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AB1209: Bill Text
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2025 - 2026 LEGISLATURE
LRB-3872/1
EKL&FFK:cdc
2025 ASSEMBLY BILL 1209
March 19, 2026 - Introduced by Representatives
Clancy
,
Hong
,
Phelps
and
Rivera-Wagner
. Referred to Committee on Ways and Means.
AB1209,1,10
1
An Act
to renumber and amend
71.21 (6) (a), 71.27 (1) and 71.27 (2);
to
2
amend
20.255 (2) (b), 71.06 (1r) (d), 71.06 (2) (k) 4., 71.06 (2) (L) 4., 71.07 (7)
3
(c), 71.23 (2), 71.35, 71.365 (4m) (a), 71.46 (1), 71.46 (2), 71.46 (3), 71.745 (2)
4
(a), 115.882 and 121.92 (1);
to create
16.5187, 20.255 (2) (ks), 25.17 (1) (om),
5
25.492, 71.06 (1r) (e), 71.06 (2) (k) 5., 71.06 (2) (L) 5., 71.27 (1) (b), 71.27 (2) (b),
6
73.03 (78), 119.44 (2) (e) and (f), 120.18 (1) (cm) and (cp), 121.07 (2) (am) and
7
(an), 121.24, 121.90 (1) (h) and (i) and 121.90 (2) (am) 6. of the statutes;
8
relating to:
modifying the income and franchise tax rate structure for
9
individuals and corporations, creating a school aid fund, supplemental school
10
aid, school district revenue limits, and making an appropriation.
Analysis by the Legislative Reference Bureau
TAXATION
Income and franchise tax rate modifications
Under current law, the individual income tax contains four tax brackets, each spanning a range of taxable income and with a progressively higher marginal tax rate. The 4th bracket has the highest marginal rate at 7.65 percent. Also under current law, the corporate income and franchise tax and the pass-through entity tax are imposed at the rate of 7.9 percent.
This bill increases the rate for the 4th individual income tax bracket to 8.65 percent for taxable year 2025 and to 8.85 percent for subsequent years. Additionally, the bill creates a 5th individual income tax bracket for taxpayers with taxable income of at least $750,000 for single taxpayers and $1,000,000 for married couples filing jointly ($500,000 if filing separately) and sets the bracket’s rate at 17.30 percent for taxable year 2025 and 17.70 percent for subsequent years.
The bill also creates a new bracket for the corporate income and franchise tax and the pass-through entity tax for income of at least $1,000,000, and sets the bracket's rate at the same rates for the 5th individual income tax bracket.
Determination of revenue raised due to rate modifications
The bill directs the secretary of revenue to determine the amount of tax revenue raised due to the increased rates and to notify the secretary of administration of the amount so that amount can be transferred to the school aid fund created under the bill.
EDUCATION FUNDING
Supplemental school aid
Under the bill, the Department of Public Instruction must annually distribute the total amount transferred to the school aid fund to school districts. The bill provides that this supplemental school aid is distributed to school districts based on the recipient’s proportional share of the total statewide property tax levy for school districts in the 2024-25 school year.
Current law generally limits the total amount of revenue per pupil that a school district may receive from general state aid and property taxes in a school year. The bill provides that supplemental school aid is considered state aid for purposes of school district revenue limits. Current law also provides certain penalties for a school district that exceeds its revenue limit. The bill specifies that these penalties do not apply to the extent that a school district’s state aid, including the supplemental school aid, is greater than its revenue limit.
Counting pupils for purposes of equalization aids and school district revenue limits
The bill changes the weighting of low-income pupils and limited-English proficient pupils in the formulas for calculating general school aid and school district revenue limits. Under the bill, a low-income pupil is counted as 1.2 pupils and a limited-English proficient pupil is counted as 1.2 pupils, rather than 1.0 pupil as under current law, for the purpose of determining a school district's membership in the general school aid calculation and for the purpose of determining the number of pupils enrolled in a school district in the revenue limit calculation. A pupil who is reported both as a low-income pupil and a limited-English proficient pupil is counted as 1.4 pupils for these purposes. For these purposes, a low-income pupil is a pupil who satisfies the criteria for a free or reduced price lunch under federal law, and a limited-English proficient pupil is a pupil whose ability to use the English language is limited because the pupil uses a different language with the pupil’s family or in other nonschool settings and who has difficulty performing ordinary classwork in English as a result of his or her limited proficiency in English.
Reimbursement for special education costs
The bill changes the rate at which the state reimburses school boards, operators of independent charter schools, cooperative educational service agencies (CESAs), and county children with disabilities education boards (CCDEBs) for costs incurred to provide special education and related services to children with disabilities and for school age parents programs (eligible costs). Under current law, the state reimburses the full cost of special education for children in hospitals and convalescent homes for orthopedically disabled children. After those costs are paid, the state reimburses remaining eligible costs from the amount remaining in the appropriation account at a rate that distributes the full amount appropriated. The Legislative Fiscal Bureau estimates that the reimbursement rate will be 42 percent in the 2025-26 school year and 45 percent in the 2026-27 school year.
The bill changes the appropriation to a sum sufficient and provides that, beginning in the 2025-26 school year, after full payment of hospital and convalescent home costs, the remaining costs are reimbursed at 90 percent of eligible costs.
For further information see the state fiscal estimate, which will be printed as an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:
AB1209,1
1
Section
1
.
16.5187 of the statutes is created to read:
AB1209,2,4
2
16.5187
Transfers involving the school aid fund.
Beginning in fiscal
3
year 2025-26, the secretary shall transfer from the general fund to the school aid
4
fund the amount specified under s. 25.492.
AB1209,2
5
Section
2
.
20.255 (2) (b) of the statutes is amended to read:
AB1209,3,2
6
20.255
(2)
(b)
Aids for special education and school age parents programs.
The
7
amounts in the schedule
A sum sufficient
for the payment of
the full cost of special
8
education for children in hospitals and convalescent homes under s. 115.88 (4) and
1
for the payment of
aids for special education and school age parents programs
2
under ss. 115.88, 115.93 and 118.255
as provided under s. 115.882
.
AB1209,3
3
Section
3
.
20.255 (2) (ks) of the statutes is created to read:
AB1209,3,6
4
20.255
(2)
(ks)
Supplemental school aid.
From the school aid fund, all moneys
5
transferred to the school fund under s. 16.5187 in the previous fiscal year for
6
supplemental school aid under s. 121.24.
AB1209,4
7
Section
4
.
25.17 (1) (om) of the statutes is created to read:
AB1209,3,8
8
25.17
(1)
(om) School aid fund (s. 25.492);
AB1209,5
9
Section
5
.
25.492 of the statutes is created to read:
AB1209,3,13
10
25.492 School aid fund.
There is established a separate nonlapsible trust
11
fund designated as the school aid fund to consist of an amount transferred from the
12
general fund that is equal to the amount determined annually by the department of
13
revenue under s. 73.03 (78).
AB1209,6
14
Section
6
.
71.06 (1r) (d) of the statutes, as created by
2025 Wisconsin Act 15
,
15
is amended to read:
AB1209,3,18
16
71.06
(1r)
(d) On all taxable income exceeding $323,290
, 7.65
but not
17
exceeding $750,000, 8.65 percent, except that for taxable years beginning after
18
December 31, 2025, 8.85
percent.
AB1209,7
19
Section
7
.
71.06 (1r) (e) of the statutes is created to read:
AB1209,3,21
20
71.06
(1r)
(e) On all taxable income exceeding $750,000, 17.30 percent, except
21
that for taxable years beginning after December 31, 2025, 17.70 percent.
AB1209,8
22
Section
8
.
71.06 (2) (k) 4. of the statutes, as created by
2025 Wisconsin Act
23
15
, is amended to read:
AB1209,4,2
24
71.06
(2)
(k) 4. On all taxable income exceeding $431,060
, 7.65
but not
1
exceeding $1,000,000 8.65 percent, except that for taxable years beginning after
2
December 31, 2025, 8.85
percent.
AB1209,9
3
Section
9
.
71.06 (2) (k) 5. of the statutes is created to read:
AB1209,4,5
4
71.06
(2)
(k) 5. On all taxable income exceeding $1,000,000, 17.30 percent,
5
except that for taxable years beginning after December 31, 2025, 17.70 percent.
AB1209,10
6
Section
10
.
71.06 (2) (L) 4. of the statutes, as created by
2025 Wisconsin Act
7
15
, is amended to read:
AB1209,4,10
8
71.06
(2)
(L) 4. On all taxable income exceeding $215,530
, 7.65
but not
9
exceeding $500,000 8.65 percent, except that for taxable years beginning after
10
December 31, 2025, 8.85
percent.
AB1209,11
11
Section
11
.
71.06 (2) (L) 5. of the statutes is created to read:
AB1209,4,13
12
71.06
(2)
(L) 5. On all taxable income exceeding $500,000, 17.30 percent,
13
except that for taxable years beginning after December 31, 2025, 17.70 percent.
AB1209,12
14
Section
12
.
71.07 (7) (c) of the statutes is amended to read:
AB1209,4,22
15
71.07
(7)
(c) The total credits under par. (b) 1. and 2. may not exceed an
16
amount determined by multiplying the taxpayer’s net Wisconsin income tax by a
17
ratio derived by dividing the income subject to tax in the other state that is also
18
subject to tax in Wisconsin while the taxpayer is a resident of Wisconsin, by the
19
taxpayer’s Wisconsin adjusted gross income. The credit under par. (b) 3. may not
20
exceed an amount determined by multiplying the income subject to tax in the other
21
state that is also subject to tax in Wisconsin by
7.9 percent
the applicable rate in s.
22
71.27 for the taxable year
.
AB1209,13
23
Section
13
.
71.21 (6) (a) of the statutes is renumbered 71.21 (6) (a) (intro.)
24
and amended to read:
AB1209,5,7
1
71.21
(6)
(a) (intro.) If persons who, on the day on which an election under this
2
paragraph is made, hold more than 50 percent of the capital and profits of a
3
partnership consent, a partnership that is a partnership for federal income tax
4
purposes may elect, on or before the due date or extended due date of its return
5
under this chapter, to be taxed at the entity level at
a
the applicable
rate
of 7.9
6
percent
in s. 71.27 for the taxable year
of net income reportable to this state as
7
described in par. (d) 1. for that taxable year.
AB1209,14
8
Section
14
.
71.23 (2) of the statutes is amended to read:
AB1209,6,4
9
71.23
(2)
Franchise tax.
For the privilege of exercising its franchise, buying
10
or selling lottery prizes if the winning tickets were originally bought in this state or
11
doing business in this state in a corporate capacity, except as provided under sub.
12
(3), every domestic or foreign corporation, except corporations specified in s. 71.26
13
(1), and every nuclear decommissioning trust or reserve fund shall annually pay a
14
franchise tax according to or measured by its entire Wisconsin net income of the
15
preceding taxable year at the rate
for the taxable year
set forth in s. 71.27 (2). In
16
addition, except as provided in sub. (3) and s. 71.26 (1), a corporation that ceases
17
doing business in this state and a nuclear decommissioning trust or reserve fund
18
that is terminated shall pay a special franchise tax according to or measured by its
19
entire Wisconsin net income for the taxable year during which the corporation
20
ceases doing business in this state or the nuclear decommissioning trust or reserve
21
fund is terminated at the
rates
rate for the taxable year
under s. 71.27 (2). Every
22
corporation organized under the laws of this state shall be deemed to be residing
23
within this state for the purposes of this franchise tax. All provisions of this
24
chapter and ch. 73 relating to income taxation of corporations shall apply to
1
franchise taxes imposed under this subsection, unless the context requires
2
otherwise. The tax imposed by this subsection on national banking associations
3
shall be in lieu of all taxes imposed by this state on national banking associations to
4
the extent it is not permissible to tax such associations under federal law.
AB1209,15
5
Section
15
.
71.27 (1) of the statutes is renumbered 71.27 (1) (a) and
6
amended to read:
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