Does Wisconsin Tax Retirement Income?
Wisconsin exempts Social Security and, starting with 2025 returns, lets filers age 67 and older exclude up to $24,000 of retirement account income each. Pension and account withdrawals above the exclusion are still taxed at regular rates.
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Quick answer
Wisconsin exempts Social Security and, starting with 2025 returns, lets filers age 67 and older exclude up to $24,000 of retirement account income each. Pension and account withdrawals above the exclusion are still taxed at regular rates. The top state individual income-tax rate shown for 2026 is 7.65%.
Official sources: Wisconsin Department of Revenue, retired persons FAQ
How Wisconsin Treats Each Retirement Income Stream
| Income stream | Wisconsin treatment |
|---|---|
| Social Security | Wisconsin does not tax Social Security benefits. They are subtracted in full from Wisconsin income. |
| Public and private pensions | 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. |
| Traditional 401(k) and IRA withdrawals | 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. |
| Military retirement pay | Military retirement system payments, including survivor benefit payments, are exempt from Wisconsin income tax with no cap. |
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.
The State Exclusion That Changes the Math
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.
Model the actual eligibility rule
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.
A Worked Retirement-Income Example
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.
This is a state-income example, not a tax return
Federal tax, local income tax, filing status, deductions, basis, Roth treatment, residency, and plan-specific rules can change the result. Use the example to compare structure, not as individualized tax advice.
Military Retirement and Transfer-Tax Fine Print
Military retirement: Military retirement system payments, including survivor benefit payments, are exempt from Wisconsin income tax with no cap.
Estate and inheritance tax: Wisconsin has no estate or inheritance tax.
Should Retirement Taxes Drive a Move to Wisconsin?
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.
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.
Compare the annual retirement-income result with property tax, insurance, sales tax, health-care access, housing cost, and the residency facts needed to leave the former state. For a broader comparison, use our 51-jurisdiction retirement tax table.
Wisconsin Retirement Tax FAQs
Planning retirement income in Wisconsin?
We can model the state and federal interaction before a large distribution, Roth conversion, or interstate move. The initial consultation is free. Educational content is not individualized tax advice.