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Wisconsin Taxes 2026: What You Need to Know

Taxes are a significant part of any paycheck, but with a little insight, you can understand exactly where your hard-earned money is going. In Wisconsin, your income is subject to federal, state, and FICA tax withholdings, along with other deductions like unemployment insurance and pre-tax benefits. 2026 brings several important updates that HR professionals and employees need to understand. Let’s break it down to help you stay informed and ahead of your finances.

Federal, State, and Unemployment Tax Withholding

Whether you are a full-time employee or an independent contractor, you will be paying federal income taxes. The IRS uses a progressive tax system, meaning the more you earn, the higher your tax rate. Wisconsin’s state income tax follows the same structure, with rates ranging between 3.50% and 7.65% for 2026.

(Source: Wisconsin Department of Revenue)

One of the most significant updates effective for the 2025 tax year (returns filed in 2026) is the expansion of the 4.40% bracket under 2025 Wisconsin Act 15, signed by Governor Tony Evers on July 3, 2025. This means a larger slice of middle-income earnings is taxed at 4.40% instead of 5.30%, resulting in lower effective tax rates for many Wisconsin workers.

(Source: Wisconsin Legislative Fiscal Bureau)

If you receive unemployment benefits, they are treated as taxable income for both federal and Wisconsin state tax purposes. The Wisconsin Department of Revenue confirms that you can request automatic state income tax withholding from your benefits, and if you do not, you may be required to make Wisconsin estimated income tax payments. Wisconsin law also provides a partial subtraction for unemployment compensation for lower-income filers where federal adjusted gross income exceeds a base threshold.

(Source: Wisconsin Department of Revenue)

FICA and State Unemployment Insurance Taxes

Besides income taxes, you will also see FICA (Federal Insurance Contributions Act) taxes deducted from every paycheck. These fund Social Security and Medicare.

For 2026, the Social Security wage base has increased to $184,500 (up from $176,100 in 2025). The Social Security tax rate remains 6.2% for employees and 6.2% for employers, applied only to earnings up to that cap. The Medicare tax rate remains 1.45% with no wage cap. Employees earning over $200,000 are subject to an additional 0.9% Medicare surtax, which employers are required to withhold once wages exceed that threshold in a calendar year. Employers do not match this additional 0.9%.

(Source: IRS Topic No. 751) (Source: Social Security Administration) (Source: Wisconsin ETF)

For Wisconsin unemployment insurance, 2026 brings good news for employers. The Wisconsin Department of Workforce Development (DWD) has confirmed that Schedule D, the lowest rate schedule, remains in effect for 2026, with a taxable wage base of $14,000 per employee. This means the first $14,000 in wages paid to each employee is subject to UI tax; wages above that threshold must still be reported but are not taxed.

(Source: Wisconsin DWD)

The DWD also reminds employees that unemployment benefits received in 2026 are taxable income for both federal and state purposes and must be reported on the 2026 tax return. (Source: Wisconsin DWD)

Pre-Tax Deductions

One of the silver linings when it comes to your paycheck is the ability to reduce your taxable income through pre-tax deductions. Common deductions include contributions to 401(k) retirement accounts, health insurance premiums, and health savings accounts (HSAs). These amounts are subtracted from your gross income before state and federal tax is calculated, lowering the total amount subject to tax.

For instance, if you are contributing to a 401(k), the money is deducted before taxes are calculated, meaning you will not pay income taxes on those contributions right now. This helps you grow your retirement savings while also reducing your current tax liability. Similarly, if you have medical insurance through your employer, your premiums are often deducted pre-tax, further lowering your taxable income.

The Wisconsin Department of Revenue’s Withholding Tax Guide (Publication W-166) notes that employees can also submit Form WT-4A to their employer as a withholding agreement to account for pre-tax deductions that reduce their annual tax liability.

(Source: Wisconsin DOR)

Wisconsin 2026 Tax Rates and Withholdings

To give you a clearer picture, here is a breakdown of the main tax withholdings and rates for 2026:

Sources: Wisconsin DOR Tax Rates | IRS Topic 751 | SSA Wage Base | Wisconsin DWD UI Tax Rates

Pro Tip: If you are receiving unemployment benefits in 2026, consider requesting state and federal income tax withholding from your payments. If you do not have taxes withheld, you may be required to make estimated tax payments to avoid interest charges when you file your return. Review the 2026 Form 1-ES instructions from the Wisconsin Department of Revenue to determine if estimated payments are required.

(Source: Wisconsin DOR)

Wisconsin 2026 Individual Income Tax Brackets

Wisconsin’s state income tax uses four progressive brackets. The 2025 Wisconsin Act 15 budget bill significantly expanded the 4.40% bracket, moving more middle-income earnings out of the 5.30% range. The brackets below apply to income earned in tax year 2025, reported on returns filed in 2026. The DOR publishes confirmed bracket thresholds for the current filing year on its Tax Rates page. (Source: Wisconsin DOR)

For Single Filers, Head of Household, Estates, and Trusts:

For Married Filing Jointly:

For Married Filing Separately:

Note: Non-residents and part-year residents must prorate the tax based on the ratio of their Wisconsin income to their federal adjusted gross income. See the Wisconsin Form 1NPR instructions for details. (Source: Wisconsin DOR)

2026 Key Updates: What Changed and What HR Professionals Need to Know

1. Social Security Wage Base Increase

The Social Security wage base rose to $184,500 for 2026. HR teams running payroll must update their payroll systems to reflect this new cap. Employees who earn above this threshold will stop having Social Security (6.2%) withheld once they reach the cap, which provides a slight boost to their net take-home pay for the rest of the year. (Source: Wisconsin ETF) (Source: IRS Publication 926)

2. Wisconsin 4.40% Bracket Expansion (Tax Year 2025, Filed 2026)

Under 2025 Wisconsin Act 15, the upper limit of the 4.40% bracket expanded significantly. For single filers, the 4.40% rate now applies to taxable income from $14,680 to $50,480 (previously $29,370). For married filing jointly, it applies up to $67,300 (previously $39,150). This change lowers the effective tax rate for a large share of Wisconsin workers and means HR payroll departments using updated Wisconsin withholding tables will see reduced state tax withholding per paycheck for eligible employees. (Source: Wisconsin DOR Tax Rates) (Source: Wisconsin Legislative Fiscal Bureau)

3. New Retirement Income Exclusion for Employees Age 67 or Older

Effective for tax year 2025 (returns filed in 2026), Wisconsin Act 15 introduced a major new retirement income exclusion. Employees or retirees who are age 67 or older by December 31, 2025 may subtract up to $24,000 of qualifying retirement income (401(k), 403(b), pension, IRA distributions) from Wisconsin taxable income. For married couples filing jointly where both spouses are age 67 or older, the exclusion is up to $48,000. Social Security benefits were already fully exempt in Wisconsin and are not counted toward this exclusion. Employees claiming this exclusion may not claim any Wisconsin income tax credits (such as the Earned Income Credit or Homestead Credit) in the same tax year. (Source: Wisconsin DOR Publication 106) (Source: Wisconsin DOR Schedule SB Instructions)

4. Wisconsin UI Tax Schedule D Remains in Effect

For 2026, Wisconsin’s unemployment insurance tax for employers stays at Schedule D, the lowest schedule available under state law. The taxable wage base is $14,000 per employee. Employers with a zero tax rate are still required to file quarterly contribution and wage reports. (Source: Wisconsin DWD)

5. Wisconsin Sales Tax Electricity Exemption

Effective October 1, 2025, Wisconsin expanded its sales tax exemption for electricity and natural gas sold for residential use to year-round. Previously, this exemption applied only from November through April. This change reduces the household cost of utilities for Wisconsin employees year-round and is relevant for employers advising on household budgeting. (Source: Wipfli, citing Wisconsin Act 15)

Wisconsin 2026 Other Tax Rates

Sales and Use Tax: The Wisconsin state sales tax rate is 5%. Seventy counties have adopted an additional 0.5% county tax. Milwaukee County’s rate is 0.9%, and the city of Milwaukee additionally imposes a 2% city sales and use tax, effective January 1, 2024. (Source: Wisconsin DOR)

Corporate Income Tax: Wisconsin’s corporate income tax rate remains 7.9% for businesses operating in the state. (Source: Wisconsin DOR)

Estate and Inheritance Tax: Wisconsin does not impose any estate or inheritance tax.

Example of Wisconsin State Income Tax Calculation (Tax Year 2025, Filed 2026)

Consider a single filer with a taxable income of $80,000 after deductions. Here is how Wisconsin’s progressive brackets apply:

The first $14,680 of income is taxed at 3.50%, totaling $513.80.

The next portion from $14,680 to $50,480 (a range of $35,800) is taxed at 4.40%, totaling $1,575.20.

The remaining income from $50,480 to $80,000 (a range of $29,520) is taxed at 5.30%, totaling $1,564.56.

This individual would owe a total of approximately $3,653.56 in Wisconsin state income taxes for tax year 2025. Notice that the effective tax rate (about 4.57%) is meaningfully lower than the top marginal rate of 5.30% that applies to the last dollar of income. This is how Wisconsin’s progressive system works in practice.

Source: Wisconsin DOR Tax Rates

Wisconsin Withholding Forms HR Professionals Need

Employers and HR teams managing Wisconsin payroll should be familiar with the following key forms, all administered by the Wisconsin Department of Revenue:

Form WT-4 is the Employee’s Wisconsin Withholding Exemption Certificate, which determines how much state income tax is withheld from each paycheck. Employees who have experienced life changes (marriage, new dependents, second job) should file an updated WT-4 to align withholding with their actual tax liability.

Form WT-4A is the Wisconsin Employee Withholding Agreement, used when an employee wants to base their withholding on an estimate of their actual annual tax liability rather than the standard wage bracket tables. For 2026 calendar year filers, Form WT-4A expires on April 30, 2027.

Form WT-6 is the Withholding Tax Deposit Report, which employers file when remitting withheld taxes to the DOR.

Form WT-7 is the Annual Reconciliation, due January 31 each year, reconciling all withholding deposits to wage statements issued.

(Source: Wisconsin DOR Withholding Tax Guide, Publication W-166)

Wrapping It Up

Wisconsin’s 2026 tax landscape reflects meaningful changes: a higher Social Security wage base, an expanded 4.40% income tax bracket that reduces effective tax rates for most workers, and a new retirement income exclusion that substantially benefits employees aged 67 and older. For HR professionals managing payroll, the priorities are ensuring payroll systems reflect the $184,500 Social Security wage base, confirming state withholding tables are updated following Act 15, and communicating the retirement income exclusion option to eligible employees during benefits and tax planning seasons.

For the most current rates, forms, and guidance directly from the source, visit the Wisconsin Department of Revenue at revenue.wi.gov and the Wisconsin Department of Workforce Development at dwd.wisconsin.gov.