Wisconsin Tax: Guide to Income, Sales, Property, and Retirement Taxes

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Navigating the complexities of state taxes can be daunting, but understanding Wisconsin's tax landscape is essential for residents and newcomers alike.

In this guide, we'll explore key components of the Badger State's tax system, from income and sales taxes to property taxes and retirement benefits.

Wisconsin state tax: Overview

Wisconsin’s income tax system has three brackets, but most people land in the middle. Property taxes can be on the higher side, which might come as a surprise to homeowners.

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The good news is that Wisconsin has one of the lowest sales tax rates in the country. However, some essential items, such as baby diapers, are still taxed.

On a brighter note, if you're thinking about long-term planning, your heirs won't face any state taxes on their inheritance, since Wisconsin doesn't have an estate or inheritance tax.

[Data for this state tax guide was gathered from several sources, including the U.S. Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]

Wisconsin income tax

Wisconsin has a graduated state individual income tax rate ranging from 3.50% to 7.65%, according to the Tax Foundation.

Wisconsin retirement taxes

Wisconsin tax on retirement benefits: Wisconsin doesn't tax Social Security or Railroad Retirement benefits. Military pay that's exempt from federal taxation is also exempt in Wisconsin.

Taxpayers age 65 and older in the state can deduct up to $5,000 of certain retirement income if they meet the following criteria.

Have a federal adjusted gross income (AGI) of less than $15,000
Have a federal AGI of less than $30,000 if married (regardless of whether filing jointly or separately)

Social Security: Not taxable
Pensions: Taxable
401(k) and IRA distributions: Taxable

Wisconsin sales tax

Wisconsin's statewide sales tax is 5%. However, the average combined local and state tax rate is 5.70%, according to the Tax Foundation.

Groceries: Exempt
Prescription drugs: Exempt
Clothing: Taxable

How much are property taxes in Wisconsin?

In Wisconsin, the average effective property tax rate is 1.25%, which is higher than in most other states.

Wisconsin property tax breaks for retirees

Wisconsin homeowners who are age 62 or older or have disabilities might qualify for a homestead credit without earned income. Homeowners age 62 and under must have earned income to qualify. Income limitations apply.

Additionally, state residents 62 and older can apply for a property tax-deferral loan of up to $3,525 through the Wisconsin Housing and Economic Development Authority. However, household income must not exceed $20,000.

Applications are also available to veterans, regardless of age.

Wisconsin gas tax

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Gasoline	31 cents per gallon
Diesel	31 cents per gallon

Source: Sales Tax Handbook

Wisconsin taxes on alcohol and tobacco

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Wisconsin tobacco taxes
Product	Tax Amount
Cigarettes	$2.52 per pack
Other Tobacco Products	71% of manufacturer's price

Source: Sales Tax Handbook

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Wisconsin alcohol taxes
Product	Tax Amount
Wine	25 cents per gallon
Beer	6 cents per gallon
Liquor	$3.25 per gallon

Source: Sales Tax Handbook

Wisconsin estate and inheritance taxes

Wisconsin doesn't have an estate or an inheritance tax.

Katelyn has more than 6 years of experience working in tax and finance. While she specialized in tax content while working at Kiplinger from 2023 to 2024, Katelyn has also written for digital publications on topics including insurance, retirement, and financial planning and had financial advice commissioned by national print publications. She believes knowledge is the key to success and enjoys providing content that educates and informs.