Does Wisconsin Tax Social Security and Retirement Income?

Wisconsin does not tax Social Security

Social Security and railroad retirement benefits are not taxable for Wisconsin. The amount included in federal adjusted gross income is subtracted on the Wisconsin return, with no age test and no income ceiling. Benefits are also left out of the gross income figure that decides whether a retiree has to file a Wisconsin return at all. (Wisconsin Department of Revenue, Publication 106: Wisconsin Tax Information for Retirees (01/26))

Because the subtraction happens before Wisconsin income is totalled, Social Security does not reduce the sliding-scale standard deduction, which is calculated on Wisconsin income rather than federal AGI. A retiree with a large benefit and modest other income can keep most of the standard deduction. (Wisconsin Department of Revenue, 2026 Form 1-ES Instructions (2026 tax rate schedules and standard deduction))

The federal government is a separate matter. Up to 85% of a benefit can be taxed on a federal return once other income passes fixed thresholds, wherever you live. Our taxable Social Security calculator shows how much of yours is counted.

Pensions are taxable, with a $24,000 subtraction from age 67 and full exemptions for military pay

For a full-year resident, pension and annuity income is generally taxable by Wisconsin in the same amount that is taxable federally. This covers private-employer pensions, Wisconsin Retirement System annuities and pensions from other states. The broad relief is the retirement income subtraction described below, which applies from age 67. (Wisconsin Department of Revenue, Publication 106: Wisconsin Tax Information for Retirees (01/26))

All retirement payments from the U.S. military retirement system are exempt from Wisconsin income tax, as are payments for service in the Coast Guard and the commissioned corps of the National Oceanic and Atmospheric Administration and the Public Health Service. There is no cap and no age condition. Survivor Benefit Plan payments are covered as well. (Wisconsin Department of Revenue: Retired Persons, common questions)

A narrower exemption covers retirement benefits received on the account of someone who was a member of the Wisconsin State Teachers Retirement System, certain Milwaukee city and county retirement systems or the federal Civil Service Retirement System as of December 31, 1963. People whose membership began after that date, and Thrift Savings Plan payments, do not qualify. (Wisconsin Department of Revenue: Retired Persons, common questions)

The subtractions for retirement income cannot be applied to benefits that are already exempt. A military retiree of 67 with a second pension from a civilian employer excludes the military pay under its own rule and can apply the $24,000 subtraction to the civilian pension and IRA withdrawals. (Wisconsin Department of Revenue, 2025 Schedule SB Instructions (lines 16 and 17, retirement income subtractions))

IRA and 401(k) withdrawals qualify for the age 67 subtraction

Taxable distributions from traditional IRAs and qualified employer plans flow into Wisconsin income from federal AGI. From the year a person is 67 by December 31, up to $24,000 of federally taxable income from a qualified retirement plan or IRA can be subtracted on Schedule SB, line 16. A married couple filing jointly who are both at least 67 can subtract up to $48,000, regardless of how much of the income each spouse received. (Wisconsin Department of Revenue, 2025 Schedule SB Instructions (lines 16 and 17, retirement income subtractions))

When only one spouse is 67, the subtraction is limited to $24,000 of retirement income, and the statute ties it to the payments that individual received. In our second example household one spouse is 68 and the other 66, so the couple subtract $24,000 rather than $48,000 until the younger spouse reaches 67. (Wisconsin Legislature, 2025 Wisconsin Act 174 (technical changes to the retirement income subtraction))

A Roth conversion is included in federal AGI and is taxable in Wisconsin in the year it is made. For a couple with more than $69,260 of taxable income in 2026, each converted dollar is taxed at 5.3% until taxable income reaches $443,630. Qualified Roth withdrawals are not in federal AGI and so are not Wisconsin income. (Wisconsin Department of Revenue, 2026 Form 1-ES Instructions (2026 tax rate schedules and standard deduction))

To size a conversion against federal brackets and Medicare surcharges, see the Roth conversion calculator; for required withdrawals, the RMD calculator.

30% of long-term capital gains is excluded; interest and dividends are fully taxed

Wisconsin excludes 30% of net capital gain from assets held more than one year, and 60% for qualifying farm assets, on Schedule WD. A capital gain distribution from a mutual fund qualifies. With the exclusion, a long-term gain that falls in the 5.3% bracket is taxed at an effective 3.71%. Net capital losses can offset up to $3,000 of other income a year ($1,500 if married filing separately), as on the federal return. (Wisconsin Department of Revenue, 2025 Schedule WD Instructions (capital gains and losses))

Interest and dividends, including qualified dividends, are taxed at ordinary rates. Interest on U.S. government obligations is subtracted, and the part of a mutual fund dividend that comes from U.S. government securities can be subtracted too. Interest on Ginnie Mae and similar securities that are only guaranteed by the government stays taxable. (Wisconsin Department of Revenue, 2025 Schedule SB Instructions (lines 16 and 17, retirement income subtractions))

Interest from state and municipal bonds that is tax-exempt on the federal return generally has to be added back to Wisconsin income on Schedule AD, line 1. Only specific issues named in the instructions, such as certain Wisconsin housing and redevelopment authority bonds, are exempt for state purposes. (Wisconsin Department of Revenue, 2025 Schedule AD Instructions (additions to income))

The example households on this page do not take the 30% exclusion, because their figures combine long-term gains with qualified dividends and only the gains would qualify. (Wisconsin Department of Revenue, 2025 Schedule WD Instructions (capital gains and losses))

Wisconsin has four brackets. For 2026 the rates for a single filer are 3.5% up to $15,110 of taxable income, 4.4% up to $51,950, 5.3% up to $332,720 and 7.65% above that. For a married couple filing jointly the brackets end at $20,150, $69,260 and $443,630. Most affluent retirees have their last dollars taxed at 5.3%. (Wisconsin Department of Revenue, 2026 Form 1-ES Instructions (2026 tax rate schedules and standard deduction))

The standard deduction is a sliding scale, which is why it is not shown as a single figure above. For 2026 a single filer gets $13,960 if Wisconsin income is $20,119 or less, reduced by 12% of income over $20,120, reaching zero above $136,453. A couple filing jointly get $25,840 up to $29,039 of Wisconsin income, reduced by 19.778% of income over $29,040, reaching zero above $159,690. Our calculations apply the formula directly; the return itself uses a table, so results can differ by a few dollars. (Wisconsin Department of Revenue, 2026 Form 1-ES Instructions (2026 tax rate schedules and standard deduction))

Exemptions are $700 for the filer and $700 for a spouse on a joint return, plus $250 for each of them who is 65 or older. A couple who are both 65 subtract $1,900. These amounts are small next to the standard deduction and do not phase out. (Wisconsin Department of Revenue, 2026 Form 1-ES Instructions (2026 tax rate schedules and standard deduction))

The retirement income subtraction created by 2025 Wisconsin Act 15 first applied to 2025 and is the main age-based break: up to $24,000 per person aged 67 or older, on federally taxable income from qualified retirement plans and IRAs. It does not cover interest, dividends, capital gains or wages, and it has no income limit. (Wisconsin Department of Revenue, 2025 Schedule SB Instructions (lines 16 and 17, retirement income subtractions))

The price is the loss of credits. A person who claims the subtraction may not claim any tax credit on Schedule CR or on Form 1 lines 13 through 20 and 30 through 35 for that year. That means giving up any credit that would otherwise be computed for the year, including amounts that could have been carried forward, and being unable to use credits carried forward from earlier years. (Wisconsin Department of Revenue, 2025 Schedule SB Instructions (lines 16 and 17, retirement income subtractions))

On the 2025 Form 1 those lines are the itemized deduction credit (line 13), the school property tax credit (line 16), the married couple credit (line 18), the credit for net tax paid to another state (line 20), the earned income credit (line 30) and the homestead credit (line 33), among others. (Wisconsin Department of Revenue, 2025 Form 1 Instructions)

An older and smaller subtraction remains for lower-income retirees: up to $5,000 of retirement plan and IRA income for each person 65 or older, available only if federal AGI is less than $15,000, or less than $30,000 for a married couple whether they file jointly or separately. It is claimed on Schedule SB, line 17, and does not restrict credits. (Wisconsin Department of Revenue, Publication 106: Wisconsin Tax Information for Retirees (01/26))

A person 65 or older on December 31 gets the additional $250 personal exemption at every income level. (Wisconsin Department of Revenue, Publication 106: Wisconsin Tax Information for Retirees (01/26))

The same three households appear on every state page, so the figures can be compared across states. Each is a full-year resident taking the standard deduction, with no dependents. The figures are state income tax only: any county, city or school district income tax is described on this page but not added in. Pension income is from a private employer, and IRA figures are taxable withdrawals from traditional accounts. The state tax is our calculation from Wisconsin's published 2026 rules; it is an illustration, not a return.

These households also owe federal income tax, which does not change with the state. The tax bracket calculator and the guide to taxes in retirement cover that side.

Real estate tax rates in Wisconsin vary by municipality, and the Department of Revenue directs people comparing locations to the local treasurer for the rate. The relief the Department describes for retirees comes as credits, some on the property tax bill and some on the income tax return, rather than as an age-based exemption. (Wisconsin Department of Revenue, Publication 106: Wisconsin Tax Information for Retirees (01/26))

Tax Foundation figures drawn from Census data put Wisconsin property taxes at 1.32% of owner-occupied home value in 2024, 10th highest among the states. (Tax Foundation, Property Taxes by State and County, 2026 (comparative figures from Census ACS data))

The lottery and gaming credit appears directly on the property tax bill of a Wisconsin resident’s primary residence. The owner must have used the home as a primary residence on January 1 of the year the taxes are levied and must apply through the county or city treasurer. It cannot be claimed on rental property, vacant land or a second home. (Wisconsin Department of Revenue: Lottery and Gaming Credit, common questions)

The state sales tax rate is 5%. Seventy counties add a 0.5% county tax. Milwaukee County’s rate is 0.9%, and the city of Milwaukee, the only municipality with its own sales tax, adds 2%, so purchases in the city are taxed at 7.9%. (Wisconsin Department of Revenue: Tax Rates, common questions)

The Tax Foundation puts Wisconsin’s average combined state and local rate at 5.72% as of January 2026, 42nd in the country. (Tax Foundation, State and Local Sales Tax Rates, 2026 (comparative figures))

Groceries bought for home preparation of meals and prescription medications are exempt from sales tax, along with newspapers and most magazine subscriptions. (Wisconsin Department of Revenue, Publication 106: Wisconsin Tax Information for Retirees (01/26))

Since October 1, 2025, electricity and natural gas sold for residential use have been exempt from sales tax all year. Before that date the exemption applied only during part of the year. (Wisconsin Department of Revenue, 2025 Tax Update (2025 Wisconsin Act 15 changes))

Wisconsin has no estate tax for anyone dying after December 31, 2007 and no inheritance tax for anyone dying on or after January 1, 1992. An inheritance is generally not income to the person who receives it, although income the estate earns after the death can be passed through to heirs on a Schedule K-1. (Wisconsin Department of Revenue: Estates, Trusts and Fiduciaries, common questions)

There is also no Wisconsin gift tax. Lifetime gifts to children or grandchildren have no state tax consequence, and only the federal estate and gift tax rules apply. (Wisconsin Department of Revenue, Publication 106: Wisconsin Tax Information for Retirees (01/26))

The federal estate tax applies in every state. The estate tax calculator estimates both the federal tax and any state tax.

2025 Wisconsin Act 15, the 2025-27 budget, created the $24,000 retirement income subtraction for people 67 and older starting with tax year 2025. It also raised the income level at which the 4.4% bracket ends, so more income is taxed at 4.4% rather than 5.3%, and set the base year for future inflation adjustments to the brackets. (Wisconsin Department of Revenue, 2025 Tax Update (2025 Wisconsin Act 15 changes))

2025 Wisconsin Act 174, effective April 4, 2026, made technical corrections to the subtraction. The statute now says plainly that both spouses on a joint return who are 67 may claim up to $48,000 in total regardless of which of them received the income, that a claimant may not use any credit including carryovers, and that a part-year resident’s limit is $24,000 multiplied by the share of their income that is taxable by Wisconsin. Nonresidents cannot claim it. (Wisconsin Legislature, 2025 Wisconsin Act 174 (technical changes to the retirement income subtraction))

The 2026 bracket thresholds, standard deduction amounts and phase-out points on this page come from the Department of Revenue’s 2026 estimated tax instructions. The retirement subtraction rules are taken from the 2025 Schedule SB instructions and the statute as amended; the 2026 Schedule SB had not been checked for this page, and the $24,000 and $48,000 limits are fixed in the statute rather than indexed. (Wisconsin Department of Revenue, 2026 Form 1-ES Instructions (2026 tax rate schedules and standard deduction))

Wisconsin taxes residents on the basis of domicile, the true, fixed and permanent home to which a person intends to return when absent. Domicile changes only when a person intends to abandon the old home and takes actions consistent with that, intends to acquire a new one and acts on that too, and is physically present in the new place. Spending the winter in Arizona or Florida does not by itself meet that test. (Wisconsin Department of Revenue, 2025 Form 1 Instructions)

Anyone domiciled in another state at any time during the year files Form 1NPR instead of Form 1, as does a couple filing jointly when either spouse was. Part-year residents and nonresidents prorate the standard deduction, the exemptions and the bracket thresholds by the ratio of Wisconsin income to federal AGI. (Wisconsin Department of Revenue, 2026 Form 1-ES Instructions (2026 tax rate schedules and standard deduction))

Payments from a qualified retirement plan are not taxable by Wisconsin when received by a nonresident, even if they were earned in Wisconsin. Payments from a nonqualified deferred compensation plan remain taxable by Wisconsin unless they are paid as an annuity over life expectancy or over at least 10 years, or come from a mirror plan. (Wisconsin Department of Revenue, Publication 106: Wisconsin Tax Information for Retirees (01/26))

Those Wisconsin rules track federal law (4 U.S.C. 114), which bars any state from taxing the retirement income of a non-resident. In the other direction, a pension earned in Illinois or Minnesota is taxed by Wisconsin once the recipient is domiciled there. (4 U.S.C. 114, Limitation on State income taxation of certain pension income)