State Bill of the Month — September 2023: Wisconsin AB 386

TPA’s State Bill of the Month for September 2023 is AB386, an act Relating to Lowering the Individual Income Tax Rates in the Third Bracket and Increasing and Expanding the Retirement Income Subtraction, introduced by State Rep. David Steffen (WI-4), State Sen. Rachael Cabral-Guevara (WI-19) and others. This legislation would decrease the income tax rate in Wisconsin’s third income tax bracket, while removing the state income tax for retirees with a yearly income of $100,000 if they are filing individually, or $150,000 if they are filing jointly.

Background: 

States are in a greater position to attract businessowners and other taxpayers if they have competitive tax rates and if they avoid harmful state income tax rates. The rate provision in AB386 makes sense because the third income tax bracket in Wisconsin includes the bulk of Wisconsinites, while the state income tax for some retirees is eliminated completely. 

According to the Tax Foundations 2023 State Business Tax Climate Index, Wisconsin is ranked 38^th in individual income tax rank among the 50 states. This low ranking is an indication that Wisconsin historically has not supported low taxes.

Wisconsin lawmakers revived their income tax plan after Wisconsin Governor Tony Evers (D) vetoed a similar plan in July. The measure was designed to encourage Wisconsin retirees to stay in the state and to combat record inflation.

AB386 is now in the Wisconsin Senate.

Wisconsin legislators are continuing to reduce the overall tax burden on its citizens.

AB386:

AB386 would lower the state’s third income tax bracket and remove the state income tax for retirees in Wisconsin up to $100,000 for single filers, and $150,000 for joint filers. The third income tax bracket makes up the bulk of filers in Wisconsin. This policy will put more money in the pockets of Wisconsinites.

It is for these reasons, among others, that TPA is proud to make AB386, relating to lowering the individual income tax rates in the third bracket and increasing and expanding the retirement income subtraction, introduced by Rep. David Steffen (WI-4), Sen. Rachael Cabral-Guevara (WI-19) and many others in the Wisconsin State Legislature, its Bill of the Month for September 2023.