GREEN BAY, WI (WTAQ-WLUK) – A plan to prevent retirement income from being taxed is being reintroduced in Wisconsin.
Three incumbent Republican lawmakers from Northeast Wisconsin announced Wednesday they plan to introduce the “2025 Tax-Free Retirement Act” when the new legislative session starts in January.
Democratic Governor Tony Evers vetoed similar legislation earlier this year. He cited concerns about having to return federal stimulus money if the state’s reserves were drained.
With Wisconsin having a $3 billion surplus, local Republicans say the time is now to provide tax cuts for retirees.
“It doesn’t have to be a partisan issue and it has shown to be successful in both red and blue states,” said State Rep. David Steffen, R-Howard.
Steffen, State Rep. Joel Kitchens of Sturgeon Bay and State Sen. Rachael Cabral-Guevara of Appleton introduced the “Tax-Free Retirement” proposal.
$75,000 of retirement income for single filers would be exempt from state income taxes. For married-joint filers, it would be $125,000, which is down from $150,000 in similar legislation that was passed, but Evers vetoed.
Those behind the proposal hope Evers will like bringing the amount for joint filers down because it means 10% of retirees would still be paying income tax on their retirement income, up from 2% under the previous proposal.
“If you look at the state’s that have had the largest growth over the last 10 years, it’s the ones with the lowest or no income tax,” said Steffen.
“But they pay for it by not having good roads, by not having good schools, by not having good medical care systems,” said Jane Benson, a Democrat running against Steffen for his Assembly seat. “I would really need to see the details to understand what the ramifications would be in Wisconsin.”
Benson says she’d love to have tax exemptions for retirees, but wants more details of the new legislation.
“I find it very interesting they’re doing it in an election year, in a Presidential election year, when the Republican Party tends to skew older to begin with,” said Benson.
“Last session we started in the spring and in many ways it was too late in the game to get things going,” said Steffen. “So we’re starting now.”
The Republicans hope starting now will give them enough time to get Governor Evers on board by the time the legislation is formally introduced in early January.
The governor’s office provided FOX 11 a statement in response to the new proposal.
“You may recall from previous legislative sessions that Gov. Evers generally prefers to actually review legislation before deciding whether or not he’ll support it,” reads the statement from Gov. Evers’ office. “The governor will review the bill after it’s been formally introduced during the next legislative session and can be considered as the state deliberates the next biennial budget.”
13 states exempt retirement income from taxation, including Illinois and Iowa.
A memo from the nonpartisan Legislative Fiscal Bureau estimates the financial impact would be about $716.8 million the first year and about $512 million a year after that.
The Republican lawmakers believe an increase in sales tax from more retirees staying here would help offset that loss.
According to the LFB memo, the maximum savings for a retiree under the proposal would be $9,563. The average decrease would be about $1,649.
Comments