Wisconsin 2023-2024 Regular Session

Wisconsin Assembly Bill AB285 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 285
5	5	May 17, 2023 - Introduced by Representatives ARMSTRONG, OHNSTAD, MCGUIRE,
6	6	BROOKS, CABRERA, DITTRICH, DOYLE, GREEN, JOERS, KITCHENS, MURSAU,
7	7	O'CONNOR, ORTIZ-VELEZ, PALMERI, SHANKLAND, SINICKI, SNODGRASS, SPIROS,
8	8	STUBBS, SUBECK and VANDERMEER, cosponsored by Senators WANGGAARD,
9	9	WIRCH, HESSELBEIN, NASS, SPREITZER and TAYLOR. Referred to Committee on
10	10	Ways and Means.
11	11	*AUTHORS SUBJECT TO CHANGE*
12	12	AN ACT to amend 71.05 (1) (an), 71.05 (6) (b) 4. (intro.), 71.05 (6) (b) 54. (intro.)
13	13	and 71.83 (1) (a) 6.; and to create 71.05 (1) (ad) of the statutes; relating to:
14	14	exempting from taxation the pension benefits of certain federal employees.
15	15	Analysis by the Legislative Reference Bureau
16	16	This bill exempts from taxation up to $8,000 in payments received in 2023 by
17	17	an individual from the U.S. Civil Service Retirement System and the full amount of
18	18	such payments received in 2024 and beyond. Under the bill, the exemption applies
19	19	without regard to when the individual became a member of or retired under CSRS,
20	20	which was the retirement system used by the federal government until 1984. In
21	21	1984, the federal government established a new retirement system, but federal
22	22	employees covered by CSRS were allowed to choose to stay in CSRS.
23	23	Under current law, payments received from CSRS are exempt from Wisconsin
24	24	income taxes but generally only if the individual was a member of or retired under
25	25	CSRS as of December 31, 1963. Similarly, payments received from other retirement
26	26	systems, such as payments received from Milwaukee city and county retirement
27	27	systems, are exempt from taxation for individuals who were members of or retired
28	28	from the systems as of December 31, 1963. Current law also provides a tax
29	29	exemption for payments received from the U.S. Military Employee Retirement
30	30	System and retirement payments that relate to service with the U.S. Coast Guard,
31	31	the commissioned corps of the National Oceanic and Atmospheric Administration,
32	32	and the commissioned corps of the U.S. Public Health Service. Also under current
33	33	law, an individual may subtract up to $5,000 of payments or distributions received
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38	38	ASSEMBLY BILL 285
39	39	from a qualified retirement plan or individual retirement account if the individual
40	40	is at least 65 years old and has federal adjusted gross income of less than $15,000,
41	41	or $30,000 if married.
42	42	Because this bill relates to an exemption from state or local taxes, it may be
43	43	referred to the Joint Survey Committee on Tax Exemptions for a report to be printed
44	44	as an appendix to the bill.
45	45	For further information see the state fiscal estimate, which will be printed as
46	46	an appendix to this bill.
47	47	The people of the state of Wisconsin, represented in senate and assembly, do
48	48	enact as follows:
49	49	SECTION 1. 71.05 (1) (ad) of the statutes is created to read:
50	50	71.05 (1) (ad) Federal employee pension income. One of the following amounts
51	51	of payments received from the U.S. civil service retirement system, to the extent that
52	52	the payments are not exempt under par. (a) or (an):
53	53	1. For taxable years beginning after December 31, 2022, and before January
54	54	1, 2024, up to $8,000 of the payments received during the taxable year.
55	55	2. For taxable years beginning after December 31, 2023, the amount of the
56	56	payments received during the taxable year.
57	57	SECTION 2. 71.05 (1) (an) of the statutes is amended to read:
58	58	71.05 (1) (an) Uniformed services retirement benefits. All retirement payments
59	59	received from the U.S. government that relate to service with the coast guard, the
60	60	commissioned corps of the national oceanic and atmospheric administration, or the
61	61	commissioned corps of the public health service, to the extent that such payments are
62	62	not exempt under par. (a), (ad), or (am) or sub. (6) (b) 54.
63	63	SECTION 3. 71.05 (6) (b) 4. (intro.) of the statutes is amended to read:
64	64	71.05 (6) (b) 4. (intro.) Disability payments other than disability payments that
65	65	are paid from a retirement plan, the payments from which are exempt under subd.
66	66	54. and sub. (1) (ad), (am), and (an), if the individual either is single or is married and
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89	89	files a joint return and is under 65 years of age before the close of the taxable year
90	90	to which the subtraction relates, retired on disability, and, when the individual
91	91	retired, was permanently and totally disabled. In this subdivision, “permanently
92	92	and totally disabled" means an individual who is unable to engage in any substantial
93	93	gainful activity by reason of any medically determinable physical or mental
94	94	impairment that can be expected to result in death or which has lasted or can be
95	95	expected to last for a continuous period of not less than 12 months. An individual
96	96	shall not be considered permanently and totally disabled for purposes of this
97	97	subdivision unless proof is furnished in such form and manner, and at such times,
98	98	as prescribed by the department. The exclusion under this subdivision shall be
99	99	determined as follows:
100	100	SECTION 4. 71.05 (6) (b) 54. (intro.) of the statutes is amended to read:
101	101	71.05 (6) (b) 54. (intro.) Except for a payment that is exempt under sub. (1) (a),
102	102	(ad), (am), or (an), or that is exempt as a railroad retirement benefit, for taxable years
103	103	beginning after December 31, 2020, up to $5,000 of payments or distributions
104	104	received each year by an individual from a qualified retirement plan under the
105	105	Internal Revenue Code or from an individual retirement account established under
106	106	26 USC 408, if all of the following conditions apply:
107	107	SECTION 5. 71.83 (1) (a) 6. of the statutes is amended to read:
108	108	71.83 (1) (a) 6. `Retirement plans.' Any natural person who is liable for a
109	109	penalty for federal income tax purposes under section 72 (m) (5), (q), (t), and (v), 4973,
110	110	4974, 4975, or 4980A of the Internal Revenue Code is liable for 33 percent of the
111	111	federal penalty unless the income received is exempt from taxation under s. 71.05
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136	136	SECTION 5 ASSEMBLY BILL 285
137	137	(1) (a) or (ad) or (6) (b) 54. The penalties provided under this subdivision shall be
138	138	assessed, levied, and collected in the same manner as income or franchise taxes.
139	139	(END)
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