Taxpayers could subtract tips and overtime and receive surplus payments

Individuals could subtract federally defined qualified tips and qualified overtime compensation when calculating Wisconsin income tax. The rules cover claimants with qualified tips or overtime compensation and limit part-year residents and nonresidents to the amounts taxable by Wisconsin. The subtraction would follow the federal definitions in effect for federal tax purposes. For tax years beginning after December 31, 2028, claimants could use the subtraction even when federal law blocks the related federal deduction. The subtraction would apply to tax years beginning after December 31, 2025; the special rule overriding federal limits would apply after December 31, 2028.

The state would issue one-time surplus payments to eligible individual taxpayers. Eligible taxpayers must have filed a Wisconsin individual income tax return for the tax year beginning after December 31, 2023, and before January 1, 2025. The payment would be $600 for a joint return and $300 for other individuals, but it could not exceed the taxpayer’s Wisconsin income tax liability. Dependents would not qualify, and special reductions would apply when a spouse is claimed as another taxpayer’s dependent. Estates would not receive payments, although a surviving spouse could receive the full joint-return amount. Part-year residents and nonresidents would qualify only if at least 90 percent of their total income was taxable by Wisconsin. The Department of Administration would issue payments by September 15, 2026, and taxpayers would have until December 15, 2026, to claim a missing or incomplete payment.

The state would distribute $302.5 million each year to school districts through a per-pupil aid program and provide additional funding for special education and school-age parent programs. The per-pupil payments would go to Wisconsin school districts, while the additional program funding would support programs covered by the state education department’s appropriations. Per-pupil payments would use school enrollment averages and a formula allocating 25 percent based on the previous three school years and 75 percent based on the current and two preceding years. The per-pupil payments would come from the specified state education appropriation. The per-pupil distribution would begin in the 2026-27 school year, with payments scheduled in September, December, March, and June; the additional program funding is listed for fiscal years 2025-26 and 2026-27.

The state would provide technical colleges with an additional $50 million each year. The funding would support the state’s technical college system. The provision states that the amount would be added to the existing amount provided under another funding paragraph. The additional funding would apply to payments in 2027 and each year afterward.