Wisconsin State Taxes: What You’ll Owe in the 2026 Tax Season

Wisconsin has among the lowest average sales tax and property tax rates in the country, according to the Tax Foundation’s Competitiveness Index. For older residents, Wisconsin offers several benefits — most notably, the state does not tax Social Security.

The big picture:

• Income tax: Individual income tax rates vary from 3.5 percent to 7.65 percent, based on marital status and income.
• Property tax: The state has an effective property tax rate of 1.32 percent of a home’s assessed value, although actual rates vary by county, according to the latest data from the Tax Foundation.
• Sales tax: The average combined state and local sales tax rate is 5.72 percent, according to the latest data from the Tax Foundation. The state’s rate is 5 percent, and local governments impose their own taxes up to 2.9 percent.

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How is income taxed?

Individual income tax rates vary from 3.5 percent to 7.65 percent, based on marital status and income.

What about investment income?

Wisconsin taxes investment income the same as other income, except the state allows a 30 percent deduction for net capital gains from assets held more than one year.

Are Social Security benefits taxed?

Social Security income is exempt from income tax in Wisconsin.

How is property taxed?

The statewide average property tax rate is 1.32 percent of a home’s assessed value, although actual rates vary by county. The lowest rate was 0.69 percent in Vilas County, while the highest was 1.82 percent in Milwaukee County. The lowest median rate paid was $1,768 in Iron County, while the highest was $6,420 in Dane County, according to the latest data from the Tax Foundation.

What about sales and other taxes?

• Sales tax: The average combined state and local sales tax rate is 5.72 percent, according to the latest data from the Tax Foundation. The state’s rate is 5 percent, and local governments impose their own taxes up to 2.9 percent. Local sales tax rates can be found here. Exemptions include prescription medication and medical equipment, diaper services, most grocery items and newspapers.
• Gas and diesel: Gasoline and diesel are taxed at 30.9 cents per gallon.
• Vehicle tax: Vehicle purchases include the state’s 5 percent sales tax, and any local city or county tax at the rates where the customer lives. Local sales tax rates can be found here.
• Alcohol: Alcohol purchases include state and local sales taxes. Additionally, Milwaukee County imposes a 0.5 percent local beverage tax on sales of alcohol consumed at a bar or restaurant. Premier resort areas also impose a 0.5 percent or 1.25 percent tax at certain restaurants, bars and liquor stores.
• Lottery: The state automatically withholds 7.65 percent from any winnings of $2,000 or more for possible state taxes and 24 percent of winnings of $5,000 or more for possible federal taxes. Whether those withholdings will be owed for state and federal taxes depends on an individual’s tax situation.

Will my heirs or estate have to pay inheritance and estate tax?

Wisconsin has no inheritance or estate tax.

Are there any tax breaks for older residents?

• Personal exemptions: Wisconsin allows people who are 65 or older by the end of the taxable year to receive $950 in personal exemptions. Residents who are married and filing jointly get an additional exemption of $250 for each person in the marriage.
• System-related exemptions: If a taxpayer’s retirement pensions come from local and state retirement systems, or the U.S. Civil Service Retirement System, Wisconsin does not tax that income.
• Homestead credit: Retirees who are 62 or older and who are full-year state residents may qualify for this credit if their total household income (taxable and nontaxable) is less than $24,680 for the year. The maximum allowable credit is $1,168.
• Retirement income subtraction: The state has two potential subtractions for retirement plans and individual retirement accounts. The first one gives taxpayers a subtraction of up to $24,000 (or up to $48,000 for certain joint filers) on qualified retirement income if they were 67 or older on Dec. 31, 2025. Taxpayers claiming this subtraction on their 2025 Wisconsin income tax return can’t claim any Wisconsin income tax credit in computing their refund or balance due for the year. The second subtraction is for up to $5,000 off qualified retirement income when calculating what taxes are due. To be eligible, taxpayers (and/or their spouses) must have been 65 or older on the last day of 2025 and must have had a federal adjusted gross income of less than $15,000 (for single filers) or $30,000 (for married filers).

Are military retirement pensions taxed?