2023 - 2024 LEGISLATURE
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2023 ASSEMBLY BILL 384
August 11, 2023 - Introduced by Representatives STEFFEN, MYERS, ALLEN,
ARMSTRONG, BEHNKE, BINSFELD, BRANDTJEN, DONOVAN, DUCHOW, EDMING,
GOEBEN, GREEN, GUNDRUM, GUSTAFSON, KITCHENS, MACCO, MAGNAFICI, MAXEY,
MURSAU, O'CONNOR, ORTIZ-VELEZ, ROZAR, SCHMIDT, SCHRAA, TITTL, WICHGERS,
WITTKE, MURPHY and RETTINGER, cosponsored by Senators CABRAL-GUEVARA,
WANGGAARD, TAYLOR and QUINN. Referred to Committee on Ways and Means.
1 AN ACT to amend 71.05 (1) (am), 71.05 (1) (an), 71.05 (6) (b) 4. (intro.), 71.05 (6)
2 (b) 54. (intro.) and 71.83 (1) (a) 6.; and to create 71.05 (6) (b) 54m. and 71.05
3 (6) (b) 54mn. of the statutes; relating to: an increase and expansion of the
4 retirement income subtraction.
Analysis by the Legislative Reference Bureau
This bill increases and expands the individual state income tax subtraction for
payments or distributions received from qualified retirement plans under the
Internal Revenue Code or from certain individual retirement accounts. Under the
bill, beginning in tax year 2024, up to $100,000 of payments or distributions received
from qualified retirement plans or certain individual retirement accounts may be
subtracted annually from an individual's taxable income, if the individual is at least
67 years of age. If the individual and individual's spouse are both at least 67 years
of age, the sum of the amount that the couple may subtract annually from their
combined taxable income may not exceed $150,000.
Under current law, up to $5,000 of payments or distributions received by
certain individuals from qualified retirement plans or from certain individual
retirement accounts may be subtracted. To be eligible, the individual must be at least
65 years old and have federal adjusted gross income under $15,000, or under $30,000
if married.
Because this bill relates to an exemption from state or local taxes, it may be
referred to the Joint Survey Committee on Tax Exemptions for a report to be printed
as an appendix to the bill.
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ASSEMBLY BILL 384
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
1 SECTION 1. 71.05 (1) (am) of the statutes is amended to read:
2 71.05 (1) (am) Military retirement systems. All retirement payments received
3 from the U.S. military employee retirement system, to the extent that such payments
4 are not exempt under par. (a) or sub. (6) (b) 54., 54m., or 54mn.
5 SECTION 2. 71.05 (1) (an) of the statutes is amended to read:
6 71.05 (1) (an) Uniformed services retirement benefits. All retirement payments
7 received from the U.S. government that relate to service with the coast guard, the
8 commissioned corps of the national oceanic and atmospheric administration, or the
9 commissioned corps of the public health service, to the extent that such payments are
10 not exempt under par. (a) or (am) or sub. (6) (b) 54., 54m., or 54mn.
11 SECTION 3. 71.05 (6) (b) 4. (intro.) of the statutes is amended to read:
12 71.05 (6) (b) 4. (intro.) Disability payments other than disability payments that
13 are paid from a retirement plan, the payments from which are exempt under subd.
14 subds. 54., 54m., and 54mn. and sub. (1) (am) and (an), if the individual either is
15 single or is married and files a joint return and is under 65 years of age before the
16 close of the taxable year to which the subtraction relates, retired on disability, and,
17 when the individual retired, was permanently and totally disabled. In this
18 subdivision, “permanently and totally disabled" means an individual who is unable
19 to engage in any substantial gainful activity by reason of any medically determinable
20 physical or mental impairment that can be expected to result in death or which has
21 lasted or can be expected to last for a continuous period of not less than 12 months.
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ASSEMBLY BILL 384 SECTION 3
1 An individual shall not be considered permanently and totally disabled for purposes
2 of this subdivision unless proof is furnished in such form and manner, and at such
3 times, as prescribed by the department. The exclusion under this subdivision shall
4 be determined as follows:
5 SECTION 4. 71.05 (6) (b) 54. (intro.) of the statutes is amended to read:
6 71.05 (6) (b) 54. (intro.) Except for a payment that is exempt under sub. (1) (a),
7 (am), or (an), or that is exempt as a railroad retirement benefit, and except as
8 provided in subds. 54m. and 54mn., for taxable years beginning after December 31,
9 2020, up to $5,000 of payments or distributions received each year by an individual
10 from a qualified retirement plan under the Internal Revenue Code or from an
11 individual retirement account established under 26 USC 408, if all of the following
12 conditions apply:
13 SECTION 5. 71.05 (6) (b) 54m. of the statutes is created to read:
14 71.05 (6) (b) 54m. Except for a payment that is exempt under sub. (1) (a), (am),
15 or (an), or that is exempt as a railroad retirement benefit, and except as provided
16 under subd. 54mn., for taxable years beginning after December 31, 2023, the
17 amount, as specified in subd. 54m. b., c., or d., whichever is applicable, of the
18 payments or distributions received each year from a qualified retirement plan under
19 the Internal Revenue Code or from an individual retirement account established
20 under 26 USC 408, if all of the following conditions apply:
21 a. The individual is at least 67 years of age before the close of the taxable year
22 to which the subtraction relates.
23 b. If the individual is single or files as head of household, the amount claimed
24 by the individual under this subdivision may not exceed $100,000 for that taxable
25 year.
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ASSEMBLY BILL 384 SECTION 5
1 c. If the individual is married and is a joint filer, and both spouses are at least
2 67 years of age before the close of the taxable year to which the subtraction relates,
3 the amount claimed by the individual under this subdivision may not exceed
4 $150,000 for that taxable year.
5 d. If the individual is married and files a separate return, but both spouses are
6 at least 67 years of age before the close of the taxable year to which the subtraction
7 relates, the sum of the amount claimed by the spouses as a subtraction under this
8 subdivision may not exceed $150,000 for that taxable year.
9 e. The individual has not claimed any credit under s. 71.07.
10 SECTION 6. 71.05 (6) (b) 54mn. of the statutes is created to read:
11 71.05 (6) (b) 54mn. For taxable years beginning after December 31, 2023, for
12 an individual who is a nonresident or a part-year resident of this state, the amount
13 that is calculated by multiplying the applicable amount under subd. 54m. b., c., or
14 d. by a fraction the numerator of which is the individual's wages, salary, tips,
15 unearned income, and net earnings from a trade or business that are taxable by this
16 state and the denominator of which is the individual's total wages, salary, tips,
17 unearned income, and net earnings from a trade or business.
18 SECTION 7. 71.83 (1) (a) 6. of the statutes is amended to read:
19 71.83 (1) (a) 6. `Retirement plans.' Any natural person who is liable for a
20 penalty for federal income tax purposes under section 72 (m) (5), (q), (t), and (v), 4973,
21 4974, 4975, or 4980A of the Internal Revenue Code is liable for 33 percent of the
22 federal penalty unless the income received is exempt from taxation under s. 71.05
23 (1) (a) or (6) (b) 54., 54m., or 54mn. The penalties provided under this subdivision
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ASSEMBLY BILL 384 SECTION 7
1 shall be assessed, levied, and collected in the same manner as income or franchise
2 taxes.
3 (END)


Statutes affected:
Bill Text: 71.05(1)(am), 71.05, 71.05(1)(an), 71.05(6)(b)4.(intro.), 71.05(6)(b)54.(intro.), 71.83(1)(a)6, 71.83