Milwaukee Sales Tax Increase: What it Means for Residents

The Milwaukee Common Council voted to implement a new Milwaukee sales tax increase. The vote for a city sales tax came shortly before the approval for an increase in Milwaukee County's sales tax rate.

Supporters of the new city tax say the tax increase will help fund essential workers and services. Without it, Milwaukee could face mass layoffs and a lack of necessary services for city residents.

“Without a major change in the structure of our finances, we will experience draconian cuts to our police, our fire department, and our libraries,” said Milwaukee Mayor Cavalier Johnson in a June State of the City Address.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

Milwaukee Sales Tax Increase 

The city of Milwaukee is set to impose its own sales tax rate of 2%. This means Milwaukee shoppers will pay $2.00 on every $100 purchase of taxable goods and services. City sales taxes aren’t uncommon. For example, Illinois has one of the highest sales tax rates in the U.S., partly due to Chicago’s local sales tax. Many other cities have local sales taxes, too.

• New York City also has a separate sales tax.
• Kansas City imposes an additional sales tax.
• Tacoma, Washington has a local sales tax.
• Long Beach, California charges an additional sales tax.

Milwaukee County Sales Tax

However, Milwaukee residents are in for a double whammy next year, since the Milwaukee County Board of Supervisors approved a sales tax increase from 0.5% to 0.9%. No other county in Wisconsin is permitted to raise the county sales tax rate above 0.5%. 

So, what does this mean? Milwaukee will become the highest-taxed city in Wisconsin (at least when it comes to sales taxes).

What is the Sales Tax in Milwaukee? 

Currently, Milwaukee shoppers pay a 5.5% sales tax rate, which includes the state sales tax rate of 5% and the county sales tax rate of 0.5%. When the new Milwaukee sales taxes go into effect, shoppers will pay 7.9% (due to the city and county increases). 

Although the city of Milwaukee’s new sales tax will only cost residents $0.02 on every dollar, the Wisconsin Department of Revenue projects the 2% sales tax will make the city more than $193 million in the first year alone. And the the county is estimated to rake in an additional $82.2 million from the Milwaukee County sales tax increase.

Milwaukee Fiscal Crisis 

The Milwaukee sales tax increase comes as lawmakers try to solve a budget crisis. Without additional revenue, the city may need to lay off essential workers, such as police officers and public healthcare workers. The nearly $194 million generated from the new city sales tax will help these workers keep their jobs, and in turn, will allow Milwaukee residents continued access to essential services.

What is the Milwaukee Pension Crisis? 

Increasing pension payments have been an issue since at least 2021. Milwaukee received some financial relief from pandemic funding, but that funding was only a short-term solution. The additional sales taxes residents will soon pay will help fund pensions for city and county workers. 

When Will Milwaukee’s Sales Tax Go Into Effect? 

Milwaukee residents won’t face a city sales tax until January 1, 2024. And a Milwaukee County sales tax increase will be implemented at the same time. 

So, shoppers still have some time to make large purchases without paying more in taxes. For example, if you purchase a $20,000 vehicle in Milwaukee in 2024, you could spend $1,580 in sales taxes. But purchasing a $20,000 vehicle in 2023 would result in only $1,100 in sales tax.