Wisconsin 2025-2026 Regular Session

Wisconsin Assembly Bill AB38 Latest Draft

Bill / Introduced Version Filed 02/17/2025

                            2025 - 2026  LEGISLATURE
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2025 ASSEMBLY BILL 38
February 17, 2025 - Introduced by Representatives TUSLER, BEHNKE, GREEN, 
GUNDRUM, KREIBICH, MAXEY, MURSAU, PENTERMAN, PIWOWARCZYK, TITTL, 
TRANEL and WICHGERS, cosponsored by Senators JACQUE, BRADLEY, HUTTON, 
CABRAL-GUEVARA, FEYEN, NASS, QUINN and TOMCZYK. Referred to Committee 
on Ways and Means. 
 
 ***AUTHORS SUBJECT TO CHANGE***
AN ACT to repeal 71.63 (6) (n) 1. and 71.63 (6) (n) 2.; to renumber and amend 
71.63 (6) (n) (intro.); to amend 71.05 (6) (b) 19. cm., 71.05 (6) (b) 19. dm., 71.05 
(6) (b) 28. e., 71.05 (6) (b) 28. f., 71.05 (6) (b) 32. b., 71.05 (6) (b) 32. c., 71.05 (6) 
(b) 33. b., 71.05 (6) (b) 33. c., 71.05 (6) (b) 35. c., 71.05 (6) (b) 35. d., 71.05 (6) (b) 
38. c., 71.05 (6) (b) 38. d., 71.05 (6) (b) 42. c., 71.05 (6) (b) 42. d. and 71.05 (6) (b) 
43. f.; to create 71.05 (1) (j) of the statutes; relating to: an income tax 
exemption for cash tips paid to an employee.
Analysis by the Legislative Reference Bureau
This bill creates an income tax exemption for cash tips received by an employee 
from the customers of the employee[s employer.
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.
For further information see the state fiscal estimate, which will be printed as 
an appendix to this bill.
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The people of the state of Wisconsin, represented in senate and assembly, do 
enact as follows:
SECTION 1. 71.05 (1) (j) of the statutes is created to read:
71.05 (1) (j)  Tips. Amounts received as cash tips by an employee from the 
customers of the employee[s employer.
SECTION 2. 71.05 (6) (b) 19. cm. of the statutes is amended to read:
71.05 (6) (b) 19. cm.  For taxable years beginning after December 31, 2020, for 
a person who is a nonresident or a part-year resident of this state, modify the 
amount calculated under subd. 19. b. by multiplying the amount by a fraction the 
numerator of which is the person[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 person[s total wages, salary, tips, unearned income, 
and net earnings from a trade or business. In this subd. 19. cm., for married 
persons filing separately Xwages, salary, tips, unearned income, and net earnings 
from a trade or businessY means the separate wages, salary, tips, unearned income, 
and net earnings from a trade or business of each spouse, and for married persons 
filing jointly Xwages, salary, tips, unearned income, and net earnings from a trade 
or businessY means the total wages, salary, tips, unearned income, and net earnings 
from a trade or business of both spouses.
SECTION 3. 71.05 (6) (b) 19. dm. of the statutes is amended to read:
71.05 (6) (b) 19. dm.  For taxable years beginning after December 31, 2020, 
reduce the amount calculated under subd. 19. b. or cm. to the person[s aggregate 
wages, salary, tips, unearned income, and net earnings from a trade or business 
that are taxable by this state.
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SECTION 4
SECTION 4. 71.05 (6) (b) 28. e. of the statutes is amended to read:
71.05 (6) (b) 28. e. For an individual who is a nonresident or part-year 
resident of this state, multiply the amount calculated under subd. 28. a., am., 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.  In this subd. 28. e., for 
married persons filing separately Xwages, salary, tips, unearned income and net 
earnings from a trade or businessY means the separate wages, salary, tips, 
unearned income and net earnings from a trade or business of each spouse, and for 
married persons filing jointly Xwages, salary, tips, unearned income and net 
earnings from a trade or businessY means the total wages, salary, tips, unearned 
income and net earnings from a trade or business of both spouses.
SECTION 5. 71.05 (6) (b) 28. f. of the statutes is amended to read:
71.05 (6) (b) 28. f.  Reduce the amount calculated under subd. 28. a., am., b., c., 
d. or e. to the individual[s aggregate wages, salary, tips, unearned income and net 
earnings from a trade or business that are taxable by this state.
SECTION 6. 71.05 (6) (b) 32. b. of the statutes is amended to read:
71.05 (6) (b) 32. b. For an individual who is a nonresident or part-year 
resident of this state, multiply the amount calculated under subd. 32. a. 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.  In this subd. 32. b., for married 
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SECTION 6
persons filing separately Xwages, salary, tips, unearned income and net earnings 
from a trade or businessY means the separate wages, salary, tips, unearned income 
and net earnings from a trade or business of each spouse, and for married persons 
filing jointly Xwages, salary, tips, unearned income and net earnings from a trade or 
businessY means the total wages, salary, tips, unearned income and net earnings 
from a trade or business of both spouses.
SECTION 7. 71.05 (6) (b) 32. c. of the statutes is amended to read:
71.05 (6) (b) 32. c.  Reduce the amount calculated under subd. 32. a. or b. to the 
individual[s aggregate wages, salary, tips, unearned income and net earnings from 
a trade or business that are taxable by this state.
SECTION 8. 71.05 (6) (b) 33. b. of the statutes is amended to read:
71.05 (6) (b) 33. b. For an individual who is a nonresident or part-year 
resident of this state, multiply the amount calculated under subd. 33. a. 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.  In this subd. 33. b., for married 
persons filing separately Xwages, salary, tips, unearned income and net earnings 
from a trade or businessY means the separate wages, salary, tips, unearned income 
and net earnings from a trade or business of each spouse, and for married persons 
filing jointly Xwages, salary, tips, unearned income and net earnings from a trade or 
businessY means the total wages, salary, tips, unearned income and net earnings 
from a trade or business of both spouses.
SECTION 9. 71.05 (6) (b) 33. c. of the statutes is amended to read:
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SECTION 9
71.05 (6) (b) 33. c.  Reduce the amount calculated under subd. 33. a. or b. to the 
individual[s aggregate wages, salary, tips, unearned income and net earnings from 
a trade or business that are taxable by this state.
SECTION 10. 71.05 (6) (b) 35. c. of the statutes is amended to read:
71.05 (6) (b) 35. c. For an individual who is a nonresident or part-year 
resident of this state, multiply the amount calculated under subd. 35. a. or b., 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.  In this subd. 35. c., for married 
persons filing separately Xwages, salary, tips, unearned income, and net earnings 
from a trade or businessY means the separate wages, salary, tips, unearned income, 
and net earnings from a trade or business of each spouse, and for married persons 
filing jointly Xwages, salary, tips, unearned income, and net earnings from a trade 
or businessY means the total wages, salary, tips, unearned income, and net earnings 
from a trade or business of both spouses.
SECTION 11. 71.05 (6) (b) 35. d. of the statutes is amended to read:
71.05 (6) (b) 35. d.  Reduce the amount calculated under subd. 35. a., b., or c. to 
the individual[s aggregate wages, salary, tips, unearned income, and net earnings 
from a trade or business that are taxable by this state.
SECTION 12. 71.05 (6) (b) 38. c. of the statutes is amended to read:
71.05 (6) (b) 38. c. For an individual who is a nonresident or part-year 
resident of this state, multiply the amount calculated under subd. 38. a. or b., by a 
fraction the numerator of which is the individual[s wages, salary, tips, unearned 
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SECTION 12
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.  In this subd. 38. c., for married 
persons filing separately Xwages, salary, tips, unearned income, and net earnings 
from a trade or businessY means the separate wages, salary, tips, unearned income, 
and net earnings from a trade or business of each spouse, and for married persons 
filing jointly Xwages, salary, tips, unearned income, and net earnings from a trade 
or businessY means the total wages, salary, tips, unearned income, and net earnings 
from a trade or business of both spouses.
SECTION 13. 71.05 (6) (b) 38. d. of the statutes is amended to read:
71.05 (6) (b) 38. d.  Reduce the amount calculated under subd. 38. a., b., or c. to 
the individual[s aggregate wages, salary, tips, unearned income, and net earnings 
from a trade or business that are taxable by this state.
SECTION 14. 71.05 (6) (b) 42. c. of the statutes is amended to read:
71.05 (6) (b) 42. c. For an individual who is a nonresident or part-year 
resident of this state, multiply the amount calculated under subd. 42. a. or b., 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.  In this subd. 42. c., for married 
persons filing separately Xwages, salary, tips, unearned income, and net earnings 
from a trade or businessY means the separate wages, salary, tips, unearned income, 
and net earnings from a trade or business of each spouse, and for married persons 
filing jointly Xwages, salary, tips, unearned income, and net earnings from a trade 
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SECTION 14
or businessY means the total wages, salary, tips, unearned income, and net earnings 
from a trade or business of both spouses.
SECTION 15. 71.05 (6) (b) 42. d. of the statutes is amended to read:
71.05 (6) (b) 42. d.  Reduce the amount calculated under subd. 42. a., b., or c. to 
the individual[s aggregate wages, salary, tips, unearned income, and net earnings 
from a trade or business that are taxable by this state.
SECTION 16. 71.05 (6) (b) 43. f. of the statutes is amended to read:
71.05 (6) (b) 43. f.  An individual who is a nonresident or part-year resident of 
this state and who claims the subtraction under this subdivision shall multiply the 
amount calculated under subd. 43. a., 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. In this subd. 43. f., for married persons filing separately 
Xwages, salary, tips, unearned income, and net earnings from a trade or businessY 
means the separate wages, salary, tips, unearned income, and net earnings from a 
trade or business of each spouse, and for married persons filing jointly Xwages, 
salary, tips, unearned income, and net earnings from a trade or businessY means 
the total wages, salary, tips, unearned income, and net earnings from a trade or 
business of both spouses.
SECTION 17. 71.63 (6) (n) (intro.) of the statutes is renumbered 71.63 (6) (n) 
and amended to read:
71.63 (6) (n)  In the form of tips paid to employees if:.
SECTION 18. 71.63 (6) (n) 1. of the statutes is repealed.
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SECTION 19
SECTION 19. 71.63 (6) (n) 2. of the statutes is repealed.
SECTION 20.  Initial applicability.
(1)  This act first applies to taxable years beginning after December 31, 2024.
(END)
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