It is rare that we ever hear that income taxes – or any taxes, for that matter – are being reduced, but the state of Wisconsin has reduced them.
The state was able to reduce the individual income tax rates due to the estimated sales and use tax received from online retailers. From the increase in revenue from out-of-state retailers and marketplace participants, there has been an increase in revenue, which allows Wisconsin to reduce the rate of tax charged to individuals.
This reduction applies to the first two tax brackets. The first rate change is on income up to $11,970 for single taxpayers and married filing jointly taxpayers with income up to $15,960. For that bracket, the rate has been reduced from 3.86% to 3.54%. The next bracket – income for single taxpayers up to $23,930 or married filing jointly income up to $31,910 – will be reduced from 5.04% to 4.65%. Tax rates on income above these amounts remain the same as prior years – 6.27% on income up to $263,480 and 7.65% on income above $263,481 for single or $351,310. The decrease in these tax rates means that filers will see larger refunds or pay less in taxes.
If you don’t find yourself in either of the two income tax brackets with reductions, there are ways to decrease your taxable income before 2020 winds down. One of those possibilities is a temporary tax change brought on by the CARES Act in response to COVID-19. That change allows for a charitable deduction on your 2020 return, a subject we covered in this blog.