New for 2008 -- Social Security Benefits not Taxable for Wisconsin

Effective for taxable years beginning in 2008, social security benefits will no longer be taxable for Wisconsin income tax purposes. This will be reflected on the 2008 Wisconsin income tax forms.

For federal income tax purposes, up to 85% of social security benefits may be taxable. Prior to 2008, if social security benefits were taxable on an individual's federal income tax return, the social security benefits were also taxable on the individual's Wisconsin income tax return. However, Wisconsin did not tax more than 50% of the benefits.

Individuals who previously had taxable social security benefits and make Wisconsin estimated tax payments may want to adjust their 2008 estimated tax payments to account for the fact that their social security benefits will not be taxed. Form 1-ES is used to make estimated tax payments. A worksheet is included in the 2008 Form 1-ES instructions for estimating 2008 taxable income. The Form 1-ES and instructions are available from the department's website at Forms.

Note: Even though social security benefits will not be taxable for income tax purposes, they must still be included in household income for homestead credit.

January 2, 2009