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Recent Wisconsin Tax Changes

Tax Law Alert John T. Barry, David Brunori, Paticia A. Hintz

Wisconsin's recent budget, signed by Gov. Scott Walker on September 21, 2017, includes many changes to the state's tax system, most of which will reduce tax burdens. Here are some of the highlights:

Income Tax

  • Repeal of the alternative minimum tax after 2018
  • Up to $100,000 exclusion for charitable contributions made from an IRA by those over age 701/2, beginning in 2018
  • Research tax credit becomes partially refundable
  • New limits on the credit for taxes paid to non-bordering states
  • New limits on the use of net operating losses
  • Eliminates the ability of individuals to take both the manufacturing and agricultural tax credit on the same income.
  • Historic rehabilitation credit capped at $500,000 per parcel
  • Homestead credit no longer available to non-elderly or non-disabled individuals with no earned income
  • Changes the sourcing rules for services
  • Confirms that Wisconsin will not conform to the new IRS partnership audit rules and will follow the old TEFRA rules

Sales Tax

  • New exemptions for:
    • property sold as part of lump sum construction contracts,
    • certain prepared foods,
    • tournament or league entrance fees advertised as prize money, and
    • certain purchases related to fish farms and bee keeping.
  • Expanded exemption for property sold as part of construction contracts for education related entities.
  • Repeal of tax on internet access services effective July 1, 2020

Property Tax

  • Elimination of the state portion of the personal property tax.
  • Exempts machinery, tools, and patters from all personal property taxation.

Local Room Tax

  • Local governments are permitted to impose room taxes on lodging marketplaces (such as AirBNB and VRBO) and owners of short-term rentals.

There are many more Wisconsin tax changes in the voluminous bill. For more information, contact John Barry at [email protected]/(414) 277-5825, David Brunori at [email protected]/(202) 780-2634, Patricia A. Hintz at [email protected]/(414) 277-5833 or your Quarles & Brady attorney.