Date of enactment: March 21, 2024
2023 Assembly Bill 793 Date of publication*: March 22, 2024
2023 WISCONSIN ACT 148
AN ACT to amend 71.05 (6) (a) 26. a., 71.05 (6) (a) 26. b., 71.05 (6) (a) 26. c., 71.05 (6) (b) 32. a., 71.05 (6) (b) 32.
ae., 71.05 (6) (b) 32. am., 71.07 (10) (a) 1., 71.07 (10) (a) 3., 71.07 (10) (b), 71.07 (10) (c) 2., 71.28 (10) (c) 2., 71.47
(10) (c) 2. and 224.50 (2) (a); and to create 71.05 (6) (b) 32. ap., 71.07 (10) (c) 3., 71.28 (10) (c) 3., 71.47 (10) (c)
3. and 71.98 (11) of the statutes; relating to: modifying the tax treatment of college savings accounts and the
employee college savings account contribution credit.
The people of the state of Wisconsin, represented in
senate and assembly, do enact as follows:
SECTION 1. 71.05 (6) (a) 26. a. of the statutes is
amended to read:
71.05 (6) (a) 26. a. To the extent that the receipt of
such the amounts by the owner or beneficiary of the
account results in a penalty as provided in 26 USC 529 (c)
(6), any amount that was not used for qualified higher
education expenses, as that term is defined in 26 USC 529
(c) (7), (8), and (9) and (e) (3), and was contributed to the
account after December 31, 2013, except that this subd.
26. a. applies only to amounts for which a subtraction was
made under par. (b) 32. or 32m. For purposes of this subd.
26. a., a first in, first out method of accounting shall apply
to the account.
SECTION 2. 71.05 (6) (a) 26. b. of the statutes is
amended to read:
71.05 (6) (a) 26. b. Any amount rolled over by an
owner into another state’s qualified tuition program, as
described in 26 USC 529 (c) (3) (C) (i), to the extent that
the amount was previously claimed as a deduction under
par. (b) 32. or 32m. For purposes of this subd. 26. b., a
first in, first out method of accounting shall apply to the
account.
SECTION 3. 71.05 (6) (a) 26. c. of the statutes is
amended to read:
71.05 (6) (a) 26. c. To the extent that an amount is not
otherwise added back under this subdivision, any amount
withdrawn from a college savings the account, as
described in s. 224.50, for any purpose if the withdrawn
amount was contributed to the account within 365 days
of the day on which the amount was withdrawn from such
an the account and if the withdrawn amount was previ-
ously subtracted under par. (b) 32. For purposes of this
subd. 26. c., a first in, first out method of accounting shall
apply to the account.
SECTION 4. 71.05 (6) (b) 32. a. of the statutes is
amended to read:
71.05 (6) (b) 32. a. Except as otherwise provided in
this subdivision, an amount equal to not more than
$3,000 $5,000 per beneficiary, by each contributor, or
$1,500 $2,500 by each contributor who is married and
files separately, to an account for each year to which the
claim relates, except that the total amount for which a
deduction may be claimed under this subdivision and
under subd. 33., per beneficiary by any claimant may not
exceed $3,000 $5,000 each year, or $1,500 $2,500 each
year by any claimant who is married and files separately.
* 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 148 2023 Assembly Bill 793
In the case of a married couple, the total deduction under
this subdivision and under subd. 33., per beneficiary by
the married couple may not exceed $3,000 $5,000 each
year. In the case of divorced parents, the total deduction
under this subdivision and under subd. 33., per benefi-
ciary by the formerly married couple, may not exceed
$3,000, and the maximum amount that may be deducted
by each former spouse is $1,500, unless the divorce judg-
ment specifies a different division of the $3,000 maxi-
mum that may be claimed by each former spouse. For
taxable years beginning after December 31, 2013 2024,
the dollar amounts in this subd. 32. a., and the dollar
amounts in subd. 33. a., 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 con-
sumers, U.S. city average, for the month of August 2012
2023, as determined by the federal department of labor,
except that the adjustment may occur only if the resulting
amount is greater than the corresponding amount that
was calculated for the previous year. Each amount that
is revised under this subd. 32. a. and under subd. 33. a.
shall be rounded to the nearest multiple of $10 if the
revised amount is not a multiple of $10 or, if the revised
amount is a multiple of $5, such an amount shall be
increased to the next higher multiple of $10. The depart-
ment of revenue shall annually adjust the changes in dol-
lar amounts required under this subd. 32. a. and incorpo-
rate the changes into the income tax forms and
instructions. Any amount that is paid into an account
under this subdivision that exceeds the maximum amount
that may be subtracted under this subdivision may be car-
ried forward to the next taxable year, and thereafter, sub-
ject to the limitations in this subdivision.
SECTION 5. 71.05 (6) (b) 32. ae. of the statutes is
amended to read:
71.05 (6) (b) 32. ae. No carryover carry−over that
would otherwise be authorized under this subdivision
may be allowed if the carryover carry−over amount was
withdrawn from an account for any purpose and the with-
drawal occurred within 365 days of the day on which the
amount was contributed to the account. For purposes of
this subd. 32. ae., a first in, first out method of accounting
shall apply to the account.
SECTION 6. 71.05 (6) (b) 32. am. of the statutes is
amended to read:
71.05 (6) (b) 32. am. Any carryover carry−over
amount that is otherwise eligible for a subtraction under
this subdivision shall be reduced by an amount equal to
the amount of a withdrawal from an account that was not
used for qualified higher education expenses, as that term
is defined in 26 USC 529 (c) (7), (8), and (9) and (e) (3),
to the extent that the withdrawn amount exceeds the
amount that is added to income under par. (a) 26.
SECTION 7. 71.05 (6) (b) 32. ap. of the statutes is cre-
ated to read:
71.05 (6) (b) 32. ap. No subtraction may be allowed
under this subdivision for any amount contributed to an
account for which a credit is claimed under s. 71.07 (10),
71.28 (10), or 71.47 (10).
SECTION 8. 71.07 (10) (a) 1. of the statutes is
amended to read:
71.07 (10) (a) 1. “Claimant” means an individual
who files a claim under this subsection and who is a sole
proprietor and an employer and contributes to an employ-
ee’s college savings account under par. (b). or who is a
partner of a partnership, member of a limited liability
company, or shareholder of a tax−option corporation that
is an employer and that contributes to an employee’s col-
lege savings account under par. (b).
SECTION 9. 71.07 (10) (a) 3. of the statutes is
amended to read:
71.07 (10) (a) 3. “Employer” means an employer that
is a partnership, as defined in s. 71.195, or a tax−option
corporation, as defined in s. 71.34 (2) a person for whom
an individual performs or performed any service as an
employee of that person and who is required to furnish a
W−2 form to the employee for federal income tax pur-
poses.
SECTION 10. 71.07 (10) (b) of the statutes is amended
to read:
71.07 (10) (b) Filing claims. Subject to the limita-
tions provided in this subsection, a claimant may claim
as a credit against the tax imposed under s. 71.02, up to
the amount of those taxes, for each employee of an
employer, the claimant’s proportionate share, as com-
puted under par. (c) 1., of an amount equal to the amount
the employer paid into a college savings account owned
by the employee in the taxable year in which the contribu-
tion is made.
SECTION 11. 71.07 (10) (c) 2. of the statutes is
amended to read:
71.07 (10) (c) 2. The maximum amount of the credit
per employee that a claimant may claim under this sub-
section is the claimant’s proportionate share of an amount
equal to 25 50 percent of the amount the employee’s
employer contributed to the employee’s college savings
account up to a maximum contribution equal to 25 per-
cent of the maximum amount that an individual contribu-
tor may deduct under s. 71.05 (6) (b) 32. a. per benefi-
ciary, not to exceed a maximum credit of $800. For
taxable years beginning after December 31, 2024, the
dollar amount in this subdivision shall be increased each
year by a percentage equal to the percentage change
between the U.S. consumer price index for all urban con-
sumers, 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 2023, as determined by the federal department of − 3 − 2023 Wisconsin Act 148 2023 Assembly Bill 793
labor, except that the adjustment may occur only if the
resulting amount is greater than the corresponding
amount that was calculated for the previous year. The
amount that is revised under this subdivision shall be
rounded to the nearest multiple of $10 if the revised
amount is not a multiple of $10 or, if the revised amount
is a multiple of $5, such an amount shall be increased to
the next higher multiple of $10. The department of rev-
enue shall annually adjust the change in the dollar
amount required under this subdivision and incorporate
the change into the income tax forms and instructions.
SECTION 12. 71.07 (10) (c) 3. of the statutes is created
to read:
71.07 (10) (c) 3. A credit may be claimed under par.
(b) only if, for federal income tax purposes, the compen-
sation of the employee described in par. (b) is reported,
or required to be reported, on a W−2 form issued by the
claimant.
SECTION 13. 71.28 (10) (c) 2. of the statutes is
amended to read:
71.28 (10) (c) 2. The maximum amount of the credit
per employee that a claimant may claim under this sub-
section is an amount equal to 25 50 percent of the amount
the claimant contributed to the employee’s college sav-
ings account up to a maximum contribution equal to 25
percent of the maximum amount that an individual con-
tributor may deduct under s. 71.05 (6) (b) 32. a. per bene-
ficiary, not to exceed a maximum credit of $800. For tax-
able years beginning after December 31, 2024, the dollar
amount in this subdivision 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 con-
sumers, U.S. city average, for the month of August 2023,
as determined by the federal department of labor, except
that the adjustment may occur only if the resulting
amount is greater than the corresponding amount that
was calculated for the previous year. The amount that is
revised under this subdivision shall be rounded to the
nearest multiple of $10 if the revised amount is not a mul-
tiple of $10 or, if the revised amount is a multiple of $5,
such an amount shall be increased to the next higher mul-
tiple of $10. The department of revenue shall annually
adjust the change in the dollar amount required under this
subdivision and incorporate the change into the income
tax forms and instructions.
SECTION 14. 71.28 (10) (c) 3. of the statutes is created
to read:
71.28 (10) (c) 3. A credit may be claimed under par.
(b) only if, for federal income tax purposes, the compen-
sation of the employee described in par. (b) is reported,
or required to be reported, on a W−2 form issued by the
claimant.
SECTION 15. 71.47 (10) (c) 2. of the statutes is
amended to read:
71.47 (10) (c) 2. The maximum amount of the credit
per employee that a claimant may claim under this sub-
section is an amount equal to 25 50 percent of the amount
the claimant contributed to the employee’s college sav-
ings account up to a maximum contribution equal to 25
percent of the maximum amount that an individual con-
tributor may deduct under s. 71.05 (6) (b) 32. a. per bene-
ficiary, not to exceed a maximum credit of $800. For tax-
able years beginning after December 31, 2024, the dollar
amount in this subdivision 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 con-
sumers, U.S. city average, for the month of August 2023,
as determined by the federal department of labor, except
that the adjustment may occur only if the resulting
amount is greater than the corresponding amount that
was calculated for the previous year. The amount that is
revised under this subdivision shall be rounded to the
nearest multiple of $10 if the revised amount is not a mul-
tiple of $10 or, if the revised amount is a multiple of $5,
such an amount shall be increased to the next higher mul-
tiple of $10. The department of revenue shall annually
adjust the change in the dollar amount required under this
subdivision and incorporate the change into the income
tax forms and instructions.
SECTION 16. 71.47 (10) (c) 3. of the statutes is created
to read:
71.47 (10) (c) 3. A credit may be claimed under par.
(b) only if, for federal income tax purposes, the compen-
sation of the employee described in par. (b) is reported,
or required to be reported, on a W−2 form issued by the
claimant.
SECTION 17. 71.98 (11) of the statutes is created to
read:
71.98 (11) QUALIFIED TUITION PROGRAMS. For taxable
years beginning after December 31, 2021, sections 221
(e) (1) and 529 of the Internal Revenue Code as in effect
for federal purposes, relating to qualified tuition pro-
grams.
SECTION 18. 224.50 (2) (a) of the statutes is amended
to read:
224.50 (2) (a) Except as provided in s. 224.51, estab-
lish and administer a college savings program that allows
an individual, trust, legal guardian, or entity described
under 26 USC 529 (e) (1) (C) to establish a college sav-
ings account to cover tuition, fees, and the costs of room
and board, books, supplies, and equipment required for
the enrollment or attendance of a beneficiary at an eligi-
ble educational institution, as defined under 26 USC 529,
and to cover tuition expenses in connection with enroll-
ment or attendance at an elementary or secondary public,
private, or religious school, as described in section 11032
of P.L. 115−97, related to qualified tuition programs
under for the purposes set forth in 26 USC 529. − 4 −2023 Wisconsin Act 148 2023 Assembly Bill 793
SECTION 19.0Initial applicability.
(1) ADDITION TO TAX FOR NONQUALIFIED WITH-
DRAWALS PREVIOUSLY DEDUCTED. The treatment of s. 71.05
(6) (a) 26. a. that amends the definition of qualified higher
education expenses to include a cross−reference to 26
USC 529 (c) (7) first applies retroactively to taxable years
beginning after December 31, 2017. The treatment of s.
71.05 (6) (a) 26. a. that amends the definition of qualified
higher education expenses to include a cross−reference to
26 USC 529 (c) (8) and (9) first applies retroactively to
taxable years beginning after December 31, 2018. The
treatment of s. 71.05 (6) (a) 26. a. to require the use of a
first in, first out method of accounting and to include a
cross−reference to s. 71.05 (6) (b) 32m. first applies to tax-
able years beginning on January 1 of the year in which this
subsection takes effect, except that if this subsection takes
effect after July 31, the treatment first applies to taxable
years beginning on January 1 of the year following the
year in which this subsection takes effect.
(2) DEFINITION OF QUALIFIED HIGHER EDUCATION
EXPENSES. The treatment of s. 71.05 (6) (b) 32. am. that
amends the definition of qualified higher education
expenses to include a cross−reference to 26 USC 529 (c)
(7) first applies retroactively to taxable years beginning
after December 31, 2017. The treatment of s. 71.05 (6)
(b) 32. am. that amends the definition of qualified higher
education expenses to include a cross−reference to 26
USC 529 (c) (8) and (9) and the treatment of s. 224.50 (2)
(a) first apply retroactively to taxable years beginning
after December 31, 2018.
(3) TAX TREATMENT FOR CONTRIBUTIONS AND WITH-
DRAWALS; EMPLOYEE COLLEGE SAVINGS ACCOUNT CONTRI-
BUTION CREDIT. The treatment of ss. 71.05 (6) (a) 26. b.
and c. and (b) 32. a., ae., and ap., 71.07 (10) (a) 1. and 3.,
(b), and (c) 2. and 3., 71.28 (10) (c) 2. and 3., and 71.47
(10) (c) 2. and 3. first applies to taxable years beginning
on January 1, 2024.