06/01/2026
This legislative session, Republicans in the Wisconsin Legislature advanced several tax relief measures focused on lowering the tax burden on working families, retirees, and homeowners across the state.
Among the proposals passed by the Legislature were measures to eliminate state income taxes on overtime pay and tips. AB 38 would exempt up to $25,000 in tips from state income taxes, while AB 461 would allow workers to deduct qualified overtime pay from state income taxes. Both bills were vetoed by Governor Tony Evers.
Lawmakers also passed AB 391, which would have eliminated Governor Evers’ controversial 400-year veto related to annual per-pupil school funding increases. That bill was also vetoed.
The state budget included approximately $1.5 billion in overall tax relief. One major provision creates a retirement income exclusion beginning at age 67, allowing the first $24,000 of retirement income for single filers and $48,000 for joint filers to be exempt from state income taxes.
The budget also expanded Wisconsin’s second income tax bracket, allowing more income to be taxed at the lower 4.40 percent rate. Additional tax relief measures included tripling the adoption expense deduction from $5,000 to $15,000 and expanding the sales tax exemption on residential electricity and natural gas.
These measures focused on providing tax relief to Wisconsin workers, retirees, and families while reducing the overall tax burden across the state.