Date of enactment:
2023 Assembly Bill 386 Date of publication*:
2023 WISCONSIN ACT
AN ACT to amend 71.05 (1) (am), 71.05 (1) (an), 71.05 (6) (b) 4. (intro.), 71.05 (6) (b) 54. (intro.), 71.06 (1q) (c),
71.06 (2) (i) 3., 71.06 (2) (j) 3. and 71.83 (1) (a) 6.; and to create 71.05 (6) (b) 54m. and 71.05 (6) (b) 54mn. of the
statutes; relating to: lowering the individual income tax rates in the third bracket and increasing and expanding the
retirement income subtraction.
The people of the state of Wisconsin, represented in
senate and assembly, do enact as follows:
SECTION 1. 71.05 (1) (am) of the statutes is amended
to read:
71.05 (1) (am) Military retirement systems. All
retirement payments received from the U.S. military
employee retirement system, to the extent that such pay-
ments are not exempt under par. (a) or sub. (6) (b) 54.
SECTION 2. 71.05 (1) (an) of the statutes is amended
to read:
71.05 (1) (an) Uniformed services retirement bene-
fits. All retirement payments received from the U.S. gov-
ernment that relate to service with the coast guard, the
commissioned corps of the national oceanic and atmos-
pheric administration, or the commissioned corps of the
public health service, to the extent that such payments are
not exempt under par. (a) or (am) or sub. (6) (b) 54.
SECTION 3. 71.05 (6) (b) 4. (intro.) of the statutes is
amended to read:
71.05 (6) (b) 4. (intro.) Disability payments other
than disability payments that are paid from a retirement
plan, the payments from which are exempt under subd.
54. and sub. (1) (am) and (an), if the individual either is
single or is married and files a joint return and is under 65
years of age before the close of the taxable year to which
the subtraction relates, retired on disability, and, when the
individual retired, was permanently and totally disabled.
In this subdivision, “permanently and totally disabled”
means an individual who is unable to engage in any sub-
stantial gainful activity by reason of any medically deter-
minable physical or mental impairment that can be
expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than
12 months. An individual shall not be considered perma-
nently and totally disabled for purposes of this subdivi-
sion unless proof is furnished in such form and manner,
and at such times, as prescribed by the department. The
exclusion under this subdivision shall be determined as
follows:
SECTION 4. 71.05 (6) (b) 54. (intro.) of the statutes is
amended to read:
71.05 (6) (b) 54. (intro.) Except for a payment that is
exempt under sub. (1) (a), (am), or (an), or that is exempt
as a railroad retirement benefit, and except as provided
under subds. 54m. and 54mn., for taxable years begin-
ning after December 31, 2020, up to $5,000 of payments
or distributions received each year by an individual from
a qualified retirement plan under the Internal Revenue
Code or from an individual retirement account estab-
* Section 991.11, WISCONSIN STATUTES: Effective date of acts. “Every act and every portion of an act enacted by the legislature over the governor’s
partial veto which does not expressly prescribe the time when it takes effect shall take effect on the day after its date of publication.” − 2 −2023 Wisconsin Act 2023 Assembly Bill 386
lished under 26 USC 408, if all of the following condi-
tions apply:
SECTION 5. 71.05 (6) (b) 54m. of the statutes is cre-
ated to read:
71.05 (6) (b) 54m. a. Except for a payment that is
exempt under sub. (1) (a), (am), or (an), or that is exempt
as a railroad retirement benefit, and except as provided
under subd. 54mn., for taxable years beginning after
December 31, 2022, the amount, up to the limit specified
in subd. 54m. b., c., or d., whichever is applicable, of the
payments or distributions received each year from a qual-
ified retirement plan under the Internal Revenue Code or
from an individual retirement account established under
26 USC 408.
b. If the individual is at least 67 years of age before
the close of the taxable year to which the subtraction
relates, the amount claimed by the individual under this
subdivision may not exceed $100,000 for that taxable
year.
c. If the individual is married and is a joint filer, and
both spouses are at least 67 years of age before the close
of the taxable year to which the subtraction relates, the
total amount claimed by the spouses under this subdivi-
sion may not exceed $150,000 for that taxable year.
d. If the individual is married and files a separate
return and is at least 67 years of age before the close of
the taxable year to which the subtraction relates, the
amount claimed by each spouse as a subtraction under
this subdivision may not exceed $75,000 for that taxable
year.
e. The individual has not claimed any credit listed
under s. 71.10 (4) for the same taxable year for which the
individual claimed the subtraction under this subdivi-
sion.
SECTION 6. 71.05 (6) (b) 54mn. of the statutes is cre-
ated to read:
71.05 (6) (b) 54mn. For taxable years beginning after
December 31, 2022, for an individual who is a part−year
resident of this state, the amount that is calculated by
multiplying the applicable amount under subd. 54m. b.,
c., or d. by a fraction the numerator of which is the indi-
vidual’s wages, salary, tips, unearned income, and net
earnings from a trade or business that are taxable by this
state and the denominator of which is the individual’s
total wages, salary, tips, unearned income, and net earn-
ings from a trade or business. A nonresident of this state
is not eligible to claim the subtraction under subd. 54m.
SECTION 7. 71.06 (1q) (c) of the statutes is amended
to read:
71.06 (1q) (c) On all taxable income exceeding
$15,000 but not exceeding $225,000, 6.27 percent,
except that for taxable years beginning after December
31, 2020, and before January 1, 2023, 5.30 percent, and
for taxable years beginning after December 31, 2022,
4.40 percent.
SECTION 8. 71.06 (2) (i) 3. of the statutes is amended
to read:
71.06 (2) (i) 3. On all taxable income exceeding
$20,000 but not exceeding $300,000, 6.27 percent,
except that for taxable years beginning after December
31, 2020, and before January 1, 2023, 5.30 percent, and
for taxable years beginning after December 31, 2022,
4.40 percent.
SECTION 9. 71.06 (2) (j) 3. of the statutes is amended
to read:
71.06 (2) (j) 3. On all taxable income exceeding
$10,000 but not exceeding $150,000, 6.27 percent,
except that for taxable years beginning after December
31, 2020, and before January 1, 2023, 5.30 percent, and
for taxable years beginning after December 31, 2022,
4.40 percent.
SECTION 10. 71.83 (1) (a) 6. of the statutes is
amended to read:
71.83 (1) (a) 6. ‘Retirement plans.’ Any natural per-
son who is liable for a penalty for federal income tax pur-
poses under section 72 (m) (5), (q), (t), and (v), 4973,
4974, 4975, or 4980A of the Internal Revenue Code is
liable for 33 percent of the federal penalty unless the
income received is exempt from taxation under s. 71.05
(1) (a) or (6) (b) 54., 54m., or 54mn. The penalties pro-
vided under this subdivision shall be assessed, levied,
and collected in the same manner as income or franchise
taxes.