Wisconsin has one of the highest average property tax rates in the country but also one of the lowest average sales tax rates. For older residents, Wisconsin offers several benefits — most notably, the state does not tax Social Security.
The big picture:
- Income tax: 3.5 percent to 7.65 percent
Wisconsin has four state income tax brackets, ranging from 3.5 percent to 7.65 percent. Most people are taxed at the second-highest rate and pay a top income tax rate of 5.3 percent.
- Property tax: 1.61 percent of a home’s assessed value (average)
Real estate taxes vary by county across Wisconsin, with an average tax rate of 1.61 percent of a home’s assessed value in 2021, according to the Tax Foundation. Wisconsin has one of the highest average property tax rates in the U.S., ranking eighth highest among all 50 states.
- Sales tax: 5.43 percent (average combined state and local)
A sales tax rate of 5 percent is levied on the sale of goods and services, in addition to an optional county tax rate of 0.5 percent, which most Wisconsin counties have adopted. The state’s average combined sales tax is 5.43 percent.
How is income taxed in Wisconsin?
Wisconsin lowered the income tax rates of the state’s bottom two tax brackets effective Jan. 1, 2023. The rate for the lowest bracket dropped from 3.54 to 3.5 percent and the rate for the second-lowest bracket was cut from 4.65 to 4.4 percent.
Wisconsin’s four state income tax brackets are below. Not all of your taxable income is taxed at the same rate. For example, if you’re a single filer and your taxable income is $80,000, the first $13,810 would be taxed at 3.5 percent, income from $13,810 to $27,630 would be taxed at 4.4 percent and so on.
Source: Wisconsin Department of Revenue
Source: Wisconsin Department of Revenue
Married taxpayers filing separate returns:
Source: Wisconsin Department of Revenue
*Taxable income: Gross income (wages, tips, bonuses, etc.) after subtracting for itemized or standard deductions
Are pensions or retirement income taxed in Wisconsin?
Yes, retirement income such as pensions, annuities and money drawn from IRAs and 401(k)s is taxable in the same manner it is for federal tax purposes, with some exemptions. Railroad retirement benefits and some government benefits, including U.S. military pensions, are not taxable. Find more information about pension and retirement tax exemptions on the Wisconsin Department of Revenue website.
AARP’s Retirement Calculator can help you determine if you are saving enough to retire when — and how — you want.
What about investment income?
Capital gains from investments are treated as ordinary personal income and are taxed at the same rates. Wisconsin allows for a 30 percent deduction of net capital from long-term gains (or 60 percent for long-term gains from farm assets). A long-term capital gain is a profit from selling an asset you’ve owned for more than one year.
Does Wisconsin tax Social Security benefits?
No. But you may pay federal taxes on a portion of your Social Security benefits, depending on your income. Up to 50 percent of your benefits will be taxed if you file an individual tax return and make $25,000 to $34,000 in total income — or if you file jointly and as a couple make $32,000 to $44,000 in total income. Up to 85 percent of your benefits will be taxed by the federal government if your total income is more than $34,000 individually or $44,000 as a couple.
AARP's Social Security Calculator can assist you in determining when to claim and how to maximize your Social Security benefits.
How is property taxed in Wisconsin?
Property tax in Wisconsin is a local tax that's based on the value of your home, which is assessed by your county. Taxes vary depending on which county you live in, but the average rate is 1.61 percent of your home’s assessed value.
The state’s median property tax bill in 2021 ranged from $1,726 in Rusk County to $5,601 in Dane County, according to the Tax Foundation.
The Wisconsin Department of Revenue has more information about how property is assessed and how to file an appeal. You can also find information about property tax credits, including the Homestead Credit, which is designed to help renters and property owners with lower incomes.
What about sales and other taxes?
- Sales tax: There’s a 5 percent tax on many consumer goods and services, including clothing and motor vehicles. Most counties add an optional 0.5 percent local tax that raises combined sales taxes in those counties to 5.5 percent. Wisconsin’s combined state and average local tax rate is 5.43 percent, the eighth lowest in the country, according to the Tax Foundation.
Starting in 2024, sales taxes will increase for shoppers in and around Milwaukee. The combined sales tax rate in Milwaukee will rise from 5.5 percent to 7.9 percent. For the rest of Milwaukee County, the combined sales tax rate will increase from 5.5 percent to 5.9 percent. A 2023 state law allowed the city and county to exceed the 0.5 percent local tax.
Find sales tax rate charts by county on the Wisconsin Department of Revenue’s website.
- Groceries and prescription drugs are exempt from sales tax.
- Gas tax: Wisconsin consumers pay an additional 32.9 cents per gallon at the pump, which includes a 30.9-cent-per-gallon state excise tax and a 2-cent state petroleum cleanup program fee. Gas is exempt from sales tax.
- Personal property tax: Wisconsin will repeal its personal property tax effective Jan. 1, 2024.
- Alcohol taxes: Consumers pay state sales and local tax on beer, wine and liquor. Excise taxes are levied at the state level. These taxes are paid by the vendor, but some or all may be included in the retail price.
The state excise tax on liquor is 85.86 cents per liter, plus an administrative fee of 2.906 cents per liter. Wisconsin taxes beer at 0.065 cents per gallon. Wine is taxed at 6.605 to 11.89 cents per liter, and cider is taxed at 1.71 cents to 11.89 cents per liter, depending on the percentage of alcohol.
- Lottery: Wisconsin lottery winnings are subject to state and federal income tax. Wisconsin automatically withholds state income taxes from lottery prizes of more than $2,000 at the highest income tax rate that applies to individuals at the time of winning.
Will I or my heirs have to pay inheritance or estate tax?
No. Wisconsin does not have an estate or inheritance tax, so heirs don’t pay taxes on money or property they inherit.
Are there any tax breaks for older Wisconsin residents?
Wisconsin residents 65 or older may be eligible to deduct up to $5,000 of certain retirement benefits. To qualify, your federal adjusted gross income must be less than $15,000 for a single person or less than $30,000 if you’re married — regardless of whether you file your taxes jointly or separately.
Residents who are 62 or older and whose total household income falls below $24,680 may qualify for a Homestead Credit of up to $1,168. The amount of the credit depends on your income and how much you paid in property taxes and/or rent during the calendar year. You may receive it as income tax credit or a direct refund. Learn more about the Homestead Credit.
Are military benefits taxed in Wisconsin?
Wisconsin does not tax U.S. military retirement pensions.
Wisconsin residents currently in the armed forces must pay state income tax on military income, with some exemptions. All military pay that’s exempt for federal tax purposes is also exempt in Wisconsin.
If you’re a nonresident stationed in Wisconsin, you must pay taxes on any nonmilitary income you earn while in the state. Learn more on the Wisconsin Department of Revenue’s website.
What is the deadline for filing Wisconsin taxes in 2024?
The deadline to file a Wisconsin state tax return is April 15, 2024, which is also the deadline for federal tax returns. For help estimating your annual income taxes, use AARP's Tax Calculator.
Wisconsin offers a six-month extension period, which matches the federal income extension period. Visit the Wisconsin Department of Revenue’s website for information on how to apply.
You will owe interest on any taxes not paid by the April 15 deadline, even if you have an extension.
To file your taxes online, use Wisconsin’s e-File system. No registration is required.
This guide was first published on Nov. 20, 2023.
Also of Interest:
- States with Highest and Lowest Sales Tax Rates
- How to Get Free Help With Your Taxes
- 2023-2024 Tax Brackets and Federal Income Tax Rates
Grace Dickinson is a contributing writer who previously wrote for the Philadelphia Inquirer. Her work has also appeared on sites like HuffPost and Eater.