Does Wisconsin Tax Retirement Income?

No. Wisconsin does not tax Social Security benefits.

Wisconsin does not tax Social Security benefits. They are subtracted in full from Wisconsin income.

The Wisconsin answer is separate from the federal one. Depending on combined income, up to 85% of Social Security benefits can be taxable on the federal return regardless of what Wisconsin does, so the state rule changes the state line only. Our guide to states that do not tax Social Security shows where Wisconsin sits among the states that still tax benefits.

Partly. Wisconsin taxes some pension income, subject to an exclusion or age rule.

Private and most public pension income is generally taxable, though payments from certain grandfathered systems, such as the U.S. Civil Service Retirement System and some Milwaukee and state teacher plans, are exempt if the retiree was a member before 1964. Military retirement pay is fully exempt.

Beginning in tax year 2025, a filer who is at least 67 by year end can subtract up to $24,000 of qualified retirement income, up to $48,000 on a joint return when both spouses qualify. There is no income limit or phaseout, but a filer who claims this subtraction cannot claim any Wisconsin tax credit for that tax year. A smaller, older exclusion of up to $5,000 still exists for filers 65 and older with federal AGI under $15,000.

Public and private pensions, annuities, and retirement-plan distributions do not always get the same treatment. The pension comparison lists which states exempt pensions broadly, partly, or only for certain plans.

Partly. Wisconsin taxes some traditional 401(k) and IRA withdrawals, subject to an exclusion or age rule.

Traditional 401(k) and IRA withdrawals are generally taxable, but they are exactly the kind of qualified retirement income the new age-67 exclusion can shelter, up to the annual cap.

Two timing points matter in Wisconsin. A Roth conversion is taxable in the year it is done, and Wisconsin starts from federal adjusted gross income, so a large conversion can land in a year when the state exclusion does not cover it. Qualified Roth withdrawals later are generally not taxable at either level. Required minimum distributions follow the same Wisconsin rules as any other traditional-account withdrawal.

Every state page on this site runs the same retiree profile so the states can be compared: $30,000 of Social Security, $40,000 withdrawn from a traditional 401(k), and a $20,000 private pension, $90,000 in total.

A 68-year-old with $30,000 of Social Security, $40,000 from a 401(k), and a $20,000 private pension starts with $60,000 of non-Social-Security retirement income. Social Security is fully exempt, and the $24,000 exclusion generally brings the taxable amount down to about $36,000 before the standard deduction and other adjustments.

Wisconsin exempts the $30,000 of Social Security, and because the filer is 68 the $24,000 subtraction takes the $60,000 of 401(k) and pension income down to $36,000. Using the 2025 schedule that Act 15 put in place, $36,000 falls entirely inside the 3.5% and 4.4% brackets: $513.80 on the first $14,680 plus 4.4% of the next $21,320, roughly $1,450 before the standard deduction, and after Wisconsin's sliding-scale standard deduction the bill is likely closer to $900 to $1,000. Remember the price of the subtraction: claiming it forfeits every Wisconsin credit for the year, so a filer with a large homestead or property tax credit should compare the two paths. Contrast a $150,000 lump-sum IRA withdrawal in the same year: the subtraction stays at $24,000, so about $186,000 is left before deductions, most of the extra $150,000 is taxed at 5.3%, and the added Wisconsin tax is roughly $7,900. A married couple both 67 with qualifying income in each name can subtract $48,000, which would shelter the entire $60,000 profile if $24,000 of it were in the second spouse's name.

The same $90,000 profile looks different a state line away. The rows below come from the reviewed 51-state table; each state name links to its own guide.

• Illinois: treats Social Security as exempt, pensions as exempt, and 401(k) and IRA withdrawals as exempt, with a top rate of 4.95% and qualified retirement income is subtracted.
• Minnesota: treats Social Security as partially taxed, pensions as taxed, and 401(k) and IRA withdrawals as taxed, with a top rate of 9.85% and income-based Social Security subtraction.
• Florida: has no individual income tax at all.

Wisconsin's 7.65% top rate looks steep next to its Midwest neighbors, but the 2025 exclusion changed the math for retirees. A married couple can now shelter up to $48,000 of retirement account income with no income test at all.

Military retirement: Military retirement system payments, including survivor benefit payments, are exempt from Wisconsin income tax with no cap. See the military retirement tax map for every state's treatment.

Estate and inheritance tax: Wisconsin has no estate or inheritance tax.

Selling a home or investments in Wisconsin: retirement-income rules do not cover capital gains. See Wisconsin capital gains tax before selling appreciated property or a brokerage position in the year you move or retire.

• Confirm the exclusion you are claiming. Beginning in tax year 2025, a filer who is at least 67 by year end can subtract up to $24,000 of qualified retirement income, up to $48,000 on a joint return when both spouses qualify. There is no income limit or phaseout, but a filer who claims this subtraction cannot claim any Wisconsin tax credit for that tax year. A smaller, older exclusion of up to $5,000 still exists for filers 65 and older with federal AGI under $15,000.
• Part-year residents. If you moved into or out of Wisconsin during the year, retirement income is generally allocated to the period of residency, and the former state may still tax distributions received before the move. Document the move date, the new domicile, and where each distribution was received.
• Withholding and estimates. Pension and IRA custodians often withhold federal tax but not Wisconsin tax. If Wisconsin taxes any part of your retirement income, check whether quarterly estimated payments are needed to avoid an underpayment penalty.
• Federal side. The federal return has its own rules: up to 85% of Social Security can be taxable, the temporary $6,000 federal senior deduction is available for 2025 through 2028 subject to income limits, and Roth conversions are taxed in the conversion year. State exemptions do not change any of that.
• Large one-time distributions. Confirm both spouses meet the age-67 test before counting on the full $48,000 joint exclusion, check which income qualifies, and compare the subtraction with the Wisconsin tax credits the filer would have to give up. Wage income and nonqualified sources do not get the break.

Comparing states before a move? Use the retirement taxes by state table and the moving states tax guide, and read retirement tax planning for how distributions, conversions, and a move are sequenced together.