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2023 - 2024 LEGISLATURE
2023 SENATE BILL 978
January 30, 2024 - Introduced by Senators C ABRAL-GUEVARA, WIMBERGER,
BALLWEG, BRADLEY, JAGLER, FELZKOWSKI, FEYEN, MARKLEIN, NASS, QUINN,
STROEBEL, TESTIN and WANGGAARD, cosponsored by Representatives STEFFEN,
KITCHENS, ALLEN, ARMSTRONG, AUGUST, BEHNKE, BINSFELD, BORN, BRANDTJEN,
DITTRICH, DONOVAN, EDMING, GOEBEN, GREEN, GUNDRUM, HURD, KATSMA, KRUG,
KURTZ, MACCO, MAGNAFICI, MAXEY, MELOTIK, MOSES, MURPHY, MURSAU, MYERS,
NEDWESKI, O'CONNOR, OLDENBURG, PENTERMAN, PETRYK, PLUMER, RETTINGER,
SCHMIDT, SCHRAA, SCHUTT, SNYDER, SORTWELL, SPIROS, TRANEL, WICHGERS and
WITTKE. Referred to Joint Committee on Finance.
***AUTHORS SUBJECT TO CHANGE***
AN ACT to amend 71.05 (1) (am), 71.05 (1) (an), 71.05 (6) (b) 4. (intro.), 71.05 (6)
(b) 54. (intro.) 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: increasing and expanding the
retirement income subtraction.
Analysis by the Legislative Reference Bureau
This bill increases and expands the individual state income tax subtraction for
payments or distributions received from qualified retirement plans under the
Internal Revenue Code or from certain individual retirement accounts. Under the
bill, beginning in tax year 2024, up to $75,000 of payments or distributions received
from qualified retirement plans or certain individual retirement accounts may be
subtracted annually from an individual's taxable income, if the individual is at least
65 years of age. If the individual and individual's spouse are both at least 65 years
of age, the sum of the amount that the couple may subtract annually from their
combined taxable income may not exceed $150,000.
Under current law, up to $5,000 of payments or distributions received by
certain individuals from qualified retirement plans or from certain individual
retirement accounts may be subtracted. To be eligible, the individual must be at least
65 years old and have federal adjusted gross income under $15,000, or under $30,000
if married.
Because this bill relates to an exemption from state or local taxes, it may be
referred to the Joint Survey Committee on Tax Exemptions for a report to be printed
as an appendix to the bill.
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SENATE BILL 978
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
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 payments
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 benefits. All retirement payments
received from the U.S. government that relate to service with the coast guard, the
commissioned corps of the national oceanic and atmospheric 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 substantial gainful
activity by reason of any medically determinable 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
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SECTION 3
SENATE BILL 978
permanently and totally disabled for purposes of this subdivision 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 beginning 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 established under 26 USC 408, if all of the
following conditions apply:
SECTION 5. 71.05 (6) (b) 54m. of the statutes is created 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, 2023,
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 qualified
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 65 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 $75,000 for that taxable year.
c. If the individual is married and is a joint filer, and both spouses are at least
65 years of age before the close of the taxable year to which the subtraction relates,
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SECTION 5 SENATE BILL 978
the total amount claimed by the spouses under this subdivision may not exceed
$150,000 for that taxable year.
d. If the individual is married and files a separate return and is at least 65 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
subdivision.
SECTION 6. 71.05 (6) (b) 54mn. of the statutes is created to read:
71.05 (6) (b) 54mn. For taxable years beginning after December 31, 2023, 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 individual'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
earnings from a trade or business. A nonresident of this state is not eligible to claim
the subtraction under subd. 54m.
SECTION 7. 71.83 (1) (a) 6. of the statutes is amended to read:
71.83 (1) (a) 6. `Retirement plans.' Any natural person who is liable for a
penalty for federal income tax purposes 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 provided under this subdivision
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SECTION 7
SENATE BILL 978
shall be assessed, levied, and collected in the same manner as income or franchise
taxes.
(END)
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