Wisconsin 2025-2026 Regular Session

Wisconsin Assembly Bill AB17 Compare Versions

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

Old	New	Differences
1	1	2025 - 2026 LEGISLATURE
2	2	LRB-0284/1
3	3	KP:cdc&skw
4	4	2025 ASSEMBLY BILL 17
5	5	February 6, 2025 - Introduced by Representatives SORTWELL, FRANKLIN, KAUFERT,
6	6	MADISON, ANDERSON, CLANCY, CRUZ, DESMIDT, GOEBEN, GOODWIN,
7	7	GUNDRUM, HONG, HYSELL, KREIBICH, MAXEY, MIRESSE, NOVAK,
8	8	PIWOWARCZYK, PRADO, TUSLER, UDELL, WICHGERS and STROUD, cosponsored
9	9	by Senators JAMES, LARSON and TOMCZYK. Referred to Committee on Ways
10	10	and Means.
11	11
12	12	*AUTHORS SUBJECT TO CHANGE*
13	13	AN ACT to amend 71.05 (6) (a) 15., 71.21 (4) (a), 71.26 (2) (a) 4., 71.34 (1k) (g)
14	14	and 71.45 (2) (a) 10.; to create 71.05 (6) (b) 57., 71.07 (12), 71.10 (4) (em),
15	15	71.26 (2) (a) 13., 71.28 (12), 71.30 (3) (am), 71.45 (2) (a) 25., 71.47 (12), 71.49
16	16	(1) (am), 73.03 (78) and 73.03 (79) of the statutes; relating to: creating an
17	17	employee ownership conversion costs tax credit, a deduction for capital gains
18	18	from the transfer of a business to employee ownership, and an employee
19	19	ownership education and outreach program.
20	20	Analysis by the Legislative Reference Bureau
21	21	This bill creates tax incentives related to businesses in this state converting to
22	22	an employee ownership business structure and requires the Department of
23	23	Revenue to establish an outreach and education program to promote employee
24	24	ownership business structures.
25	25	Employee ownership conversion costs tax credit
26	26	Under the bill, DOR may certify a business to claim a nonrefundable income
27	27	tax credit for an amount equal to 70 percent of costs related to converting the
28	28	business to a worker-owned cooperative or 50 percent of the costs related to
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36	36	ASSEMBLY BILL 17
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39	39	converting the business to an employee stock ownership plan. The credit is limited
40	40	to a maximum amount of $100,000. A business is qualified to receive the credit if
41	41	the business is subject to income and franchise taxes in this state and, at the time
42	42	the business receives the credit, does not have an employee stock ownership plan
43	43	and is not, in whole or in part, a worker-owned cooperative.
44	44	Capital gain deduction
45	45	The bill also creates an individual income tax subtraction and a corporate
46	46	income and franchise tax deduction for the amount of the capital gain realized from
47	47	the transfer of ownership of a business in this state to an employee stock ownership
48	48	plan or worker-owned cooperative.
49	49	Employee ownership outreach and education
50	50	Finally, the bill directs DOR to establish an economic development program
51	51	for the purpose of promoting employee ownership business structures, including the
52	52	business structures of employee stock ownership plans and worker-owned
53	53	cooperatives, through education, outreach, technical assistance, and training
54	54	related to converting existing businesses to an employee ownership business
55	55	structure or starting new businesses with an employee ownership business
56	56	structure. The bill directs DOR to submit an application to the U.S. secretary of
57	57	labor for a grant under 29 USC 3228 for use in administering the program created
58	58	in the bill.
59	59	Because this bill relates to an exemption from state or local taxes, it may be
60	60	referred to the Joint Survey Committee on Tax Exemptions for a report to be
61	61	printed as an appendix to the bill.
62	62	For further information see the state fiscal estimate, which will be printed as
63	63	an appendix to this bill.
64	64	The people of the state of Wisconsin, represented in senate and assembly, do
65	65	enact as follows:
66	66	SECTION 1. 71.05 (6) (a) 15. of the statutes is amended to read:
67	67	71.05 (6) (a) 15. The amount of the credits computed under s. 71.07 (2dm),
68	68	(2dx), (2dy), (3g), (3h), (3n), (3q), (3s), (3t), (3w), (3wm), (3y), (4k), (4n), (5i), (5j), (5k),
69	69	(5r), (5rm), (6n), and (10), and (12) and not passed through by a partnership, limited
70	70	liability company, or tax-option corporation that has added that amount to the
71	71	partnership[s, company[s, or tax-option corporation[s income under s. 71.21 (4) or
72	72	71.34 (1k) (g).
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83	83	SECTION 2
84	84	SECTION 2. 71.05 (6) (b) 57. of the statutes is created to read:
85	85	71.05 (6) (b) 57. a. For taxable years beginning after December 31, 2024, to
86	86	the extent otherwise included in Wisconsin taxable income if not for this
87	87	subdivision, the amount of the capital gain as computed under the Internal
88	88	Revenue Code from the transfer of ownership of a business in this state to an
89	89	employee stock ownership plan or a worker-owned cooperative.
90	90	b. No modification may be claimed under this subdivision unless an employee
91	91	stock ownership plan or worker-owned cooperative owns more than 50 percent of the
92	92	business whose transfer results in a capital gain described in subd. 57. a.
93	93	c. In this subdivision, Xemployee stock ownership planY has the meaning given
94	94	in 26 USC 4975 (e) (7).
95	95	d. In this subdivision, Xworker-owned cooperativeY has the meaning given for
96	96	Xeligible worker-owned cooperativeY in 26 USC 1042 (c) (2).
97	97	SECTION 3. 71.07 (12) of the statutes is created to read:
98	98	71.07 (12) EMPLOYEE OWNERSHIP CONVERSION COSTS CREDIT. (a) Definitions.
99	99	In this subsection:
100	100	1. XClaimantY means a person that owns an interest in a qualified business
101	101	prior to its conversion to an employee stock ownership plan or worker-owned
102	102	cooperative and that files a claim under this subsection.
103	103	2. XConversion costsY has the meaning given in s. 73.03 (79) (b) 1.
104	104	3. XEmployee stock ownership planY has the meaning given in 26 USC 4975 (e)
105	105	(7).
106	106	4. XQualified businessY has the meaning given in s. 73.03 (79) (b) 3.
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133	133	SECTION 3
134	134	5. XWorker-owned cooperativeY has the meaning given for Xeligible worker-
135	135	owned cooperativeY in 26 USC 1042 (c) (2).
136	136	(b) Filing claims. For taxable years beginning after December 31, 2024, and
137	137	subject to the limitations provided in this subsection, a claimant may claim as a
138	138	credit against the tax imposed under s. 71.02 for the taxable year during which a
139	139	conversion to an employee stock ownership plan or a worker-owned cooperative is
140	140	complete, up to the amount of those taxes, all of the following:
141	141	1. An amount equal to 70 percent of the conversion costs, up to $100,000,
142	142	incurred by a qualified business for converting to a worker-owned cooperative.
143	143	2. An amount equal to 50 percent of the conversion costs, up to $100,000,
144	144	incurred by a qualified business for converting to an employee stock ownership
145	145	plan.
146	146	(c) Limitations. 1. No credit may be allowed under this subsection unless the
147	147	claimant files an application with the department, at the time and in the manner
148	148	prescribed by the department, and the department approves the application. The
149	149	claimant shall submit a copy of the certification under s. 73.03 (79) (a) 3. with the
150	150	claimant[s return.
151	151	2. Partnerships, limited liability companies, and tax-option corporations may
152	152	not claim the credit under this subsection, but the eligibility for and the amount of
153	153	the credit are based on the amounts paid by the entities under par. (b). A
154	154	partnership, limited liability company, or tax-option corporation shall compute the
155	155	amount of the credit that each of its partners, members, or shareholders may claim
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181	181	SECTION 3
182	182	and shall provide that information to each of them. Partners, members, and
183	183	shareholders may claim the credit in proportion to their ownership interests.
184	184	(d) Administration. Section 71.28 (4) (e) to (h), as it applies to the credit under
185	185	s. 71.28 (4), applies to the credit under this subsection.
186	186	SECTION 4. 71.10 (4) (em) of the statutes is created to read:
187	187	71.10 (4) (em) Employee ownership conversion costs credit under s. 71.07 (12).
188	188	SECTION 5. 71.21 (4) (a) of the statutes is amended to read:
189	189	71.21 (4) (a) The amount of the credits computed by a partnership under s.
190	190	71.07 (2dm), (2dx), (2dy), (3g), (3h), (3n), (3q), (3s), (3t), (3w), (3wm), (3y), (4k), (4n),
191	191	(5g), (5i), (5j), (5k), (5r), (5rm), (6n), and (10), and (12) and passed through to
192	192	partners shall be added to the partnership[s income.
193	193	SECTION 6. 71.26 (2) (a) 4. of the statutes is amended to read:
194	194	71.26 (2) (a) 4. Plus the amount of the credit computed under s. 71.28 (1dm),
195	195	(1dx), (1dy), (3g), (3h), (3n), (3q), (3t), (3w), (3wm), (3y), (5g), (5i), (5j), (5k), (5r),
196	196	(5rm), (6n), and (10), and (12) and not passed through by a partnership, limited
197	197	liability company, or tax-option corporation that has added that amount to the
198	198	partnership[s, limited liability company[s, or tax-option corporation[s income under
199	199	s. 71.21 (4) or 71.34 (1k) (g).
200	200	SECTION 7. 71.26 (2) (a) 13. of the statutes is created to read:
201	201	71.26 (2) (a) 13. a. Minus the amount of the capital gain as computed under
202	202	the Internal Revenue Code, to the extent included in federal taxable income, from
203	203	the transfer of ownership of a business in this state to an employee stock ownership
204	204	plan or a worker-owned cooperative.
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231	231	SECTION 7
232	232	b. The deduction under this subdivision does not apply unless an employee
233	233	stock ownership plan or worker-owned cooperative owns more than 50 percent of the
234	234	business whose transfer results in a capital gain described in subd. 13. a.
235	235	c. In this subdivision, Xemployee stock ownership planY has the meaning given
236	236	in 26 USC 4975 (e) (7).
237	237	d. In this subdivision, Xworker-owned cooperativeY has the meaning given for
238	238	Xeligible worker-owned cooperativeY in 26 USC 1042 (c) (2).
239	239	SECTION 8. 71.28 (12) of the statutes is created to read:
240	240	71.28 (12) EMPLOYEE OWNERSHIP CONVERSION COSTS CREDIT. (a) Definitions.
241	241	In this subsection:
242	242	1. XClaimantY means a person that owns an interest in a qualified business
243	243	prior to its conversion to an employee stock ownership plan or worker-owned
244	244	cooperative and that files a claim under this subsection.
245	245	2. XConversion costsY has the meaning given in s. 73.03 (79) (b) 1.
246	246	3. XEmployee stock ownership planY has the meaning given in 26 USC 4975 (e)
247	247	(7).
248	248	4. XQualified businessY has the meaning given in s. 73.03 (79) (b) 3.
249	249	5. XWorker-owned cooperativeY has the meaning given for Xeligible worker-
250	250	owned cooperativeY in 26 USC 1042 (c) (2).
251	251	(b) Filing claims. For taxable years beginning after December 31, 2024, and
252	252	subject to the limitations provided in this subsection, a claimant may claim as a
253	253	credit against the tax imposed under s. 71.23 for the taxable year during which a
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279	279	SECTION 8
280	280	conversion to an employee stock ownership plan or worker-owned cooperative is
281	281	complete, up to the amount of those taxes, all of the following:
282	282	1. An amount equal to 70 percent of the conversion costs, up to $100,000,
283	283	incurred by a qualified business for converting to a worker-owned cooperative.
284	284	2. An amount equal to 50 percent of the conversion costs, up to $100,000,
285	285	incurred by a qualified business for converting to an employee stock ownership
286	286	plan.
287	287	(c) Limitations. 1. No credit may be allowed under this subsection unless the
288	288	claimant files an application with the department, at the time and in the manner
289	289	prescribed by the department, and the department approves the application. The
290	290	claimant shall submit a copy of the certification under s. 73.03 (79) (a) 3. with the
291	291	claimant[s return.
292	292	2. Partnerships, limited liability companies, and tax-option corporations may
293	293	not claim the credit under this subsection, but the eligibility for and the amount of
294	294	the credit are based on the amounts paid by the entities under par. (b). A
295	295	partnership, limited liability company, or tax-option corporation shall compute the
296	296	amount of the credit that each of its partners, members, or shareholders may claim
297	297	and shall provide that information to each of them. Partners, members, and
298	298	shareholders may claim the credit in proportion to their ownership interests.
299	299	(d) Administration. Subsection (4) (e) to (h), as it applies to the credit under
300	300	sub. (4), applies to the credit under this subsection.
301	301	SECTION 9. 71.30 (3) (am) of the statutes is created to read:
302	302	71.30 (3) (am) Employee ownership conversion costs credit under s. 71.28 (12).
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329	329	SECTION 10
330	330	SECTION 10. 71.34 (1k) (g) of the statutes is amended to read:
331	331	71.34 (1k) (g) An addition shall be made for credits computed by a tax-option
332	332	corporation under s. 71.28 (1dm), (1dx), (1dy), (3), (3g), (3h), (3n), (3q), (3t), (3w),
333	333	(3wm), (3y), (4), (5), (5g), (5i), (5j), (5k), (5r), (5rm), (6n), and (10), and (12) and
334	334	passed through to shareholders.
335	335	SECTION 11. 71.45 (2) (a) 10. of the statutes is amended to read:
336	336	71.45 (2) (a) 10. By adding to federal taxable income the amount of credit
337	337	computed under s. 71.47 (1dm) to (1dy), (3g), (3h), (3n), (3q), (3w), (3y), (5g), (5i),
338	338	(5j), (5k), (5r), (5rm), (6n), and (10), and (12) and not passed through by a
339	339	partnership, limited liability company, or tax-option corporation that has added
340	340	that amount to the partnership[s, limited liability company[s, or tax-option
341	341	corporation[s income under s. 71.21 (4) or 71.34 (1k) (g) and the amount of credit
342	342	computed under s. 71.47 (3), (3t), (4), (4m), and (5).
343	343	SECTION 12. 71.45 (2) (a) 25. of the statutes is created to read:
344	344	71.45 (2) (a) 25. a. By subtracting from federal taxable income, to the extent
345	345	included in federal taxable income, the amount of the capital gain as computed
346	346	under the Internal Revenue Code from the transfer of ownership of a business in
347	347	this state to an employee stock ownership plan or a worker-owned cooperative.
348	348	b. The deduction under this subdivision does not apply unless an employee
349	349	stock ownership plan or worker-owned cooperative owns more than 50 percent of the
350	350	business whose transfer results in a capital gain described in subd. 25. a.
351	351	c. In this subdivision, Xemployee stock ownership planY has the meaning given
352	352	in 26 USC 4975 (e) (7).
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379	379	SECTION 12
380	380	d. In this subdivision, Xworker-owned cooperativeY has the meaning given for
381	381	Xeligible worker-owned cooperativeY in 26 USC 1042 (c) (2).
382	382	SECTION 13. 71.47 (12) of the statutes is created to read:
383	383	71.47 (12) EMPLOYEE OWNERSHIP CONVERSION COSTS CREDIT. (a) Definitions.
384	384	In this subsection:
385	385	1. XClaimantY means a person that owns an interest in a qualified business
386	386	prior to its conversion to an employee stock ownership plan or worker-owned
387	387	cooperative and that files a claim under this subsection.
388	388	2. XConversion costsY has the meaning given in s. 73.03 (79) (b) 1.
389	389	3. XEmployee stock ownership planY has the meaning given in 26 USC 4975 (e)
390	390	(7).
391	391	4. XQualified businessY has the meaning given in s. 73.03 (79) (b) 3.
392	392	5. XWorker-owned cooperativeY has the meaning given for Xeligible worker-
393	393	owned cooperativeY in 26 USC 1042 (c) (2).
394	394	(b) Filing claims. For taxable years beginning after December 31, 2024, and
395	395	subject to the limitations provided in this subsection, a claimant may claim as a
396	396	credit against the tax imposed under s. 71.43 for the taxable year during which a
397	397	conversion to an employee stock ownership plan or worker-owned cooperative is
398	398	complete, up to the amount of those taxes, all of the following:
399	399	1. An amount equal to 70 percent of the conversion costs, up to $100,000,
400	400	incurred by a qualified business for converting to a worker-owned cooperative.
401	401	2. An amount equal to 50 percent of the conversion costs, up to $100,000,
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427	427	SECTION 13
428	428	incurred by a qualified business for converting to an employee stock ownership
429	429	plan.
430	430	(c) Limitations. 1. No credit may be allowed under this subsection unless the
431	431	claimant files an application with the department, at the time and in the manner
432	432	prescribed by the department, and the department approves the application. The
433	433	claimant shall submit a copy of the certification under s. 73.03 (79) (a) 3. with the
434	434	claimant[s return.
435	435	2. Partnerships, limited liability companies, and tax-option corporations may
436	436	not claim the credit under this subsection, but the eligibility for and the amount of
437	437	the credit are based on the amounts paid by the entities under par. (b). A
438	438	partnership, limited liability company, or tax-option corporation shall compute the
439	439	amount of the credit that each of its partners, members, or shareholders may claim
440	440	and shall provide that information to each of them. Partners, members, and
441	441	shareholders may claim the credit in proportion to their ownership interests.
442	442	(d) Administration. Section 71.28 (4) (e) to (h), as it applies to the credit under
443	443	s. 71.28 (4), applies to the credit under this subsection.
444	444	SECTION 14. 71.49 (1) (am) of the statutes is created to read:
445	445	71.49 (1) (am) Employee ownership conversion costs credit under s. 71.47 (12).
446	446	SECTION 15. 73.03 (78) of the statutes is created to read:
447	447	73.03 (78) (a) To establish and administer an economic development program
448	448	for the purpose of doing all of the following:
449	449	1. Providing education and outreach to inform employees and employers about
450	450	the possibilities and benefits of employee ownership business structures and
451	451	succession planning, including providing information about financial education,
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479	479	SECTION 15
480	480	employee teams, open-book management, and other tools that enable employees to
481	481	share ideas and information about how their businesses can succeed.
482	482	2. Providing technical assistance to assist employee efforts to become business
483	483	owners, to enable employers and employees to explore and assess the feasibility of
484	484	transferring full or partial ownership to employees, and to encourage employees
485	485	and employers to start new businesses with an employee ownership business
486	486	structure.
487	487	3. Training employees and employers with respect to methods of employee
488	488	participation in open-book management, work teams, committees, and other
489	489	approaches for seeking greater employee input.
490	490	4. Training other entities to establish programs and carry out program
491	491	activities designed to promote employee ownership business structures.
492	492	(b) The department may contract with a 3rd party to operate the program
493	493	under this subsection.
494	494	(c) Within one year after the effective date of this paragraph .... [LRB inserts
495	495	date], the department shall submit an application to the U.S. secretary of labor for
496	496	a grant under 29 USC 3228 for use in connection with the program under this
497	497	section.
498	498	(d) In this subsection:
499	499	1. XEmployee ownership business structureY includes the business structures
500	500	for employee stock ownership plans and worker-owned cooperatives.
501	501	2. XEmployee stock ownership planY has the same meaning as in 26 USC 4975
502	502	(e) (7).
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525	525	23 2025 - 2026 Legislature
526	526	ASSEMBLY BILL 17
527	527	- 12 - LRB-0284/1
528	528	KP:cdc&skw
529	529	SECTION 15
530	530	3. XWorker-owned cooperativeY has the meaning given for Xeligible worker-
531	531	owned cooperativeY in 26 USC 1042 (c) (2).
532	532	SECTION 16. 73.03 (79) of the statutes is created to read:
533	533	73.03 (79) (a) 1. To implement a program to approve applications for purposes
534	534	of ss. 71.07 (12), 71.28 (12), and 71.47 (12).
535	535	2. An applicant for a tax credit under s. 71.07 (12), 71.28 (12), or 71.47 (12) is
536	536	eligible for certification under subd. 3. if all of the following apply:
537	537	a. The applicant is a business subject to taxes under ch. 71.
538	538	b. The applicant does not have an employee stock ownership plan and is not,
539	539	in whole or in part, a worker-owned cooperative.
540	540	3. The department may certify a qualified business to claim a tax credit under
541	541	s. 71.07 (12), 71.28 (12), or 71.47 (12) as follows:
542	542	a. An amount, not to exceed $100,000, equal to up to 70 percent of conversion
543	543	costs related to converting a qualified business to a worker cooperation.
544	544	b. An amount, not to exceed $100,000, equal to up to 50 percent of conversion
545	545	costs related to converting a qualified business to an employee stock ownership
546	546	plan.
547	547	4. The department may allocate up to $5,000,000 in total credits under ss.
548	548	71.07 (12), 71.28 (12), and 71.47 (12) each year. Any unused allocation may be
549	549	carried forward.
550	550	(b) In this subsection:
551	551	1. XConversion costsY means professional services, including accounting,
552	552	legal, and business advisory services, for any of the following:
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568	568	16
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575	575	23 2025 - 2026 Legislature
576	576	ASSEMBLY BILL 17
577	577	- 13 - LRB-0284/1
578	578	KP:cdc&skw
579	579	SECTION 16
580	580	a. A feasibility study or other preliminary assessments regarding a transition
581	581	of a business to an employee stock ownership plan or a worker-owned cooperative.
582	582	b. The transition of a business to an employee stock ownership plan or a
583	583	worker-owned cooperative.
584	584	2. XEmployee stock ownership planY has the same meaning as in 26 USC 4975
585	585	(e) (7).
586	586	3. XQualified businessY means a person that satisfies the criteria under par.
587	587	(a) 2.
588	588	4. XWorker-owned cooperativeY has the meaning given for Xeligible worker-
589	589	owned cooperativeY in 26 USC 1042 (c) (2).
590	590	SECTION 17. Initial applicability.
591	591	(1) CAPITAL GAIN SUBTRACTION. The treatment of ss. 71.26 (2) (a) 13. and
592	592	71.45 (2) (a) 25. first applies to taxable years beginning on January 1, 2025.
593	593	(END)
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