Are my retirement benefits taxable?
The taxation of your retirement benefits varies whether you are a full-year resident, nonresident, or part-year resident of Wisconsin:
- 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 benefits are not taxable by Wisconsin.
- Payments received from the retirement systems listed below are not taxable by Wisconsin provided any of the following apply:
- You were retired from the system before January 1, 1964
- 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
- You are receiving payments from the system as the beneficiary of an individual who met either of the two conditions listed above
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 - the Civil Service 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.
- Military and uniformed services retirement benefits are not taxable for Wisconsin income tax purposes
- Railroad retirement benefits are not taxable for Wisconsin income tax purposes
Note: Payments you receive from a nonqualified pension or annuity or a nonqualified deferred compensation plan are taxable by Wisconsin when received by a Wisconsin resident. Such payments may be taxable or may be exempt when received by a nonresident of Wisconsin. For more information on this issue, see
Wisconsin Publication 106, Wisconsin Tax Information for Retirees, and
Wisconsin Publication 126,
How Your Retirement Benefits are Taxed.
Are my military or uniformed services retirement benefits taxable?
Payments you receive from the following are not taxable for Wisconsin:
- The U.S. military retirement system (including payments from the Retired Serviceman's Family Protection Plan and the Survivor Benefit Plan)
- Payments from Defense Finance and Accounting Service (DFAS) for military retirement pay
- 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
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 legal Wisconsin resident, Wisconsin taxes your income from all sources. During the time that you aren't a legal Wisconsin resident, Wisconsin taxes only your income from Wisconsin sources.
You are considered a part-year resident only if you were domiciled in Wisconsin for part of the year and in another state for the rest of the year.
Your domicile is your true, fixed, and permanent home where you 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.
How much of my social security benefits are taxable by Wisconsin?
Wisconsin does not tax social security benefits.
As a retired person, do I qualify for homestead credit?
Retirees age 62 years of age or older who are full-year legal 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 $24,680 for the year. Retirees under age 62 may qualify if they are disabled or have earned income. For more information about the homestead credit, see the Wisconsin
Schedule H Instructions.
If I received taxable 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 $500 or more. For more information regarding estimated tax payments see the Wisconsin
Form 1-ES instructions. If you do not receive a Form 1-ES in the mail, you may use the
Wisconsin Estimated Tax Interactive Voucher or contact any Department of Revenue office. You may be subject to an underpayment interest charge if you do not make required payments of estimated tax.
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 of the taxable year, are allowed a $700 personal exemption for themselves, and 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 of the taxable year, you are allowed an additional exemption deduction of $250 for yourself and $250 for your spouse.
Does Wisconsin allow a subtraction from income on Form 1 for the amount that I pay for health insurance?
You may claim a subtraction from income for the amount you paid for medical care insurance during the taxable year. The amount allowed depends on your income and employment status.
For more information on the subtraction from income for medical care insurance premiums paid, see the Wisconsin
Schedule SB Instructions for the year in question.
What is the Wisconsin retirement income subtraction?
Individuals who receive income from a qualified retirement plan or an individual retirement account (IRA) may 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:
- If the individual is single or files as head of household, their federal adjusted gross income is less than $15,000
- If the individual is married and files a joint return, the couple's federal adjusted gross income is less than $30,000
- If the individual is married and files a separate return, the sum of both spouse's federal adjusted gross income is less than $30,000
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.