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Wisconsin Department of Revenue

Individual Income Tax
Retired Persons

  1. Are my retirement benefits taxable?
    (For tax Year 2008 -- Social Security not Taxable for Wisconsin)
  2. Are my military or uniformed services retirement benefits taxable?
  3. If I live in another state for a portion of the year, how much of my income is taxable by Wisconsin?
  4. How much of my social security benefits are taxable by Wisconsin?
  5. As a retired person, do I qualify for homestead credit?
  6. As a retired person, am I eligible for the working families tax credit?
  7. If I received non-wage income, do I need to make estimated tax payments?
  8. The federal government allows for an increased standard deduction for taxpayers age 65 or older. Does Wisconsin allow for any type of benefit for older or retired taxpayers?
  9. Does Wisconsin allow a subtraction from income on Form 1 for the amount that I pay for health insurance?
  10. Changes for 2009
  1. Are my retirement benefits taxable?
    • If you are a full-year resident of Wisconsin, generally the same amount of your pension and annuity income that is taxable for federal tax purposes is taxable by Wisconsin.
    • If you are a nonresident of Wisconsin, your pension and annuity income is generally nontaxable by Wisconsin.
    • If you are a part-year resident of Wisconsin, the pension and annuity income you receive while a Wisconsin resident is generally taxable in the same manner as it is for federal tax purposes. The pension and annuity income you receive while a nonresident is generally nontaxable.

    Exceptions to the taxation of retirement income described above are as follows:

    • Social security payments received on or after January 1, 2008 are not taxable by Wisconsin.
    • Payments received from the retirement systems listed below are not taxable by Wisconsin provided:
      1. You were retired from the system before January 1, 1964, or
      2. You were a member of the system as of December 31, 1963, retiring at a later date and payments you receive are from an account established before 1964, or
      3. You are receiving payments from the system as the beneficiary of an individual who met either condition a or b.

      The specific retirement systems are:

    Local and state retirement systems: Milwaukee City Employees, Milwaukee City Police Officers, Milwaukee Fire Fighters, Milwaukee Public School Teachers, Milwaukee County Employees, Milwaukee Sheriff, and Wisconsin State Teachers retirement systems.

    Federal retirement systems: United States government civilian employee retirement systems. Examples include the Civil Service Retirement System and the Federal Employees' Retirement System.

    Note: The following payments are not exempt from Wisconsin income tax:

    • Payments received as a result of voluntary tax-sheltered annuity deposits in any of the retirement systems listed above.
    • Payments received from one of the retirement systems listed above if you first became a member after December 31, 1963. This applies even though pre-1964 military service may have been counted as creditable service in computing your retirement benefit.
    • Payments from the federal Thrift Savings Plan.

    Caution: Only retirement benefits based on qualified membership in one of the retirement systems listed above may be subtracted from Wisconsin income. Qualified membership is membership that began before January 1964 as explained above. Any portion of your retirement benefit that is based on membership in other retirement systems, or based on employment which began after December 31, 1963, is taxable and may not be subtracted from federal income.

    • For tax years beginning in 2002 and thereafter, military and uniformed services retirement benefits are not taxable for Wisconsin tax purposes.

    • Railroad retirement benefits are not taxable for Wisconsin purposes.

    • payments you receive from a nonqualified pension or annuity or a nonqualified deferred compensation plan may be taxable by Wisconsin after you are no longer a resident here. For more information on this issue, see Wisconsin Publication 106. Wisconsin Tax Information for Retirees and Wisconsin Publication 126. How Your Retirements Benefits are Taxed.

  2. Are my military or uniformed services retirement benefits taxable?

    Payments you receive from:

    • The U.S. military retirement system (including payments from the Retired Serviceman's Family Protection Plan), and
    • The U.S. government that relate to service with the Coast Guard, the commissioned corps of the National Oceanic and Atmospheric Administration, or the commissioned corps of the Public Health Service are not taxable for Wisconsin tax purposes.

  3. If I live in another state for a portion of the year, how much of my income is taxable by Wisconsin?

    It depends on whether or not you remained a legal resident of Wisconsin for the entire year. During the time that you are a Wisconsin resident, Wisconsin taxes your income from all sources. During the time that you aren't a Wisconsin resident, Wisconsin taxes only your income from Wisconsin sources.

    You are considered a part-year resident only if you were domiciled in Wisconsin and another state for a portion of the year.

    Your domicile is your true, fixed, and permanent home where your intend to remain permanently and indefinitely and to which, whenever absent, you intend to return. It is often referred to as "legal residence." You can be physically present or residing in one state but maintain a domicile in another. You can have only one domicile at a time. For more information, see Wisconsin Publication 122, Tax Information for Part-Year Residents and Nonresidents of Wisconsin.

  4. How much of my social security benefits are taxable by Wisconsin?

    Prior to 2009, no more than 50% of your social security benefits were includable in your Wisconsin taxable income. Wisconsin did not follow the federal law, which taxed up to 85% of social security benefits.

    For the tax years beginning on and after January 1, 2008, Wisconsin no longer taxes social security benefits included in federal adjusted gross income.

  5. As a retired person, do I qualify for homestead credit?

    Retirees who are full-year residents of Wisconsin may qualify for homestead credit if they meet certain conditions. One of the qualifications is that your total household income (both taxable and nontaxable income) must be less than $24,500. For more information about homestead credit, see the Wisconsin Schedule H Instructions.

  6. As a retired person, am I eligible for the working families tax credit?

    Yes. If your income is less than $10,000 ($19,000 if married filing a joint return), this credit reduces or completely eliminates the Wisconsin income tax for persons, including retirees, who are full-year residents of Wisconsin. It is not necessary that you be employed, or that you have more than one person in your household, in order to claim this credit.

  7. If I received non-wage income, do I need to make estimated tax payments?

    If you have income from which Wisconsin tax is not withheld, such as interest income or pension or annuity income, you may be required to prepay your tax in installments. Generally, you must pay estimated tax if your tax return will show a balance due of $200 or more. For more information regarding estimated tax payments and how to make them, see the Wisconsin Form 1-ES Instructions. You may be subject to an underpayment interest charge if you do not make required payments of estimated tax.

  8. The federal government allows for an increased standard deduction for taxpayers age 65 or older. Does Wisconsin allow for any type of benefit for older or retired taxpayers?

    Yes. Persons age 65 or older on December 31, 2009, are not only allowed a $700 personal exemption for themselves, but are allowed an additional personal exemption deduction of $250.

    If you are married filing a joint return and both you and your spouse were age 65 or older on December 31, 2009, you are allowed an additional exemption deduction of $250 for yourself and $250 for your spouse.

  9. Does Wisconsin allow a subtraction from income on Form 1 for the amount that I pay for health insurance?

    10. For the 2009 tax year, if you had no employer and were not self-employed, you may claim as a subtraction from income 66.7% of the amount you paid for medical care insurance in 2009.

    If you had an employer or were self employed, you may be able to claim a subtraction from income for the amount you paid for medical insurance.

    For more information on the subtraction from income for medical care insurance premiums you paid in 2009, see the Wisconsin Form1 instruction booklet.

  10. Changes for 2009

Effective for taxable years beginning on or after January 1, 2009, individuals who receive income from a qualified retirement plan or an individual retirement account (IRA) may be able to subtract up to $5,000 of such retirement benefits when computing their Wisconsin income tax.

To qualify for the subtraction, the individual must be at least 65 years of age before the close of the taxable year for which the subtraction is being claimed, and meet the following income limitations for that year:

The subtraction does not apply to retirement benefits that are otherwise exempt from Wisconsin income tax. For example, an individual is receiving military retirement benefits that are exempt from Wisconsin income tax. The individual may not claim the $5,000 subtraction based on the military retirement benefits.

The subtraction will first be available on 2009 Wisconsin income tax returns (due April 15, 2010). Individuals who will qualify for the subtraction and who will be making estimated tax payments for 2009 may want to consider the subtraction when determining the amount of their estimated tax payments.

FOR MORE INFORMATION PLEASE CONTACT:

WISCONSIN DEPARTMENT OF REVENUE
Customer Service and Education Bureau
P.O. Box 8949
Madison, WI 53708-8949
Phone: (608) 266-2486
Fax: (608) 267-1030
E-Mail Additional Questions

Last updated January 13, 2010