Wisconsin 2023-2024 Regular Session

Wisconsin Senate Bill SB281 Compare Versions

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

Old	New	Differences
1	1	LRB-2971/1
2	2	KP:wlj
3	3	2023 - 2024 LEGISLATURE
4	4	2023 SENATE BILL 281
5	5	May 15, 2023 - Introduced by Senators WANGGAARD, WIRCH, HESSELBEIN, NASS,
6	6	SPREITZER, TAYLOR and BALLWEG, cosponsored by Representatives ARMSTRONG,
7	7	OHNSTAD, BROOKS, CABRERA, DITTRICH, DOYLE, GREEN, JOERS, KITCHENS,
8	8	MURSAU, O'CONNOR, ORTIZ-VELEZ, PALMERI, SHANKLAND, SINICKI, SNODGRASS,
9	9	SPIROS, STUBBS, SUBECK and VANDERMEER. Referred to Committee on
10	10	Universities and Revenue.
11	11	AN ACT to amend 71.05 (1) (an), 71.05 (6) (b) 4. (intro.), 71.05 (6) (b) 54. (intro.)
12	12	and 71.83 (1) (a) 6.; and to create 71.05 (1) (ad) of the statutes; relating to:
13	13	exempting from taxation the pension benefits of certain federal employees.
14	14	Analysis by the Legislative Reference Bureau
15	15	This bill exempts from taxation up to $8,000 in payments received in 2023 by
16	16	an individual from the U.S. Civil Service Retirement System and the full amount of
17	17	such payments received in 2024 and beyond. Under the bill, the exemption applies
18	18	without regard to when the individual became a member of or retired under CSRS,
19	19	which was the retirement system used by the federal government until 1984. In
20	20	1984, the federal government established a new retirement system, but federal
21	21	employees covered by CSRS were allowed to choose to stay in CSRS.
22	22	Under current law, payments received from CSRS are exempt from Wisconsin
23	23	income taxes but generally only if the individual was a member of or retired under
24	24	CSRS as of December 31, 1963. Similarly, payments received from other retirement
25	25	systems, such as payments received from Milwaukee city and county retirement
26	26	systems, are exempt from taxation for individuals who were members of or retired
27	27	from the systems as of December 31, 1963. Current law also provides a tax
28	28	exemption for payments received from the U.S. Military Employee Retirement
29	29	System and retirement payments that relate to service with the U.S. Coast Guard,
30	30	the commissioned corps of the National Oceanic and Atmospheric Administration,
31	31	and the commissioned corps of the U.S. Public Health Service. Also under current
32	32	law, an individual may subtract up to $5,000 of payments or distributions received
33	33	1
34	34	2
35	35	3 - 2 -2023 - 2024 Legislature LRB-2971/1
36	36	KP:wlj
37	37	SENATE BILL 281
38	38	from a qualified retirement plan or individual retirement account if the individual
39	39	is at least 65 years old and has federal adjusted gross income of less than $15,000,
40	40	or $30,000 if married.
41	41	Because this bill relates to an exemption from state or local taxes, it may be
42	42	referred to the Joint Survey Committee on Tax Exemptions for a report to be printed
43	43	as an appendix to the bill.
44	44	For further information see the state fiscal estimate, which will be printed as
45	45	an appendix to this bill.
46	46	The people of the state of Wisconsin, represented in senate and assembly, do
47	47	enact as follows:
48	48	SECTION 1. 71.05 (1) (ad) of the statutes is created to read:
49	49	71.05 (1) (ad) Federal employee pension income. One of the following amounts
50	50	of payments received from the U.S. civil service retirement system, to the extent that
51	51	the payments are not exempt under par. (a) or (an):
52	52	1. For taxable years beginning after December 31, 2022, and before January
53	53	1, 2024, up to $8,000 of the payments received during the taxable year.
54	54	2. For taxable years beginning after December 31, 2023, the amount of the
55	55	payments received during the taxable year.
56	56	SECTION 2. 71.05 (1) (an) of the statutes is amended to read:
57	57	71.05 (1) (an) Uniformed services retirement benefits. All retirement payments
58	58	received from the U.S. government that relate to service with the coast guard, the
59	59	commissioned corps of the national oceanic and atmospheric administration, or the
60	60	commissioned corps of the public health service, to the extent that such payments are
61	61	not exempt under par. (a), (ad), or (am) or sub. (6) (b) 54.
62	62	SECTION 3. 71.05 (6) (b) 4. (intro.) of the statutes is amended to read:
63	63	71.05 (6) (b) 4. (intro.) Disability payments other than disability payments that
64	64	are paid from a retirement plan, the payments from which are exempt under subd.
65	65	54. and sub. (1) (ad), (am), and (an), if the individual either is single or is married and
66	66	1
67	67	2
68	68	3
69	69	4
70	70	5
71	71	6
72	72	7
73	73	8
74	74	9
75	75	10
76	76	11
77	77	12
78	78	13
79	79	14
80	80	15
81	81	16
82	82	17
83	83	18 - 3 -2023 - 2024 Legislature
84	84	LRB-2971/1
85	85	KP:wlj
86	86	SECTION 3
87	87	SENATE BILL 281
88	88	files a joint return and is under 65 years of age before the close of the taxable year
89	89	to which the subtraction relates, retired on disability, and, when the individual
90	90	retired, was permanently and totally disabled. In this subdivision, “permanently
91	91	and totally disabled" means an individual who is unable to engage in any substantial
92	92	gainful activity by reason of any medically determinable physical or mental
93	93	impairment that can be expected to result in death or which has lasted or can be
94	94	expected to last for a continuous period of not less than 12 months. An individual
95	95	shall not be considered permanently and totally disabled for purposes of this
96	96	subdivision unless proof is furnished in such form and manner, and at such times,
97	97	as prescribed by the department. The exclusion under this subdivision shall be
98	98	determined as follows:
99	99	SECTION 4. 71.05 (6) (b) 54. (intro.) of the statutes is amended to read:
100	100	71.05 (6) (b) 54. (intro.) Except for a payment that is exempt under sub. (1) (a),
101	101	(ad), (am), or (an), or that is exempt as a railroad retirement benefit, for taxable years
102	102	beginning after December 31, 2020, up to $5,000 of payments or distributions
103	103	received each year by an individual from a qualified retirement plan under the
104	104	Internal Revenue Code or from an individual retirement account established under
105	105	26 USC 408, if all of the following conditions apply:
106	106	SECTION 5. 71.83 (1) (a) 6. of the statutes is amended to read:
107	107	71.83 (1) (a) 6. `Retirement plans.' Any natural person who is liable for a
108	108	penalty for federal income tax purposes under section 72 (m) (5), (q), (t), and (v), 4973,
109	109	4974, 4975, or 4980A of the Internal Revenue Code is liable for 33 percent of the
110	110	federal penalty unless the income received is exempt from taxation under s. 71.05
111	111	1
112	112	2
113	113	3
114	114	4
115	115	5
116	116	6
117	117	7
118	118	8
119	119	9
120	120	10
121	121	11
122	122	12
123	123	13
124	124	14
125	125	15
126	126	16
127	127	17
128	128	18
129	129	19
130	130	20
131	131	21
132	132	22
133	133	23 - 4 -2023 - 2024 Legislature LRB-2971/1
134	134	KP:wlj
135	135	SECTION 5 SENATE BILL 281
136	136	(1) (a) or (ad) or (6) (b) 54. The penalties provided under this subdivision shall be
137	137	assessed, levied, and collected in the same manner as income or franchise taxes.
138	138	(END)
139	139	1
140	140	2
141	141	3