2023 - 2024 LEGISLATURE
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2023 SENATE BILL 406
September 8, 2023 - Introduced by Senator BALLWEG, cosponsored by
Representatives KRUG, BRANDTJEN, BROOKS, GUSTAFSON, MURSAU,
ORTIZ-VELEZ, STEFFEN, SUBECK and TUSLER. Referred to Committee on
Universities and Revenue.
1 AN ACT to amend 71.05 (1) (an) and 71.83 (1) (a) 6. of the statutes; relating to:
2 exempting from taxation certain pension payments received by an individual
3 for service in the U.S. Foreign Service.
Analysis by the Legislative Reference Bureau
This bill exempts from taxation all retirement payments received from the
federal government that relate to service with the U.S. Foreign Service, provided
that such payments are not already exempt from taxation. Currently, the pension
benefits of certain public employees are exempt from state taxation. The pensions
that are exempt include payments received from the U.S. Civil Service Retirement
System, the U.S. military employee retirement system, the Milwaukee city and
county retirement systems, the Milwaukee public school teachers' retirement fund,
the Wisconsin state teachers' retirement fund, and the sheriff 's annuity and benefit
fund of Milwaukee County. For most of these pension plans, the exemption applies
only to persons who were members of or retired from the plans as of December 31,
1963, although this limitation does not apply to retirement payments received from
the U.S. military employee retirement system or from payments received from the
federal government that relate to service with the U.S. Coast Guard, the
commissioned corps of the National Oceanic and Atmospheric Administration, or the
commissioned corps of the U.S. Public Health Service. Similarly, the limitation does
not apply to the exemption created in this bill for the Foreign Service Pension
System.
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SENATE BILL 406
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.
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) (an) of the statutes is amended to read:
2 71.05 (1) (an) Uniformed services, foreign service, retirement benefits. All
3 retirement payments received from the U.S. government that relate to service with
4 the coast guard, the commissioned corps of the national oceanic and atmospheric
5 administration, or the commissioned corps of the public health service, or the foreign
6 service, to the extent that such payments are not exempt under par. (a) or (am) or sub.
7 (6) (b) 54.
8 SECTION 2. 71.83 (1) (a) 6. of the statutes is amended to read:
9 71.83 (1) (a) 6. `Retirement plans.' Any natural person who is liable for a
10 penalty for federal income tax purposes under section 72 (m) (5), (q), (t), and (v), 4973,
11 4974, 4975, or 4980A of the Internal Revenue Code is liable for 33 percent of the
12 federal penalty unless the income received is exempt from taxation under s. 71.05
13 (1) (a), (am), or (an) or (6) (b) 54. The penalties provided under this subdivision shall
14 be assessed, levied, and collected in the same manner as income or franchise taxes.
15 SECTION 3.0Initial applicability.
16 (1) This act first applies to taxable years beginning on January 1 of the year
17 in which this subsection takes effect, except that if this subsection takes effect after
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SENATE BILL 406 SECTION 3
1 July 31, this act first applies to taxable years beginning on January 1 of the year
2 following the year in which this subsection takes effect.
3 (END)


Statutes affected:
Bill Text: 71.05(1)(an), 71.05, 71.83(1)(a)6, 71.83