Tax tables should align with new Wisconsin tax cuts

The new state budget bill signed into law by Governor Tony Evers last week contains a tax cut for most Wisconsinites. But that won’t be apparent for a while. The new law provides about $2 billion in tax relief to Wisconsin filers, and drops the individual income tax rate in the state from 6.27% to 5.3%. That is welcome news. The law is retroactive to January 1 of this year. But even though we will end up owing less to the state when we next file our taxes, we won’t see that change reflected in our paychecks. That is because Governor Evers vetoed a technical provision in the budget that would have directed the Wisconsin Department of Revenue to update the state’s individual income tax withholding tables to reflect the change. Those tables are what employers use to determine how much state tax to withhold from your paycheck. So even though we owe less, our employers will continue to take the same amount from our checks as last year. We will get that back when we file next year, but failing to change the withholding tables means Wisconsin filers will provide the state about $700 million more than they actually owe for each of the next two years. That is like giving the government an interest-free loan. Evers was wrong to veto that provision, because we shouldn’t have to give state government more money than we actually owe.