Wis. Stat. § 71.04 — Situs of income; allocation and apportionment

71.04 Situs of income; allocation and apportionment. (1) SITUS. (a) All income or loss of resident individuals and resident estates and trusts shall follow the residence of the individual, estate or trust. Income or loss of nonresident individuals and nonresident estates and trusts from business, not requiring apportionment under sub. (4) or (11), shall follow the situs of the business from which derived, except that all income that is realized from the sale of or purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in this state shall be allocated to this state. All items of income, loss and deductions of nonresident individuals and nonresident estates and trusts derived from a tax-option corporation not requiring apportionment under sub. (9) shall follow the situs of the business of the corporation from which derived, except that all income that is realized from the sale of or purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in this state shall be allocated to this state. Income or loss of nonresident individuals and nonresident estates and trusts derived from rentals and royalties from real estate or tangible personal property, or from the operation of any farm, mine or quarry, or from the sale of real property or tangible personal property shall follow the situs of the property from which derived. Income from personal services of nonresident individuals, including income from professions, shall follow the situs of the services. A nonresident limited partner’s distributive share of partnership income shall follow the situs of the business, except that all income that is realized from the sale of or purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in this state shall be allocated to this state. A nonresident limited liability company member’s distributive share of limited liability company income shall follow the situs of the business, except that all income that is realized from the sale of or purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in this state shall be allocated to this state. Income of nonresident individuals, estates and trusts from the state lottery under ch. 565 is taxable by this state. Income of nonresident individuals, estates and trusts from

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any multijurisdictional lottery under ch. 565 is taxable by this state, but only if the winning lottery ticket or lottery share was purchased from a retailer, as defined in s. 565.01 (6), located in this state or from the department. Income of nonresident individuals, nonresident trusts and nonresident estates from pari-mutuel winnings or purses under ch. 562 is taxable by this state. Income of nonresident individuals, estates and trusts from winnings from a casino or bingo hall that is located in this state and that is operated by a Native American tribe or band shall follow the situs of the casino or bingo hall. Income derived by a nonresident individual from a covenant not to compete is taxable by this state to the extent that the covenant was based on a Wisconsin-based activity. All other income or loss of nonresident individuals and nonresident estates and trusts, including income or loss derived from land contracts, mortgages, stocks, bonds and securities or from the sale of similar intangible personal property, shall follow the residence of such persons, except as provided in par. (b) and sub. (9), except that all income that is realized from the sale of or purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in this state shall be allocated to this state. (b) For purposes of determining the situs of income under this section: 1. The situs of income derived by any taxpayer as the beneficiary of the estate of a decedent or of a trust estate shall be determined as if such income had been received without the intervention of a fiduciary. 2. The situs of income received by a trustee, which income, under the internal revenue code, is taxable to the grantor of the trust or to any person other than the trust, shall be determined as if such income had been actually received directly by such grantor or such other person, without the intervention of the trust. 3. The residence of an estate or trust shall be as provided under s. 71.14. (2) PART-YEAR RESIDENT LIABILITY DETERMINATION. Liability to taxation for income which follows the residence of the recipient, in the case of persons other than corporations, who move into or out of the state within the year, shall be determined for such year on the basis of the income received (or accrued, if on the accrual basis) during the portion of the year that any such person was a resident of Wisconsin. The net income of such person assignable to the state for such year shall be used in determining the income subject to assessment under this chapter. (3) PARTNERS AND LIMITED LIABILITY COMPANY MEMBERS. (a) Part-year residents, time of residence. Partners or members who are residents of this state for less than a full taxable year shall compute taxes for that year on their share of partnership or limited liability company income or loss under this chapter on the part of the taxable year during which they are residents in the following manner: 1. Assign an equal portion of each item of income, loss or deduction to each day of the partnership’s or limited liability company’s taxable year. 2. Multiply each daily portion of those items of income, loss or deduction by a fraction that represents the partner’s or member’s portion, on that day, of the total partnership or limited liability company interest. 3. Net the items of income, loss or deduction, after the calculation under subd. 2., for all of the days during which the partner or member was a resident of this state. (b) Part-year residents, nonresidents. All partners or members who are residents of this state for less than a full taxable year or who are nonresidents shall compute taxes for that year on their share of partnership or limited liability company income or loss under this chapter for the part of the taxable year during which

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they are nonresidents by recognizing their proportionate share of all items of income, loss or deduction attributable to a business in, services performed in, or rental of property in, this state. (c) Disregarding agreements. In computing taxes under this chapter a partner or member shall disregard, for purposes of determining the situs of partnership income of partners, all provisions in partnership or limited liability company agreements that do any of the following: 1. Characterize the consideration for payments to the partner or member as services or the use of capital. 2. Allocate to the partner or member, as income from or gain from sources outside this state, a greater proportion of the partner’s or member’s distributive share of partnership or limited liability company income or gain than the ratio of partnership or company income or gain from sources outside this state to partnership or company income or gain from all sources. 3. Allocate to a partner or member a greater proportion of a partnership or limited liability company item of loss or deduction from sources in this state than the partner’s or member’s proportionate share of total partnership or company loss or deduction. 4. Determine a partner’s or member’s distributive share of an item of partnership or limited liability company income, gain, loss or deduction for federal income tax purposes if the principal purpose of that determination is to avoid or evade the tax under this chapter. (4) NONRESIDENT ALLOCATION AND APPORTIONMENT FORMULA. Nonresident individuals and nonresident estates and trusts engaged in business within and without the state shall be taxed only on such income as is derived from business transacted and property located within the state. The amount of such income attributable to Wisconsin may be determined by an allocation and separate accounting thereof, when the business of such nonresident individual or nonresident estate or trust within the state is not an integral part of a unitary business, but the department of revenue may permit an allocation and separate accounting in any case in which it is satisfied that the use of such method will properly reflect the income taxable by this state. In all cases in which allocation and separate accounting is not permissible, the determination shall be made in the following manner: for all businesses except air carriers, financial organizations, telecommunications companies, pipeline companies, public utilities, railroads, and car line companies there shall first be deducted from the total net income of the taxpayer the part thereof (less related expenses, if any) that follows the situs of the property or the residence of the recipient. The remaining net income shall be apportioned to this state by use of an apportionment fraction composed of the sales factor under sub. (7). Cross-reference: See also s. Tax 2.41, Wis. adm. code.

(4m) APPORTIONMENT FORMULA COMPUTATION. (a) For taxable years beginning after December 31, 2007, if both the numerator and the denominator of the sales factor under sub. (7) related to a taxpayer’s remaining net income are zero, none of the taxpayer’s remaining net income is apportioned to this state. (b) For taxable years beginning after December 31, 2007, if the numerator of the sales factor under sub. (7) related to a taxpayer’s remaining net income is a negative number and the denominator of the sales factor under sub. (7) related to a taxpayer’s remaining net income is a positive number, a negative number, or zero, none of the taxpayer’s remaining net income is apportioned to this state. (c) For taxable years beginning after December 31, 2007, if the numerator of the sales factor under sub. (7) related to a taxpayer’s remaining net income is a positive number and the denominator of the sales factor under sub. (7) related to a taxpayer’s

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remaining net income is zero or a negative number, all of the taxpayer’s remaining net income is apportioned to this state. (7) SALES FACTOR. For purposes of sub. (4): (a) The sales factor is a fraction, the numerator of which is the total sales of the taxpayer in this state during the tax period, and the denominator of which is the total sales of the taxpayer everywhere during the tax period. For sales of tangible personal property, the numerator of the sales factor is the sales of the taxpayer during the tax period under par. (b) 1. and 2. plus 100 percent of the sales of the taxpayer during the tax period under pars. (b) 2m. and 3. and (c). For purposes of applying pars. (b) 2m. and 3. and (c), if a taxpayer is within another state’s jurisdiction for income or franchise tax purposes for any part of the taxable year, it is considered to be within that state’s jurisdiction for income or franchise tax purposes for the entire taxable year. (b) Sales of tangible personal property are in this state if any of the following occur: 1. The property is delivered or shipped to a purchaser, other than the federal government, within this state regardless of the f.o.b. point or other conditions of the sale. 2. The property is shipped from an office, store, warehouse, factory or other place of storage in this state and delivered to the federal government within this state regardless of the f.o.b. point or other conditions of sale. 2m. The property is shipped from an office, store, warehouse, factory or other place of storage in this state and delivered to the federal government outside this state and the taxpayer is not within the jurisdiction, for income or franchise tax purposes, of the destination state. 3. The property is shipped from an office, store, warehouse, factory or other place of storage in this state to a purchaser other than the federal government and the taxpayer is not within the jurisdiction, for income or franchise tax purposes, of the destination state. (c) Sales of tangible personal property by an office in this state to a purchaser in another state and not shipped or delivered from this state are in this state if the taxpayer is not within the jurisdiction for income tax purposes of either the state from which the property is delivered or shipped or of the destination state. (df) 1. Gross receipts from the use of computer software are in this state if the purchaser or licensee uses the computer software at a location in this state. 2. Computer software is used at a location in this state if the purchaser or licensee uses the computer software in the regular course of business operations in this state, for personal use in this state, or if the purchaser or licensee is an individual whose domicile is in this state. If the purchaser or licensee uses the computer software in more than one state, the gross receipts shall be divided among those states having jurisdiction to impose an income tax on the taxpayer in proportion to the use of the computer software in those states. To determine computer software use in this state, the department may consider the number of users in each state where the computer software is used, the number of site licenses or workstations in this state, and any other factors that reflect the use of computer software in this state. (dh) 1. Gross receipts from services are in this state if the purchaser of the service received the benefit of the service in this state. 2. The benefit of a service is received in this state if any of the following applies: a. The service relates to real property that is located in this state. b. The service relates to tangible personal property that is delivered directly or indirectly to customers in this state.

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c. The service is purchased by an individual who is physically present in this state at the time that the service is received. d. The service is provided to a person engaged in a trade or business in this state and relates to that person’s business in this state. 3. Except as provided in subd. 4., if the purchaser of a service receives the benefit of a service in more than one state, the gross receipts from the performance of the service are included in the numerator of the sales factor according to the portion of the service received in this state. 4. For taxable years beginning after December 31, 2018, a broadcaster’s gross receipts from advertising are in this state only if the advertiser’s commercial domicile is in this state. With regard to a broadcaster who is a member of a combined group, as defined in s. 71.255 (1) (a), this subdivision does not apply to the gross receipts of the members who are not broadcasters. (dj) 1. Except as provided in subd. 2. and par. (df), gross royalties and other gross receipts received for the use or license of intangible property, including patents, copyrights, trademarks, trade names, service names, franchises, licenses, plans, specifications, blueprints, processes, techniques, formulas, designs, layouts, patterns, drawings, manuals, technical know-how, contracts, and customer lists, are sales in this state if any of the following applies: a. The purchaser or licensee uses the intangible property in the operation of a trade or business at a location in this state. Except as provided in subd. 2., if the purchaser or licensee uses the intangible property in the operation of a trade or business in more than one state, the gross royalties and other gross receipts from the use of the intangible property shall be divided between those states having jurisdiction to impose an income tax on the taxpayer in proportion to the use of the intangible property in those states. b. The purchaser or licensee is billed for the purchase or license of the use of the intangible property at a location in this state. c. The purchaser or licensee of the use of the intangible property has its commercial domicile in this state. 2. For taxable years beginning after December 31, 2018, a broadcaster’s gross royalties and other gross receipts received for the use or license of intangible property are sales in this state only if the commercial domicile of the purchaser or licensee is in this state and the purchaser or licensee has a direct connection or relationship with the broadcaster pursuant to a contract under which the royalties or receipts are derived. With regard to a broadcaster who is a member of a combined group, as defined in s. 71.255 (1) (a), this subdivision does not apply to the gross royalties and receipts of the members who are not broadcasters. (dk) 1. Sales of intangible property, excluding securities, are sales in this state if any of the following applies: a. The purchaser uses the intangible property in the regular course of business operations in this state or for personal use in this state. If the purchaser uses the intangible property in more than one state, the sales shall be divided between those states having jurisdiction to impose an income tax on the taxpayer in proportion to the use of the intangible property in those states. b. The purchaser is billed for the purchase of the intangible property at a location in this state. c. The purchaser of the intangible property has its commercial domicile in this state. (e) In this subsection, “sales” includes, but is not limited to, the following items related to the production of business income: 1. Gross receipts from the sale of inventory.

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2. Gross receipts from the operation of farms, mines and quarries. 3. Gross receipts from the sale of scrap or by-products. 4. Gross commissions. 5. Gross receipts from personal and other services. 6. Gross rents from real property or tangible personal property. 7. Interest on trade accounts and trade notes receivable. 8. A partner’s or member’s share of the partnership’s or limited liability company’s gross receipts. 9. Gross management fees. 10. Gross royalties from income-producing activities. 11. Gross franchise fees from income-producing activities. (f) The following items are among those that are not included in “sales” in this subsection: 1. Gross receipts and gain or loss from the sale of tangible business assets, except those under par. (e) 1., 2. and 3. 2. Gross receipts and gain or loss from the sale of nonbusiness real or tangible personal property. 3. Gross rents and rental income or loss from real property or tangible personal property if that real property or tangible personal property is not used in the production of business income. 4. Royalties from nonbusiness real property or nonbusiness tangible personal property. 5. Proceeds and gain or loss from the redemption of securities. 6. Interest, except interest under par. (e) 7., and dividends. 7. Gross receipts and gain or loss from the sale of intangible assets, except those under par. (e) 1. 8. Dividends deductible by corporations in determining net income. 9. Gross receipts and gain or loss from the sale of securities. 10. Proceeds and gain or loss from the sale of receivables. 11. Refunds, rebates and recoveries of amounts previously expended or deducted. 12. Other items not includable in apportionable income. 13. Foreign exchange gain or loss. 14. Royalties and income from passive investments in the property under s. 71.25 (5) (a) 21. 16. Pari-mutuel wager winnings or purses under ch. 562. 17. Gross receipts from sales of property or services as part of performing disaster relief work, as defined in s. 323.12 (5) (a) 3. (g) 1. For taxable years beginning after December 31, 2018, the amount of a broadcaster’s gross receipts from advertising and the use or license of intangible property, as determined under pars. (dh) 4. and (dj) 2., shall be adjusted as follows: a. Determine the amount of the numerator of the sales factor for a broadcaster as provided in this subsection. b. Multiply .01 by the total amount of the domestic gross receipts of the broadcaster from advertising and royalties and other gross receipts for the use or license of intangible property. c. Determine the numerator of the sales for a broadcaster by substituting the amount determined under subd. 1. b. for the total amount determined under subd. 1. a. d. Except as provided in subd. 1. e., if the amount of the numerator determined under subd. 1. c. is more than the amount determined under subd. 1. a., substitute the amount of total gross receipts determined under subd. 1. b. for the total amount of the gross receipts determined under subd. 1. a. For purposes of this subd. 1. d., the amount of the numerator for a broadcaster is the amount determined under subd. 1. c.

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e. If the amount of the numerator computed under subd. 1. c. is more than 140 percent of the amount determined under subd. 1. a., adjust the total amount of the gross receipts under subd. 1. a. so that the amount of the numerator for a broadcaster is 140 percent of the numerator otherwise determined under subd. 1. a. 2. The department may promulgate rules to administer this paragraph. (8) RAILROADS, FINANCIAL ORGANIZATIONS AND PUBLIC UTILITIES. (a) 1. In this section, “financial organization” means any bank, trust company, savings bank, industrial bank, land bank, safe deposit company, private banker, savings and loan association, credit union, cooperative bank, small loan company, sales finance company, investment company, brokerage house, underwriter, or any type of insurance company. 2. In this section, “financial organization” includes any subsidiary of an entity described in subd. 1., if a significant purpose for the subsidiary is to hold investments or if the subsidiary primarily functions to hold investments. (b) In this section, for taxable years beginning after December 31, 2005, “public utility” means any business entity providing service to the public and engaged in the transportation of goods and persons for hire, as defined in s. 194.01 (4), regardless of whether or not the entity’s rates or charges for services have been established or approved by a federal, state or local government or governmental agency. (c) The net business income of railroads, car line companies, pipeline companies, financial organizations, telecommunications companies, air carriers, and public utilities requiring apportionment shall be apportioned pursuant to rules of the department of revenue, but the income taxed is limited to the income derived from business transacted and property located within the state. Cross-reference: See also ss. Tax 2.46, 2.47, 2.475, 2.49, 2.495, 2.50, and 2.502, Wis. adm. code.

(9) NONRESIDENT INCOME FROM MULTISTATE TAX-OPTION CORPORATION. Nonresident individuals and nonresident estates and trusts deriving income from a tax-option corporation which is engaged in business within and without this state shall be taxed only on the income of the corporation derived from business transacted and property located in this state and losses and other items of the corporation deductible by such shareholders shall be limited to their proportionate share of the Wisconsin loss or other item, except that all income that is realized from the sale of or purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in this state shall be allocated to this state. For purposes of this subsection, all intangible income of tax-option corporations passed through to shareholders is business income that follows the situs of the business, except that all income that is realized from the sale of or purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in this state shall be allocated to this state. (11) DEPARTMENT MAY APPORTION BY RULE. If the income of any such nonresident individual or nonresident estate or trust properly assignable to the state of Wisconsin cannot be ascertained with reasonable certainty by the methods under this section, then the same shall be apportioned and allocated under such rules as the department of revenue may prescribe. History: 1987 a. 312; 1987 a. 411 ss. 34 to 40, 61; 1989 a. 31; 1989 a. 56 s. 259; 1991 a. 39, 189, 269; 1993 a. 112, 204, 491; 1995 a. 27; 1997 a. 27, 237; 1999 a. 9; 2003 a. 37; 2005 a. 25; 2007 a. 20; 2009 a. 2, 28; 2015 a. 84, 196, 216; 2017 a. 59; 2025 a. 118. Cross-reference: See also s. Tax 2.39, Wis. adm. code.

71.05 Income computation. (1) EXEMPT AND EXCLUDABLE INCOME. There shall be exempt from taxation under this subchapter the following: (a) Retirement systems. All payments received from the U.S.

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civil service retirement system, the U.S. military employee retirement system, the employee’s retirement system of the city of Milwaukee, Milwaukee County employees’ retirement system, sheriff’s annuity and benefit fund of Milwaukee County, police officer’s annuity and benefit fund of Milwaukee, fire fighter’s annuity and benefit fund of Milwaukee, or the public employee trust fund as successor to the Milwaukee public school teachers’ annuity and retirement fund and to the Wisconsin state teachers retirement system, which are paid on the account of any person who was a member of the paying or predecessor system or fund as of December 31, 1963, or was retired from any of the systems or funds as of December 31, 1963, but such exemption shall not exclude from gross income tax sheltered annuity benefits. Cross-reference: See also s. Tax 2.94, Wis. adm. code.

(am) Military retirement systems. All retirement payments received from the U.S. military employee retirement system, to the extent that such payments are not exempt under par. (a). (an) Uniformed services retirement benefits. All retirement payments received from the U.S. government that relate to service with the coast guard, the commissioned corps of the national oceanic and atmospheric administration, or the commissioned corps of the public health service, to the extent that such payments are not exempt under par. (a) or (am). (b) State legislature allowance for expenses. All amounts received in accordance with s. 13.123 (1) (a) which are spent for the purposes specified in s. 13.123 (1) (a) if the person does not claim a deduction for travel expenses away from home on legislative days. In this chapter, the place of residence of a member of the state legislature within the legislative district which the member represents shall be considered the member’s home. (c) Certain interest income. Interest received on bonds or notes issued by any of the following: 1. The Wisconsin Housing and Economic Development Authority under s. 234.65, if the bonds are used to fund an economic development loan to finance construction, renovation, or development of property that would be exempt under s. 70.11 (36). 1m. The Wisconsin Housing and Economic Development Authority under s. 234.08 or 234.61, on or after January 1, 2004, if the bonds or notes are issued to fund multifamily affordable housing projects or elderly housing projects. 3. A local exposition district created under subch. II of ch. 229. 4. A local professional baseball park district created under subch. III of ch. 229. 5. A local professional football stadium district created under subch. IV of ch. 229. 6. A local cultural arts district created under subch. V of ch. 229. 6p. A sponsoring municipality borrowing to assist a local exposition district created under subch. II of ch. 229. 7. The Wisconsin Aerospace Authority. 8. The Wisconsin Health and Educational Facilities Authority under s. 231.03 (6), on or after October 27, 2007, if the proceeds from the bonds or notes that are issued are used by a health facility, as defined in s. 231.01 (5), to fund the acquisition of information technology hardware or software. 10. A commission created under s. 66.0304, if any of the following applies: a. The bonds or notes are used to fund multifamily affordable housing projects or elderly housing projects in this state, and the Wisconsin Housing and Economic Development Authority has the authority to issue its bonds or notes for the project being funded. b. The bonds or notes are used by a health facility, as defined

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in s. 231.01 (5), to fund the acquisition of information technology hardware or software, in this state, and the Wisconsin Health and Educational Facilities Authority has the authority to issue its bonds or notes for the project being funded. c. The bonds or notes are issued to fund a redevelopment project in this state or a housing project in this state, and the authority exists for bonds or notes to be issued by an entity described under s. 66.1201, 66.1333, or 66.1335. 11. The Wisconsin Health and Educational Facilities Authority under s. 231.03 (6), if the bonds or notes are issued for the benefit of a person who is eligible to receive the proceeds of bonds or notes from another entity for the same purpose for which the bonds or notes are issued under s. 231.03 (6) and the interest income received from the other bonds or notes is exempt from taxation under this subchapter. 12. The Wisconsin Housing and Economic Development Authority, if the bonds or notes are issued to provide loans to a public affairs network under s. 234.75 (4). 13. An entity described under, or an entity whose bonds are issued under, s. 66.1201, 66.1333, or 66.1335. 14. The Wisconsin Health and Educational Facilities Authority under s. 231.03 (6), if the bonds or notes are issued in an amount totaling $35,000,000 or less, and to the extent that the interest income received is not otherwise exempt under this subsection. (f) Income from the sales of certain insurance policies. Income received by the original policyholder or original certificate holder who has a catastrophic or life-threatening illness or condition from the sale of a life insurance policy or certificate, or the sale of the death benefit under a life insurance policy or certificate, under a life settlement contract, as defined in s. 632.69 (1) (k). In this paragraph, “catastrophic or life-threatening illness or condition” includes AIDS, as defined in s. 49.686 (1) (a), and HIV infection, as defined in s. 49.686 (1) (d). (g) Income from work performed during a declared state of emergency. Income of an out-of-state business, as defined in s. 323.12 (5) (a) 6., and an out-of-state employee, as defined in s. 323.12 (5) (a) 7., from disaster relief work, as defined under s. 323.12 (5) (a) 3. (h) Wisconsin allocations from the federal coronavirus relief fund. Income received in the form of allocations issued by this state with moneys received from the coronavirus relief fund authorized under 42 USC 801 to be used for any of the following purposes: 1. Broadband expansion. 2. Privately owned movie theater grants. 3. A nonprofit grant program. 4. A tourism grants program. 5. A cultural organization grant program. 6. Music and performance venue grants. 7. Lodging industry grants. 8. Low-income home energy assistance. 9. A rental assistance program. 10. Supplemental child care grants. 11. A food insecurity initiative. 12. A farm support program. 13. Grants to small businesses. 14. Ethanol industry assistance. 15. Wisconsin Eye. (hn) Wisconsin grants awarded during and related to the pandemic. Income received in the form of a grant issued by the Wisconsin Economic Development Corporation during and related to

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the COVID-19 pandemic under the ethnic minority emergency grant program. Amounts otherwise deductible under this chapter that are paid directly or indirectly with the grant money are deductible. (hp) Grants from the federal restaurant revitalization fund. Income received in the form of a grant from the restaurant revitalization fund under section 5003 of the federal American Rescue Plan Act of 2021, P.L. 117-2. Amounts otherwise deductible under this chapter that are paid directly or indirectly with the grant money are deductible. Amounts excluded under this paragraph by a tax-option corporation or partnership shall be treated as taxexempt income for purposes of sections 705 and 1366 of the Internal Revenue Code. (i) Commercial loans. Income of a tax-option corporation that is a financial institution, as defined in s. 69.30 (1) (b), including interest, fees, and penalties, derived from a commercial loan of five million dollars or less provided to a person residing or located in this state and used primarily for a business or agricultural purpose in this state. (2) NONRESIDENT RECIPROCITY. All payments received by natural persons domiciled outside Wisconsin who derive income from the performance of personal services in Wisconsin shall be excluded from Wisconsin gross income to the extent that it is subjected to an income tax imposed by the state of domicile; provided that the law of the state of domicile allows a similar exclusion of income from personal services earned in such state by natural persons domiciled in Wisconsin, or a credit against the tax imposed by such state on such income equal to the Wisconsin tax on such income. Cross-reference: See also s. Tax 2.02, Wis. adm. code.

(3) MENOMINEE INDIAN TRIBE; DISTRIBUTION OF ASSETS. No distribution of assets from the United States to the members of the Menominee Indian tribe as defined in s. 49.385 or their lawful distributees, or to any corporation, or organization, created by the tribe or at its direction pursuant to section 8, P.L. 83-399, as amended, and no issuance of stocks, bonds, certificates of indebtedness, voting trust certificates or other securities by any such corporation or organization, or voting trust, to such members of the tribe or their lawful distributees shall be subject to income taxes under this chapter; provided, that so much of any cash distribution made under said P.L. 83-399 as consists of a share of any interest earned on funds deposited in the treasury of the United States pursuant to the supplemental appropriation act, 1952, (65 Stat. 736, 754) shall not by virtue of this subsection be exempt from the individual income tax of this state in the hands of the recipients for the year in which paid. For the purpose of ascertaining the gain or loss resulting from the sale or other disposition of such assets and stocks, bonds, certificates of indebtedness and other securities under this chapter, the fair market value of such property, on termination date as defined in s. 70.057 (1), 1967 stats., shall be the basis for determining the amount of such gain or loss. (5) FRACTIONAL YEAR. When an income tax return is required to be filed for a fractional part of a year under s. 71.03 (3), the Wisconsin taxable income shall be placed on an annual basis using the method applicable for federal income taxes under section 443 (b) (1) of the internal revenue code. (6) MODIFICATIONS AND TRANSITIONAL ADJUSTMENTS. Some of the modifications referred to in s. 71.01 (13) and (14) are: (a) Additions. To federal adjusted gross income add: 1. The amount of any interest, except interest under par. (b) 1., less related expenses, which is not included in federal adjusted gross income, and except the amount of any interest or original is-

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sue discount derived from bonds issued under subch. IV of ch. 18. Cross-reference: See also s. Tax 3.095, Wis. adm. code.

2. Losses not allocable or apportionable to this state under s. 71.04. 3. Any amount deducted as a capital loss carry-over from any taxable year prior to the 1965 taxable year. 4. The amount of any lump sum distribution taxable under section 402 (d) (1) of the internal revenue code (relating to distributions from employee benefit plans). 5. Any amount deducted as a capital loss carry-over from any taxable year prior to the 1975 taxable year if the capital asset which generated the loss had a situs outside of Wisconsin. 6. Any amount received in taxable year 1979 or thereafter by a Wisconsin resident shareholder as a proportionate share of the earnings and profits of a tax-option corporation which was accumulated prior to the beginning of its 1979 taxable year and not considered a dividend when received under section 1375 (d) (1) of the internal revenue code as amended to December 31, 1978. 7. Any amount deducted under section 170 (i) of the internal revenue code (relating to the deduction of charitable contributions by individuals who do not itemize deductions). 8. Wages paid to an entertainer or entertainment corporation unless the taxpayer complies with ss. 71.63 (3) (b), 71.64 (4) and (5) and 71.80 (15) (b). 9. Any amount excluded from adjusted gross income under section 641 (c) (1) of the internal revenue code (relating to gain on the sale of any property by a trust within 2 years of acquisition). 12. All penalties for early withdrawals from time savings accounts and deposits deducted for federal income tax purposes and paid while the individual charged with the penalty was a nonresident of this state; all reforestation expenses related to property not in this state, deducted for federal income tax purposes and paid while the individual paying the expense was not a resident of this state; all contributions to individual retirement accounts, simplified employee pension plans and self-employment retirement plans and all deductible employee contributions, deducted for federal income tax purposes and in excess of that amount multiplied by a fraction the numerator of which is the individual’s wages and net earnings from a trade or business taxable by this state and the denominator of which is the individual’s total wages and net earnings from a trade or business; the contributions to a Keogh plan deducted for federal income tax purposes and in excess of that amount multiplied by a fraction the numerator of which is the individual’s net earnings from a trade or business, taxable by this state, and the denominator of which is the individual’s total net earnings from a trade or business; the amount of health insurance costs of self-employed individuals deducted under section 162 (L) of the internal revenue code for federal income tax purposes and in excess of that amount multiplied by a fraction the numerator of which is the individual’s net earnings from a trade or business, taxable by this state, and the denominator of which is the individual’s total net earnings from a trade or business; and the amount of self-employment taxes deducted under section 164 (f) of the internal revenue code for federal income tax purposes and in excess of that amount multiplied by a fraction the numerator of which is the individual’s net earnings from a trade or business, taxable by this state, and the denominator of which is the individual’s total net earnings from a trade or a business. 13. The amount claimed by a fiduciary as an itemized deduction under section 164 or 216 (a) (1) of the internal revenue code on the federal fiduciary return. 14. Any amount received as a proportionate share of the

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earnings and profits of a corporation that is an S corporation for federal income tax purposes if those earnings and profits accumulated during a year for which the shareholders have elected under s. 71.365 (4) (a) not to be a tax-option corporation, to the extent not included in federal adjusted gross income for the current year. This subdivision does not apply to earnings and profits accumulated during a year for which a tax-option corporation has made an election under s. 71.365 (4m) (a) to be taxed at the entity level. 15. The amount of the credits computed under all of the following and not passed through by a partnership, limited liability company, or tax-option corporation that has added that amount to the partnership’s, company’s, or tax-option corporation’s income under s. 71.21 (4) or 71.34 (1k) (g): a. Section 71.07 (2dm). NOTE: Subd. 15. a. is repealed eff. 1-1-43 by 2025 Wis. Act 118, section 36.

b. Section 71.07 (2dx). NOTE: Subd. 15. b. is repealed eff. 1-1-43 by 2025 Wis. Act 118, section 37.

c. Section 71.07 (2dy). NOTE: Subd. 15. c. is repealed eff. 1-1-37 by 2025 Wis. Act 118, section 38.

d. Section 71.07 (3g). NOTE: Subd. 15. d. is repealed eff. 1-1-41 by 2025 Wis. Act 118, section 39.

e. Section 71.07 (3h). NOTE: Subd. 15. e. is repealed eff. 1-1-35 by 2025 Wis. Act 118, section 40.

f. Section 71.07 (3n). NOTE: Subd. 15. f. is repealed eff. 1-1-35 by 2025 Wis. Act 118, section 41.

g. Section 71.07 (3q). NOTE: Subd. 15. g. is repealed eff. 1-1-30 by 2025 Wis. Act 118, section 42.

h. Section 71.07 (3s). NOTE: Subd. 15. h. is repealed eff. 1-1-32 by 2025 Wis. Act 118, section 43.

i. Section 71.07 (3t). NOTE: Subd. 15. i. is repealed eff. 1-1-29 by 2025 Wis. Act 118, section 44.

j. Section 71.07 (3w). k. Section 71.07 (3wm). L. Section 71.07 (3y). m. Section 71.07 (4k). n. Section 71.07 (4n). NOTE: Subd. 15. n. is repealed eff. 1-1-35 by 2025 Wis. Act 118, section 45.

o. Section 71.07 (5f). p. Section 71.07 (5h). q. Section 71.07 (5i). NOTE: Subd. 15. q. is repealed eff. 1-1-35 by 2025 Wis. Act 118, section 46.

r. Section 71.07 (5j). NOTE: Subd. 15. r. is repealed eff. 1-1-35 by 2025 Wis. Act 118, section 47.

s. Section 71.07 (5k). t. Section 71.07 (5r). NOTE: Subd. 15. t. is repealed eff. 1-1-35 by 2025 Wis. Act 118, section 48.

u. Section 71.07 (5rm). NOTE: Subd. 15. u. is repealed eff. 1-1-35 by 2025 Wis. Act 118, section 49.

v. Section 71.07 (6n). NOTE: Subd. 15. v. is repealed eff. 1-1-34 by 2025 Wis. Act 118, section 50.

w. Section 71.07 (10). 16. Any amount recognized as a loss under section 1001 (c) of the Internal Revenue Code if a surviving spouse and a distributee exchange their interests in marital property under s. 766.31 (3) (b). 17. The amount received under s. 71.60 that is not included in federal adjusted gross income. 18. Any amount deducted as moving expenses under section 217 of the internal revenue code if the expense relates to a move made by an individual who changes his or her domicile from this state as a result of the move or if the expense relates to a move

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made by an individual who is not domiciled in this state as a result of the move. 20. The amount of any excess distribution, as that term is used in section 1291 (b) of the Internal Revenue Code, from a passive foreign investment company. 23. Any amount deducted by an individual under section 62 (a) (20) of the Internal Revenue Code related to attorney fees or court costs, involving an unlawful discrimination claim, if the individual is a nonresident or part-year resident of this state and if the judgment or settlement resulting from the claim is not taxable by this state. 24. The amount deducted or excluded under the Internal Revenue Code for interest expenses, rental expenses, intangible expenses, and management fees that are directly or indirectly paid, accrued, or incurred to, or in connection directly or indirectly with one or more direct or indirect transactions with, one or more related entities. 25. The amount computed under s. 71.07 (5n) in the previous taxable year and not passed through by a partnership, limited liability company, or tax-option corporation that has added that amount to the partnership’s, company’s, or tax-option corporation’s income under s. 71.21 (4) (a) or 71.34 (1k) (m) and not included in federal adjusted gross income. 26. For the taxable year in which a distribution is received, all of the following amounts distributed from a college savings account, as described in s. 224.50: a. To the extent that the receipt of the amounts by the owner or beneficiary of the account results in a penalty as provided in 26 USC 529 (c) (6), any amount that was not used for qualified higher education expenses, as defined in 26 USC 529 (c) (7), (8), and (9) and (e) (3), and was contributed to the account, except that this subd. 26. a. applies only to amounts for which a subtraction was made under par. (b) 32. or 32m. For purposes of this subd. 26. a., a first in, first out method of accounting shall apply to the account. b. Any amount rolled over by an owner into another state’s qualified tuition program, as described in 26 USC 529 (c) (3) (C) (i), to the extent that the amount was previously claimed as a deduction under par. (b) 32. or 32m. For purposes of this subd. 26. b., a first in, first out method of accounting shall apply to the account. c. To the extent that an amount is not otherwise added back under this subdivision, any amount withdrawn from the account for any purpose if the withdrawn amount was contributed to the account within 365 days of the day on which the amount was withdrawn from the account and if the withdrawn amount was previously subtracted under par. (b) 32. For purposes of this subd. 26. c., a first in, first out method of accounting shall apply to the account. 27. Except as provided in subd. 28., to the extent that an amount is not included in federal adjusted gross income, any amount withdrawn from a qualified ABLE account described under section 529A (b) (1) of the Internal Revenue Code for any reason other than the payment of qualified disability expenses, as defined in section 529A (e) (5) of the Internal Revenue Code, for the account beneficiary. 28. Upon the termination of an account as described under s. 16.643 or 224.55, any amount in the account that is returned to an account owner’s estate. 29. The amount deducted under the Internal Revenue Code as moving expenses, as defined in s. 71.01 (8j), paid or incurred during the taxable year to move the taxpayer’s Wisconsin business operation, in whole or in part, to a location outside the state or to move the taxpayer’s business operations outside the United States.

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(b) Subtractions. From federal adjusted gross income subtract to the extent included in federal taxable or adjusted gross income unless the modification is an item, other than a capital gain deduction under s. 71.36 or interest on U.S. obligations, that is passed through to an individual from a tax-option corporation and would be included in that corporation’s income if it were not a tax-option corporation: 1. The amount of any interest or dividend income which is by federal law exempt from taxation by this state less the related expense in regard to both the distributable and nondistributable interest and dividend income on a fiduciary return. Cross-reference: See also ss. Tax 3.095 and 3.096, Wis. adm. code.

2. Net income not allocated or apportioned to this state under s. 71.04. 3. Any other amount not subject to taxation under this chapter, less any amount allocable thereto which has been deducted in the computation of federal taxable or adjusted gross income except amounts used to calculate the credit under s. 71.07 (5). Cross-reference: See also s. Tax 3.098, Wis. adm. code.

3m. As provided under s. 71.07 (3s) (c) 7., the amount of the credit under s. 71.07 (3s) that the taxpayer added back to income under s. 71.05 (6) (a) at the time that the taxpayer first claimed the credit. NOTE: Subd. 3m. is repealed eff. 1-1-32 by 2025 Wis. Act 118.

4. Disability payments other than disability payments that are paid from a retirement plan, the payments from which are exempt under sub. (1) (am) and (an), if the individual either is single or is married and files a joint return and is under 65 years of age before the close of the taxable year to which the subtraction relates, retired on disability, and, when the individual retired, was permanently and totally disabled. In this subdivision, “permanently and totally disabled” means an individual who is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. An individual shall not be considered permanently and totally disabled for purposes of this subdivision unless proof is furnished in such form and manner, and at such times, as prescribed by the department. The exclusion under this subdivision shall be determined as follows: a. If the individual is single and the individual’s federal adjusted gross income in the year to which the subtraction relates is less than $20,200, the maximum subtraction is $100 for each week that payments are received or the amount of disability pay reported as income, whichever is less. b. If the individual is married and filing a joint return and the couple’s federal adjusted gross income in the year to which the subtraction relates is less than $20,200, or $25,400 if both spouses are disabled, the maximum subtraction is $100 for each week that payments are received, per spouse if both spouses are disabled, or the amount of disability pay reported as income, whichever is less. c. If the federal adjusted gross income of the individual, or individuals if filing a joint return, for the taxable year, determined without regard to this subdivision, exceeds $15,000, the amount subtracted under this subdivision for the taxable year shall be reduced by an amount equal to the excess of the federal adjusted gross income over $15,000. 5. Any amounts that are recoveries of federal itemized deductions for which no tax benefit was received for Wisconsin purposes. 8. The difference between the amount included in federal adjusted gross income for the current year and the amount calculated under section 85 of the internal revenue code (relating to un-

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employment compensation) as that section existed on December 31, 1985. 9. On assets held more than one year and on all assets acquired from a decedent, 30 percent of the capital gain as computed under the internal revenue code, not including capital gains for which the federal tax treatment is determined under section 406 of P.L. 99-514; not including amounts treated as ordinary income for federal income tax purposes because of the recapture of depreciation or any other reason; and not including amounts treated as capital gain for federal income tax purposes from the sale or exchange of a lottery prize. For purposes of this subdivision, the capital gains and capital losses for all assets shall be netted before application of the percentage. 9m. On farm assets held more than one year and on all farm assets acquired from a decedent, to the extent that they are not subtracted under subd. 9. or 10., 60 percent of the capital gain as computed under the Internal Revenue Code, not including capital gains for which the federal tax treatment is determined under section 406 of P.L. 99-514; not including amounts treated as ordinary income for federal income tax purposes because of the recapture of depreciation or any other reason; and not including amounts treated as capital gain for federal income tax purposes from the sale or exchange of a lottery prize. In this subdivision, “farm assets” means livestock, farm equipment, farm real property, and farm depreciable property. For purposes of this subdivision, the capital gains and capital losses for all assets shall be netted before application of the percentage. NOTE: Subd. 9m. is amended eff. 1-1-35 by 2025 Wis. Act 118 to read: 9m. On farm assets held more than one year and on all farm assets acquired from a decedent, to the extent that they are not subtracted under subd. 9., 60 percent of the capital gain as computed under the Internal Revenue Code, not including capital gains for which the federal tax treatment is determined under section 406 of P.L. 99-514; not including amounts treated as ordinary income for federal income tax purposes because of the recapture of depreciation or any other reason; and not including amounts treated as capital gain for federal income tax purposes from the sale or exchange of a lottery prize. In this subdivision, “farm assets” means livestock, farm equipment, farm real property, and farm depreciable property. For purposes of this subdivision, the capital gains and capital losses for all assets shall be netted before application of the percentage.

10. Farm losses added to income under par. (a) 10. [s. 71.05 (6) (a) 10., 2023 stats.,] in any of the 15 preceding years, to the extent that they are not offset against farm income of any year between the loss year and the taxable year for which the modification under this subdivision is claimed and to the extent that they do not exceed the net profits or net gains from the sale or exchange of capital or business assets in the current taxable year from the same farming business or portion of that business to which the limits on deductible farm losses under par. (a) 10. [s. 71.05 (6) (a) 10., 2023 stats.,] applied in the loss year. NOTE: The correct cross-reference is shown in brackets. Section 71.05 (6) (a) 10. was repealed by 2025 Wis. Act 118. Corrective legislation is pending. NOTE: Subd. 10. is repealed eff. 1-1-35 by 2025 Wis. Act 118.

12. Any amount recognized as a gain under section 1001 (c) of the Internal Revenue Code if a surviving spouse and a distributee exchange their interests in marital property under s. 766.31 (3) (b). 19. For taxable years beginning on or after January 1, 1995, an amount paid by a self-employed person for medical care insurance for the person, his or her spouse and the person’s dependents, calculated as follows: a. One hundred percent of the amount paid by the person for medical care insurance, not including any amount that is paid with a premium assistance credit amount under 26 USC 36B. In this subdivision, “medical care insurance” means a medical care insurance policy that covers the person, his or her spouse and the person’s dependents and provides surgical, medical, hospital, major medical or other health service coverage, and includes payments made for medical care benefits under a self-insured plan,

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but “medical care insurance” does not include hospital indemnity policies or policies with ancillary benefits such as accident benefits or benefits for loss of income resulting from a total or partial inability to work because of illness, sickness or injury. b. From the amount calculated under subd. 19. a., subtract the amounts deducted from gross income for medical care insurance in the calculation of federal adjusted gross income. c. For taxable years beginning before January 1, 2021, for a person who is a nonresident or a part-year resident of this state, modify the amount calculated under subd. 19. b. by multiplying the amount by a fraction the numerator of which is the person’s net earnings from a trade or business that are taxable by this state and the denominator of which is the person’s total net earnings from a trade or business. cm. For taxable years beginning after December 31, 2020, for a person who is a nonresident or a part-year resident of this state, modify the amount calculated under subd. 19. b. by multiplying the amount by a fraction the numerator of which is the person’s wages, salary, tips, unearned income, and net earnings from a trade or business that are taxable by this state and the denominator of which is the person’s total wages, salary, tips, unearned income, and net earnings from a trade or business. In this subd. 19. cm., for married persons filing separately “wages, salary, tips, unearned income, and net earnings from a trade or business” means the separate wages, salary, tips, unearned income, and net earnings from a trade or business of each spouse, and for married persons filing jointly “wages, salary, tips, unearned income, and net earnings from a trade or business” means the total wages, salary, tips, unearned income, and net earnings from a trade or business of both spouses. d. For taxable years beginning before January 1, 2021, reduce the amount calculated under subd. 19. b. or c. to the person’s aggregate net earnings from a trade or business that are taxable by this state. dm. For taxable years beginning after December 31, 2020, reduce the amount calculated under subd. 19. b. or cm. to the person’s aggregate wages, salary, tips, unearned income, and net earnings from a trade or business that are taxable by this state. 21. For taxable years beginning after December 31, 2007, the amount of social security benefits included in federal adjusted gross income under section 86 of the Internal Revenue Code. 22. a. For taxable years beginning after December 31, 1995, and before January 1, 2025, an amount up to $5,000 that is expended during the period that consists of the year to which the claim relates and the prior 2 taxable years, by a full-year resident of this state who is an adoptive parent, for adoption fees, court costs or legal fees relating to the adoption of a child, for whom a final order of adoption has been entered under s. 48.91 (3) or by an order of a court of any other state, or upon registration of a foreign adoption under s. 48.97 (2), during the taxable year. b. For taxable years beginning after December 31, 2024, an amount up to $15,000 that is expended during the period that consists of the year to which the claim relates and the prior 2 taxable years, by a full-year resident of this state who is an adoptive parent, for adoption fees, court costs, or legal fees relating to the adoption of a child, for whom a final order of adoption has been entered under s. 48.91 (3) or by an order of a court of any other state, or upon registration of a foreign adoption under s. 48.97 (2), during the taxable year. 23. Any increase in value of a tuition unit that is purchased under a tuition contract under s. 224.48, except that the subtraction under this subdivision may not be claimed by any individual who received a refund under s. 224.48 (7) (a) 2., 3. or 4. NOTE: Subd. 23. is repealed eff. 1-1-28 by 2025 Wis. Act 118.

25. All gains that are not excluded from taxation under subd.

May 22, 2026, are designated by NOTES. (Published 5-22-26)

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9., on business assets or on assets used in farming, or both, held more than one year, that are sold or otherwise disposed of to persons who are related to the seller or transferor by blood, marriage or adoption within the 3rd degree of kinship as determined under s. 990.001 (16), as computed under the Internal Revenue Code, not including amounts treated as ordinary income for federal income tax purposes because of the recapture of depreciation or any other reason. For purposes of this subdivision, “assets used in farming” includes any of the following: a. Shares in a corporation or beneficial interest in a trust that meets the standards under s. 182.001 (1). b. Ownership interest in a partnership or limited liability company treated as a partnership under this chapter, if the partnership or limited liability company has 15 or fewer partners or members and all partners or members are natural persons. 26. For taxable years beginning on or after January 1, 1998, an amount paid by a person for a long-term care insurance policy for the person and his or her spouse, calculated as follows: a. One hundred percent of the amount paid by the person for a long-term care insurance policy. In this subdivision, “long-term care insurance policy” means a disability insurance policy or certificate advertised, marketed, offered or designed primarily to provide coverage for care that is provided in the insured person’s home or in institutional and community-based settings and that is convalescent or custodial care or care for a chronic condition or terminal illness; the term does not include a medicare supplement policy or medicare replacement policy or a continuing care contract, as defined in s. 647.01 (2). “Long-term care insurance policy” applies to a policy that covers the person and his or her spouse. b. From the amount calculated under subd. 26. a., subtract the amounts deducted from gross income for a long-term care insurance policy in the calculation of federal adjusted gross income. c. For a person who is a nonresident or a part-year resident of this state, modify the amount calculated under subd. 26. b. by multiplying the amount by a fraction the numerator of which is the person’s wages, unearned income and net earnings from a trade or business that are taxable by this state and the denominator of which is the person’s total wages, unearned income and net earnings from a trade or business. d. Reduce the amount calculated under subd. 26. b. or c. to the person’s aggregate wages, unearned income and net earnings from a trade or business that are taxable by this state. 28. An amount paid by a claimant for tuition expenses and mandatory student fees for a student who is the claimant or who is the claimant’s child and the claimant’s dependent, as defined under section 152 of the Internal Revenue Code, to attend any university, college, technical college or a school approved under s. 440.52, that is located in Wisconsin or to attend a public vocational school or public institution of higher education in Minnesota under a reciprocity agreement under s. 36.27 (2r) or 39.47, calculated as follows: a. Subject to subd. 28. am., an amount equal to $6,000 per student for each year to which the claim relates. am. Notwithstanding subd. 28. a., for taxable years beginning after December 31, 2008, the department of revenue and the Board of Regents of the University of Wisconsin System shall continue making the calculation described under subd. 28. a. Notwithstanding subd. 28. a., once this calculation exceeds $6,000, the deduction for tuition expenses and mandatory student fees, as described in subd. 28. (intro.), shall be based on an amount equal to not more than twice the average amount charged by the Board of Regents of the University of Wisconsin System at 4-year institutions for resident undergraduate academic fees for

Updated 23-24 Wis. Stats.

the most recent fall semester, as determined by the Board of Regents by September 1 of that semester, per student for each year to which the claim relates, and the deduction that may be claimed under this subd. 28. am. first applies to taxable years beginning on the January 1 after the calculation of the Board of Regents, that must occur by September 1, exceeds $6,000. b. From the amount calculated under subd. 28. a. or am., if the claimant is single or married and filing as head of household and his or her federal adjusted gross income is more than $50,000 but not more than $60,000, subtract the product of the amount calculated under subd. 28. a. or am. and the value of a fraction, the denominator of which is $10,000 and the numerator of which is the difference between the claimant’s federal adjusted gross income and $50,000. c. From the amount calculated under subd. 28. a. or am., if the claimant is married and filing jointly and the claimant’s and his or her spouse’s federal adjusted gross income is more than $80,000 but not more than $100,000, subtract the product of the amount calculated under subd. 28. a. or am. and the value of a fraction, the denominator of which is $20,000 and the numerator of which is the difference between the claimant’s and his or her spouse’s federal adjusted gross income and $80,000. d. From the amount calculated under subd. 28. a. or am., if the claimant is married and filing separately and the claimant’s federal adjusted gross income is more than $40,000 but not more than $50,000, subtract the product of the amount calculated under subd. 28. a. or am. and the value of a fraction, the denominator of which is $10,000 and the numerator of which is the difference between the claimant’s federal adjusted gross income and $40,000. e. For an individual who is a nonresident or part-year resident of this state, multiply the amount calculated under subd. 28. a., am., b., c. or d. by a fraction the numerator of which is the individual’s wages, salary, tips, unearned income and net earnings from a trade or business that are taxable by this state and the denominator of which is the individual’s total wages, salary, tips, unearned income and net earnings from a trade or business. In this subd. 28. e., for married persons filing separately “wages, salary, tips, unearned income and net earnings from a trade or business” means the separate wages, salary, tips, unearned income and net earnings from a trade or business of each spouse, and for married persons filing jointly “wages, salary, tips, unearned income and net earnings from a trade or business” means the total wages, salary, tips, unearned income and net earnings from a trade or business of both spouses. f. Reduce the amount calculated under subd. 28. a., am., b., c., d. or e. to the individual’s aggregate wages, salary, tips, unearned income and net earnings from a trade or business that are taxable by this state. g. No modification may be claimed under this subdivision by a claimant who is single or married and filing as head of household if the claimant’s federal adjusted gross income is more than $60,000, by a claimant who is married and filing jointly if the claimant’s and his or her spouse’s federal adjusted gross income is more than $100,000 or by a claimant who is married and filing separately if the claimant’s federal adjusted gross income is more than $50,000. h. No modification may be claimed under this subdivision for an amount paid for tuition expenses and mandatory student fees, as described under this subdivision, if the source of the payment is an amount withdrawn from a college savings account, as described in s. 224.50, and if the owner of the account or another individual who contributed to the account has claimed a deduction under subd. 32. that relates to such an amount. i. For taxable years beginning after December 31, 2012, the

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dollar amounts in subd. 28. b., c., d., and g. shall be increased each year by a percentage equal to the percentage change between the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August of the previous year and the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August 2011, as determined by the federal department of labor, except that the adjustment may occur only if the resulting amount is greater than the corresponding amount that was calculated for the previous year. Each amount that is revised under this subd. 28. i. shall be rounded to the nearest multiple of $10 if the revised amount is not a multiple of $10 or, if the revised amount is a multiple of $5, such an amount shall be increased to the next higher multiple of $10. The department of revenue shall annually adjust the changes in dollar amounts required under this subd. 28. i. and incorporate the changes into the income tax forms and instructions. 29. The amount claimed as a federal miscellaneous itemized deduction under the Internal Revenue Code for repayment of an amount included in income in a previous year to the extent that the repayment was previously included in Wisconsin adjusted gross income, except that no amount that is used in calculating the credit under s. 71.07 (1) may be included in the calculation under this subdivision. 30. For taxable years beginning after December 31, 1998, any settlement received for claims against any person for any recovered assets, or any amount of assets or any gain generated on such assets, that were stolen from, hidden from or otherwise lost by an individual who was persecuted by Nazi Germany or any Axis regime during any period from 1933 to 1945 and have been recovered, returned or otherwise paid to the original victim or his or her heirs or beneficiaries. The assets to which this subdivision applies includes cash, bonds, stocks, deposits in a financial institution, proceeds from a life or other type of insurance policy, jewelry, precious metals, artwork or any other item of value owned by such a victim during any period from 1920 to 1945. 31. Any increase in value of a college savings account, as described in s. 224.50, except that the subtraction under this subdivision may not be claimed by any individual who has made a nonqualified withdrawal, as described in s. 224.50 (2) (e). 32. An amount paid into a college savings account, as described in s. 224.50, in the taxable year in which the contribution is made or on or before the 15th day of the 4th month beginning after the close of a taxpayer’s taxable year to which this subtraction relates, by the owner of the account or by any other individual, for the benefit of any beneficiary of an account, calculated as follows, except that each amount that is subtracted under this subdivision may be subtracted only once: a. Except as otherwise provided in this subdivision, an amount equal to not more than $5,000 per beneficiary, by each contributor, or $2,500 by each contributor who is married and files separately, to an account for each year to which the claim relates. For taxable years beginning after December 31, 2024, the dollar amounts in this subd. 32. a. shall be increased each year by a percentage equal to the percentage change between the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August of the previous year and the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August 2023, as determined by the federal department of labor, except that the adjustment may occur only if the resulting amount is greater than the corresponding amount that was calculated for the previous year. Each amount that is revised under this subd. 32. a. shall be rounded to the nearest multiple of $10 if the revised amount is not a multiple of $10 or, if the revised amount is a multiple of $5, such an amount shall be increased to the next higher multiple of $10. The department of revenue shall annually adjust the changes in dollar amounts required under this

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subd. 32. a. and incorporate the changes into the income tax forms and instructions. Any amount that is paid into an account under this subdivision that exceeds the maximum amount that may be subtracted under this subdivision may be carried forward to the next taxable year, and thereafter, subject to the limitations in this subdivision. ae. No carry-over that would otherwise be authorized under this subdivision may be allowed if the carry-over amount was withdrawn from an account for any purpose and the withdrawal occurred within 365 days of the day on which the amount was contributed to the account. For purposes of this subd. 32. ae., a first in, first out method of accounting shall apply to the account. am. Any carry-over amount that is otherwise eligible for a subtraction under this subdivision shall be reduced by an amount equal to the amount of a withdrawal from an account that was not used for qualified higher education expenses, as defined in 26 USC 529 (c) (7), (8), and (9) and (e) (3), to the extent that the withdrawn amount exceeds the amount that is added to income under par. (a) 26. ap. No subtraction may be allowed under this subdivision for any amount contributed to an account for which a credit is claimed under s. 71.07 (10), 71.28 (10), or 71.47 (10). b. For an individual who is a nonresident or part-year resident of this state, multiply the amount calculated under subd. 32. a. by a fraction the numerator of which is the individual’s wages, salary, tips, unearned income and net earnings from a trade or business that are taxable by this state and the denominator of which is the individual’s total wages, salary, tips, unearned income and net earnings from a trade or business. In this subd. 32. b., for married persons filing separately “wages, salary, tips, unearned income and net earnings from a trade or business” means the separate wages, salary, tips, unearned income and net earnings from a trade or business of each spouse, and for married persons filing jointly “wages, salary, tips, unearned income and net earnings from a trade or business” means the total wages, salary, tips, unearned income and net earnings from a trade or business of both spouses. c. Reduce the amount calculated under subd. 32. a. or b. to the individual’s aggregate wages, salary, tips, unearned income and net earnings from a trade or business that are taxable by this state. 32m. Consistent with the limitations specified in subd. 32., for rollovers occurring after April 15, 2015, any principal amount rolled over to a college savings account, as described in s. 224.50, from another state’s qualified tuition program, as described in 26 USC 529 (c) (3) (C) (i). Amounts eligible for the subtraction under this subdivision that are in excess of the annual limits specified under subd. 32. may be carried forward to future taxable years of the taxpayer without limitation, other than the limits specified in subd. 32. ae. and am. 34. Any amount of basic, special, and incentive pay income or compensation, as those terms are used in 37 USC chapters 3 and 5, received from the federal government by a person who is a member of a reserve component of the U.S. armed forces, after being called into active federal service under the provisions of 10 USC 12302 (a), 10 USC 12304, or 10 USC 12304b, or into special state service authorized by the federal department of defense under 32 USC 502 (f), that is paid to the person for a period of time during which the person is on active duty. 35. For taxable years beginning after December 31, 2005, an amount paid by an individual who is the employee of another person if the individual’s employer pays no amount of money toward the individual’s medical care insurance, for medical care insurance for the individual, his or her spouse, and the individual’s dependents, calculated as follows:

May 22, 2026, are designated by NOTES. (Published 5-22-26)

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INCOME AND FRANCHISE TAXES

a. One hundred percent of the amount paid by the individual for medical care insurance, not including any amount that is paid with a premium assistance credit amount under 26 USC 36B. In this subdivision, “medical care insurance” means a medical care insurance policy that covers the individual, his or her spouse, and the individual’s dependents and provides surgical, medical, hospital, major medical, or other health service coverage, and includes payments made for medical care benefits under a self-insured plan, but “medical care insurance” does not include hospital indemnity policies or policies with ancillary benefits such as accident benefits or benefits for loss of income resulting from a total or partial inability to work because of illness, sickness, or injury. b. From the amount calculated under subd. 35. a., subtract the amounts deducted from gross income for medical care insurance in the calculation of federal adjusted gross income. c. For an individual who is a nonresident or part-year resident of this state, multiply the amount calculated under subd. 35. a. or b., by a fraction the numerator of which is the individual’s wages, salary, tips, unearned income, and net earnings from a trade or business that are taxable by this state and the denominator of which is the individual’s total wages, salary, tips, unearned income, and net earnings from a trade or business. In this subd. 35. c., for married persons filing separately “wages, salary, tips, unearned income, and net earnings from a trade or business” means the separate wages, salary, tips, unearned income, and net earnings from a trade or business of each spouse, and for married persons filing jointly “wages, salary, tips, unearned income, and net earnings from a trade or business” means the total wages, salary, tips, unearned income, and net earnings from a trade or business of both spouses. d. Reduce the amount calculated under subd. 35. a., b., or c. to the individual’s aggregate wages, salary, tips, unearned income, and net earnings from a trade or business that are taxable by this state. 38. For taxable years beginning after December 31, 2010, an amount paid by an individual, other than a person to whom subd. 19. applies, who has no employer and no self-employment income, for medical care insurance for the individual, his or her spouse, and the individual’s dependents, calculated as follows: a. One hundred percent of the amount paid by the individual for medical care insurance, not including any amount that is paid with a premium assistance credit amount under 26 USC 36B. In this subdivision, “medical care insurance” means a medical care insurance policy that covers the individual, his or her spouse, and the individual’s dependents and provides surgical, medical, hospital, major medical, or other health service coverage, and includes payments made for medical care benefits under a self-insured plan, but “medical care insurance” does not include hospital indemnity policies or policies with ancillary benefits such as accident benefits or benefits for loss of income resulting from a total or partial inability to work because of illness, sickness, or injury. b. From the amount calculated under subd. 38. a., subtract the amounts deducted from gross income for medical care insurance in the calculation of federal adjusted gross income. c. For an individual who is a nonresident or part-year resident of this state, multiply the amount calculated under subd. 38. a. or b., by a fraction the numerator of which is the individual’s wages, salary, tips, unearned income, and net earnings from a trade or business that are taxable by this state and the denominator of which is the individual’s total wages, salary, tips, unearned income, and net earnings from a trade or business. In this subd. 38. c., for married persons filing separately “wages, salary, tips, unearned income, and net earnings from a trade or business”

Updated 23-24 Wis. Stats.

means the separate wages, salary, tips, unearned income, and net earnings from a trade or business of each spouse, and for married persons filing jointly “wages, salary, tips, unearned income, and net earnings from a trade or business” means the total wages, salary, tips, unearned income, and net earnings from a trade or business of both spouses. d. Reduce the amount calculated under subd. 38. a., b., or c. to the individual’s aggregate wages, salary, tips, unearned income, and net earnings from a trade or business that are taxable by this state. 42. For taxable years beginning after December 31, 2012, an amount paid by an individual who is the employee of another person, if the individual’s employer pays a portion of the cost of the individual’s medical care insurance, for medical care insurance for the individual, his or her spouse, and the individual’s dependents, calculated as follows: a. One hundred percent of the amount paid by the individual for medical care insurance, not including any amount that is paid with a premium assistance credit amount under 26 USC 36B. In this subdivision, “medical care insurance” means a medical care insurance policy that covers the individual, his or her spouse, and the individual’s dependents and provides surgical, medical, hospital, major medical, or other health service coverage, and includes payments made for medical care benefits under a self-insured plan, but “medical care insurance” does not include hospital indemnity policies or policies with ancillary benefits such as accident benefits or benefits for loss of income resulting from a total or partial inability to work because of illness, sickness, or injury. b. From the amount calculated under subd. 42. a., subtract the amounts deducted from gross income for medical care insurance in the calculation of federal adjusted gross income. c. For an individual who is a nonresident or part-year resident of this state, multiply the amount calculated under subd. 42. a. or b., by a fraction the numerator of which is the individual’s wages, salary, tips, unearned income, and net earnings from a trade or business that are taxable by this state and the denominator of which is the individual’s total wages, salary, tips, unearned income, and net earnings from a trade or business. In this subd. 42. c., for married persons filing separately “wages, salary, tips, unearned income, and net earnings from a trade or business” means the separate wages, salary, tips, unearned income, and net earnings from a trade or business of each spouse, and for married persons filing jointly “wages, salary, tips, unearned income, and net earnings from a trade or business” means the total wages, salary, tips, unearned income, and net earnings from a trade or business of both spouses. d. Reduce the amount calculated under subd. 42. a., b., or c. to the individual’s aggregate wages, salary, tips, unearned income, and net earnings from a trade or business that are taxable by this state. 43. Subject to subd. 43. e. and f., the allowable amount specified in subd. 43. d. of employment-related expenses claimed by the claimant under section 21 of the Internal Revenue Code in the taxable year to which that claim relates: d. For taxable years beginning after December 31, 2013, and before January 1, 2022, up to $3,000 if the claimant has one qualified individual and up to $6,000 if the claimant has more than one qualified individual. e. A claimant who claims the subtraction under this subdivision is subject to the special rules in 26 USC 21 (e) (2) and (4). f. An individual who is a nonresident or part-year resident of this state and who claims the subtraction under this subdivision shall multiply the amount calculated under subd. 43. d. by a fraction the numerator of which is the individual’s wages, salary, tips,

May 22, 2026, are designated by NOTES. (Published 5-22-26)

Updated 23-24 Wis. Stats.

unearned income, and net earnings from a trade or business that are taxable by this state and the denominator of which is the individual’s total wages, salary, tips, unearned income, and net earnings from a trade or business. In this subd. 43. f., for married persons filing separately “wages, salary, tips, unearned income, and net earnings from a trade or business” means the separate wages, salary, tips, unearned income, and net earnings from a trade or business of each spouse, and for married persons filing jointly “wages, salary, tips, unearned income, and net earnings from a trade or business” means the total wages, salary, tips, unearned income, and net earnings from a trade or business of both spouses. NOTE: Subd. 43. is repealed eff. 1-1-28 by 2025 Wis. Act 118, section 67.

45. An amount added to federal adjusted gross income under par. (a) 24., to the extent that the conditions under s. 71.80 (23) are satisfied. 46. An amount added, pursuant to par. (a) 24. or s. 71.26 (2) (a) 7., 71.34 (1k) (j), or 71.45 (2) (a) 16., to the federal income of a related entity that paid interest expenses, rental expenses, intangible expenses, or management fees to the individual or fiduciary, to the extent that the related entity could not offset such amount with the deduction allowable under subd. 45. or s. 71.26 (2) (a) 8., 71.34 (1k) (k), or 71.45 (2) (a) 17. 48. For taxable years that begin after December 31, 2012, any amount of basic, special, or incentive pay income, as those terms are used in 37 USC chapters 3 and 5, received from the federal government by an individual who is on active duty in the U.S. armed forces, as defined in 26 USC 7701 (a) (15), and who dies while on active duty if the individual’s death occurred while he or she was serving in a combat zone or as a result of wounds, disease, or injury incurred while serving in a combat zone. The subtraction in this subdivision applies to the basic, special, or incentive pay income that is received by the individual in the year in which he or she dies, and in the year immediately preceding that year if the individual has not filed a return for the year before the year in which he or she dies. 48m. For taxable years that begin after December 31, 2012, any amount of income received by an individual who is on active duty in the U.S. armed forces, as defined in 26 USC 7701 (a) (15), and who dies while on active duty if the individual’s death occurred while he or she was serving in a combat zone or as a result of wounds, disease, or injury incurred while serving in a combat zone. The subtraction in this subdivision applies to the income that is received by the individual in the year in which he or she dies, and in the year immediately preceding that year if the individual has not filed a return for the year before the year in which he or she dies. 49. a. Subject to the definitions provided in subd. 49. b. to g. and the limitations specified in subd. 49. h. to j. for taxable years beginning after December 31, 2013, and subject to the limitation in subd. 49. k. for taxable years beginning after December 31, 2017, tuition expenses that are paid by a claimant for tuition for a pupil to attend an eligible institution. b. In this subdivision, “claimant” means an individual who claims a pupil as a dependent, as defined under section 152 of the Internal Revenue Code, on his or her tax return. c. In this subdivision, “elementary pupil” means an individual who is enrolled in grades kindergarten to 8 at an eligible institution. d. In this subdivision, “eligible institution” means a private school, as defined in s. 115.001 (3r), that meets all of the criteria under s. 118.165 (1). e. In this subdivision, “pupil” means an elementary pupil or secondary pupil.

INCOME AND FRANCHISE TAXES

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f. In this subdivision, “secondary pupil” means an individual who is enrolled in grades 9 to 12 at an eligible institution. g. In this subdivision, “tuition” means any amount paid by a claimant, in the year to which the claim relates, for a pupil’s tuition to attend an eligible institution. h. For each elementary pupil, in each year to which the claim relates, the maximum amount of tuition expenses which a claimant may subtract under this subdivision in a taxable year is $4,000. i. For each secondary pupil, in each year to which the claim relates, the maximum amount of tuition expenses which a claimant may subtract under this subdivision in a taxable year is $10,000. j. If an individual is an elementary pupil and a secondary pupil in the same taxable year, the claimant may claim the subtraction under this subdivision for only one grade for that pupil for that taxable year. k. For taxable years beginning after December 31, 2017, no modification may be claimed under this subdivision for an amount paid for tuition expenses, as described under this subdivision, if the source of the payment is an amount withdrawn from a college savings account, as described in s. 224.50. 51. For taxable years beginning after December 31, 2013, any amount received by a physician or psychiatrist, in the taxable year to which the subtraction relates, from the primary care and psychiatry shortage grant program under s. 39.385. 52. Subject to the limits under section 529A (b) (2) of the Internal Revenue Code, any amount that is deposited by an account owner or any other person for the taxable year in which the contribution is made into an ABLE account described under section 529A (b) (1) of the Internal Revenue Code. The subtraction under this subdivision does not apply to rollover contributions or transfers. 53. The value of any Olympic, Paralympic, or Special Olympics medal won by an individual in an Olympic, Paralympic, or Special Olympics competition, and the amount of any payment such an individual receives from the U.S. Olympic Committee or from the Special Olympics Board of Directors, but only to the extent that the committee made the payment because the individual won an Olympic, Paralympic, or Special Olympics medal. 54. Except for a payment that is exempt under sub. (1) (a), (am), or (an), or that is exempt as a railroad retirement benefit, and except as provided under subds. 54m. and 54mn., for taxable years beginning after December 31, 2020, up to $5,000 of payments or distributions received each year by an individual from a qualified retirement plan under the Internal Revenue Code or from an individual retirement account established under 26 USC 408, if all of the following conditions apply: a. The individual is at least 65 years of age before the close of the taxable year to which the exemption claim relates. b. If the individual is single or files as head of household, his or her federal adjusted gross income in the year to which the exemption claim relates is less than $15,000. c. If the individual is married and is a joint filer, the couple’s federal adjusted gross income in the year to which the exemption claim relates is less than $30,000. d. If the individual is married and files a separate return, the sum of both spouses’ federal adjusted gross income in the year to which the exemption claim relates is less than $30,000. 54m. a. Except for a payment that is exempt under sub. (1) (a), (am), or (an), or that is exempt as a railroad retirement benefit, and except as provided under subd. 54mn., for taxable years beginning after December 31, 2024, the amount, up to the limit specified in subd. 54m. b. or c., whichever is applicable, of the

May 22, 2026, are designated by NOTES. (Published 5-22-26)

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INCOME AND FRANCHISE TAXES

payments or distributions received each year from a qualified retirement plan under the Internal Revenue Code or from an individual retirement account established under 26 USC 408. b. If the individual is at least 67 years of age before the close of the taxable year to which the subtraction relates, the amount claimed by the individual under this subdivision may not exceed $24,000 for that taxable year. c. If the individual is married and is a joint filer, and both spouses are at least 67 years of age before the close of the taxable year to which the subtraction relates, the total amount claimed by the spouses under this subdivision may not exceed $48,000 for that taxable year. d. An individual who claims the subtraction under this subdivision for a taxable year may not claim any credit listed under s.