How Wisconsin taxes retirement income
Wisconsin does not tax Social Security benefits. Pensions and 401(k)/IRA withdrawals are partly taxed (there is an exclusion, then the rest is taxed). Wisconsin does not tax Social Security benefits. Pension/401(k)/IRA withdrawals are generally taxable as ordinary income, but two age-based subtractions can shelter a meaningful slice: (1) a long-standing subtraction of up to $5,000/year of retirement income for filers 65+, available only if federal AGI is under $15,000 single / $30,000 married; and (2) a NEW subtraction effective tax year 2025 for filers 67+ (both spouses 67+ for the joint amount) of up to $24,000/year single or $48,000/year married filing jointly, with NO income limit, but a filer who claims this new 67+ subtraction cannot claim any other Wisconsin tax credit that year. Wisconsin Retirement System (WRS) payments attributable to pre-1964 creditable service, and military/uniformed-service retirement pay, remain separately exempt regardless of age.
Retirement income tax in Wisconsin, at a glance
| Income type | Taxed by Wisconsin? |
|---|---|
| Social Security | No |
| Pensions | Partially (exclusion applies) |
| 401(k) / IRA withdrawals | Yes |
| Estate / inheritance tax | None |
| Avg. property tax rate | 1.32% of home value |
Does Wisconsin tax Social Security benefits?
No. Wisconsin does not tax Social Security benefits.
Does Wisconsin tax pensions and 401(k) or IRA withdrawals?
Partly. Wisconsin does not tax Social Security benefits. Pension/401(k)/IRA withdrawals are generally taxable as ordinary income, but two age-based subtractions can shelter a meaningful slice: (1) a long-standing subtraction of up to $5,000/year of retirement income for filers 65+, available only if federal AGI is under $15,000 single / $30,000 married; and (2) a NEW subtraction effective tax year 2025 for filers 67+ (both spouses 67+ for the joint amount) of up to $24,000/year single or $48,000/year married filing jointly, with NO income limit, but a filer who claims this new 67+ subtraction cannot claim any other Wisconsin tax credit that year. Wisconsin Retirement System (WRS) payments attributable to pre-1964 creditable service, and military/uniformed-service retirement pay, remain separately exempt regardless of age.
For the mechanics of required withdrawals in retirement, see what is an RMD.
Sources
- Wisconsin taxation of retirement income (Social Security, pensions, 401(k)/IRA): Wisconsin Department of Revenue / Taxation.