July 4, 2025 – Wisconsin Retirement Income Subtraction (Effective 2025)

Wisconsin Act 15 creates a new state tax break beginning in 2025 that allows certain retirees to subtract a portion of their retirement income from Wisconsin taxable income. This reduces the amount of income subject to Wisconsin tax.

Overview of the Subtraction

• Allows a subtraction of up to: 
  • $24,000 per eligible individual
  • $48,000 for married couples filing jointly (if both qualify)
• Applies to retirement income such as: 
  • Distributions from qualified retirement plans and IRAs
• Only applies to income not already excluded under other federal or Wisconsin provisions

Who Qualifies

• Must be at least age 67 by the end of the tax year
• For married couples: 
  • Both spouses must be 67+ to claim the full $48,000
• Must be a Wisconsin resident (full-year or part-year) 
  • Nonresidents do NOT qualify

Limitations & Special Rules

• Part-year residents: 
  • Deduction must be prorated based on Wisconsin income vs. total federal income
• Credit restriction: 
  • Taxpayers who claim this subtraction cannot claim certain Wisconsin tax credits under Wis. Stat. § 71.10(4) for that year. This includes credits such as, but not limited to:
    • Homestead Credit
    • Wisconsin Earned Income Credit
    • Veterans & Surviving Spouses Property Tax Credit
    • Farmland Preservation Credit
    • Historical Rehabilitation Credit

The deduction is claimed on line 16 of Schedule SB, which is filed with your regular Form 1 Wisconsin tax return.

Click here for additional details: DOR 2025 Fall Tax Updates - Practitioner Questions & Answers