as
55	55	an appendix to this bill.
56	56	The people of the state of Wisconsin, represented in senate and assembly, do
57	57	enact as follows:
58	58	SECTION 1. 71.05 (1) (ad) of the statutes is created to read:
59	59	71.05 (1) (ad) Certain payments from the Wisconsin Retirement System. 1.
60	60	Subject to the limitation in subd. 5., one of the following amounts of payments or
61	61	distributions received each year by a frontline worker, correctional officer, or
62	62	protective occupation participant from the Wisconsin Retirement System as an
63	63	annuity:
64	64	a. For taxable years beginning after December 31, 2023, and before January
65	65	1, 2025, 25 percent of the amount received.
66	66	b. For taxable years beginning after December 31, 2024, and before January
67	67	1, 2026, 50 percent of the amount received.
68	68	c. For taxable years beginning after December 31, 2025, and before January
69	69	1, 2027, 75 percent of the amount received.
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84	84	SECTION 1
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86	86	d. For taxable years beginning after December 31, 2026, 100 percent of the
87	87	amount received.
88	88	2. In this paragraph, “correctional officer” has the meaning given in s. 102.475
89	89	(8) (a).
90	90	3. In this paragraph, “frontline worker” means an individual who was a state,
91	91	county, or municipal employee with regular job duties that, as determined by the
92	92	employment relations commission in consultation with the department of revenue,
93	93	included interacting with members of the public or with large populations of people
94	94	or directly involved the maintenance of public works. “Frontline worker” does not
95	95	include any elected state official, constitutional officer, agency head, or person
96	96	employed under s. 13.20.
97	97	4. In this paragraph, “protective occupation participant” has the meaning given
98	98	in s. 40.02 (48).
99	99	5. The amount exempted under subd. 1. in a taxable year may not exceed the
100	100	portion of the payment or distribution received from the Wisconsin Retirement
101	101	System as an annuity that is attributable to the period of time during which the
102	102	individual was a frontline worker, correctional officer, or protective occupation
103	103	participant.
104	104	SECTION 2. 71.05 (6) (b) 4. (intro.) of the statutes is amended to read:
105	105	71.05 (6) (b) 4. (intro.) Disability payments other than disability payments that
106	106	are paid from a retirement plan, the payments from which are exempt under subd.
107	107	54. and sub. (1) (ad), (am), and (an), if the individual either is single or is married and
108	108	files a joint return and is under 65 years of age before the close of the taxable year
109	109	to which the subtraction relates, retired on disability, and, when the individual
110	110	retired, was permanently and totally disabled. In this subdivision, “permanently
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137	137	SECTION 2 ASSEMBLY BILL 1136
138	138	and totally disabled" means an individual who is unable to engage in any substantial
139	139	gainful activity by reason of any medically determinable physical or mental
140	140	impairment that can be expected to result in death or which has lasted or can be
141	141	expected to last for a continuous period of not less than 12 months. An individual
142	142	shall not be considered permanently and totally disabled for purposes of this
143	143	subdivision unless proof is furnished in such form and manner, and at such times,
144	144	as prescribed by the department. The exclusion under this subdivision shall be
145	145	determined as follows:
146	146	SECTION 3. 71.05 (6) (b) 54. (intro.) of the statutes is amended to read:
147	147	71.05 (6) (b) 54. (intro.) Except for a payment that is exempt under sub. (1) (a),
148	148	(ad), (am), or (an), or that is exempt as a railroad retirement benefit, for taxable years
149	149	beginning after December 31, 2020, up to $5,000 of payments or distributions
150	150	received each year by an individual from a qualified retirement plan under the
151	151	Internal Revenue Code or from an individual retirement account established under
152	152	26 USC 408, if all of the following conditions apply:
153	153	SECTION 4. 71.83 (1) (a) 6. of the statutes is amended to read:
154	154	71.83 (1) (a) 6. `Retirement plans.' Any natural person who is liable for a
155	155	penalty for federal income tax purposes under section 72 (m) (5), (q), (t), and (v), 4973,
156	156	4974, 4975, or 4980A of the Internal Revenue Code is liable for 33 percent of the
157	157	federal penalty unless the income received is exempt from taxation under s. 71.05
158	158	(1) (a) or (ad) or (6) (b) 54. The penalties provided under this subdivision shall be
159	159	assessed, levied, and collected in the same manner as income or franchise taxes.
160	160	SECTION 5.0Initial applicability.
161	161	(1) This act first applies to taxable years beginning on January 1, 2024.
162	162	(END)
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