Wisconsin Retirees Gain Significant Tax Relief in 2025
Starting with the 2025 tax year, Wisconsin retirees will benefit from a significant income tax cut included in the state’s new budget. Here’s a quick overview of what’s changing and how it may affect your financial planning:
Who Qualifies?
Wisconsin residents age 67 and older
Full-year residents are eligible for the full exemption
Part-year residents may qualify on Wisconsin-sourced income
Nonresidents are not eligible
What’s the Benefit?
Individuals can subtract up to $24,000 of retirement income from state taxes
Married couples filing jointly can subtract up to $48,000 if both spouses are 67+
This is a major increase from the previous limits of $5,000 (individual) and $10,000 (joint).
Effective Date
This exemption applies for the 2025 tax year (returns filed in 2026)
What Income Is Covered?
Withdrawals from IRAs, 401(k)s, pensions
Investment income (interest, dividends, capital gains)
Social Security income (already not taxed in Wisconsin)
Important Considerations
If you claim this exemption, you cannot claim other state tax credits
Review your retirement income sources to see how much qualifies
Consider your residency status, especially if you split time between states
Estimated average savings:
$1,242 for joint filers
$705 for single filers
Update your tax withholding if you expect a lower tax bill
What to Do Next
We recommend reviewing your retirement income sources and tax strategy to determine how these changes may benefit your personal situation. If you have questions or want to schedule a planning session, please reach out. An updated tax plan may help you make the most of this generous new exemption.
Tony Powers, AIF®, CFP®, CRPS® Shareholder
Tony Powers, President of KerberRose Wealth Management, has more than 20 years of experience in the financial services industry. He specializes in helping private and public sector employers set-up and manage their employee retirement plans. Tony provides Fiduciary Services and Support, Plan Design Consultation, Plan Benchmarking and Financial Wellness.