Imagine you’re a 68-year-old Wisconsinite who loves Packers football, Friday fish fries, and—let’s be honest—saving money. You’ve worked hard, and now you want your retirement dollars to stretch as far as possible. Good news: Wisconsin just rolled out a tax break that could put a big smile on your face.
What’s the Big Deal?
Starting in 2025, if you’re a Wisconsin resident and at least 67 years old by the end of the year, you can subtract up to $24,000 of your retirement income from your state taxes. That’s right—money you pull from your 401(k), IRA, or other qualified retirement plans can be tax-free in Wisconsin, up to that limit .
But wait, there’s more! If you’re married and both you and your spouse are 67 or older, you can double-dip: together, you can subtract up to $48,000 of eligible retirement income.
What Counts as “Eligible Retirement Income”?
- Qualified retirement plans (like 401(k)s and pensions)
- IRAs (Individual Retirement Accounts)
- As long as the income isn’t already excluded from Wisconsin taxes by another law
So, if you’re getting payments from your old job’s pension or taking money out of your IRA, you’re probably in luck!
Special Rules: The Fine Print
- Part-Year Residents: If you only lived in Wisconsin for part of the year, you can’t claim the full $24,000 or $48,000. Instead, you get a prorated amount based on how much of your income was earned while living in Wisconsin.
- Nonresidents: Sorry, this deal is for full-time cheeseheads only. If you don’t live in Wisconsin, you can’t claim this subtraction .
What’s the Catch?
Here’s where it gets interesting: If you claim this new subtraction on your Wisconsin tax return, you can’t also claim certain Wisconsin tax credits. So, you might have to do a little math (or let us do your return) to see which option saves you the most money. Sometimes, the subtraction is better; other times, the credits might win out.
Why Is Wisconsin Doing This?
This new tax break is part of a bigger plan to help retirees keep more of their hard-earned money. Lawmakers hope it’ll make Wisconsin a more attractive place to retire and live.
Quick Recap:
- 67 or older? Subtract up to $24,000 of retirement income from your state taxes.
- Married and both 67+? Subtract up to $48,000.
- Part-year resident? You get a smaller, prorated amount.
- Nonresident? No subtraction for you.
- Claiming the subtraction? You can’t take certain other tax credits—so compare both options!