State-by-State Guide to Taxes on Retirees
Tool | December 2020

Wisconsin State Tax Guide for Retirees

State tax rates and rules for income, sales, property, estate, and other taxes that impact retirees.

Wisconsin

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The Bottom Line
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Least Tax-Friendly

The Badger State exempts Social Security benefits from state taxes, but income from pensions and annuities, along with distributions from IRAs and 401(k) plans, are generally taxable. However, retirees who are 65 and older can subtract up to $5,000 of retirement income (including distributions from IRAs) from Wisconsin taxable income if their federal adjusted gross income is less than $15,000 ($30,000 for a married couple filing jointly).

Property taxes are the eighth-highest in the U.S. Plus, there are limited property tax breaks for retirees.

There are some bright spots for retirees. For example, sales taxes are actually low in Wisconsin. It has the ninth-lowest average combined state and local tax rate in the nation. There are no estate or inheritance taxes, either.

Income Tax Range

Low: 3.54% (on up to $12,120 of taxable income for singles or up to $16,160 for married couples)

High: 7.65% (on taxable income over $266,930 for singles or over $355,910 for married couples)

Taxation of Social Security Benefits

Social Security benefits are not taxed by the state.

Tax Breaks for Other Retirement Income

Income from federal government and designated Wisconsin state and local government retirement plans is exempt if the taxpayer was a member of the plan before 1964.

In addition, taxpayers age 65 and older with federal adjusted gross income of $15,000 or less ($30,000 or less for joint filers) can deduct up to $5,000 of federally-taxed income from private or government retirement plans (other than income otherwise excluded).

Military pensions (including for certain service with the Coast Guard, National Oceanic and Atmospheric Administration, and Public Health Service) and Railroad Retirement benefits are fully exempt.

Sales Tax

5% state levy. Municipalities can add up to 1.75% to that, with the average combined rate at 5.43%, according to the Tax Foundation.

Groceries: Exempt
Clothing: Taxable
Motor Vehicles: Taxable
Prescription Drugs: Exempt

Real Property Taxes

Unlike younger taxpayers, residents age 62 or older don't have to have earned income to claim a homestead tax credit on their income tax return for property tax or rent paid.

In addition, the Wisconsin Housing and Economic Development Authority provides property-tax-deferral loans for the elderly with incomes under $20,000.

Annual Car Taxes and Fees

An annual vehicle registration fee is imposed. Additional local fees may apply.

Estate and Inheritance Taxes

No estate or inheritance tax.

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