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AB38: Bill Text
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2025 - 2026 LEGISLATURE
LRB-1657/1
KP:amn
2025 ASSEMBLY BILL 38
February 17, 2025 - Introduced by Representatives
Tusler
,
Behnke
,
Green
,
Gundrum
,
Kreibich
,
Maxey
,
Mursau
,
Penterman
,
Piwowarczyk
,
Tittl
,
Tranel
and
Wichgers
, cosponsored by Senators
Jacque
,
Bradley
,
Hutton
,
Cabral-Guevara
,
Feyen
,
Nass
,
Quinn
and
Tomczyk
. Referred to Committee on Ways and Means.
AB38,1,7
1
An Act
to repeal
71.63 (6) (n) 1. and 71.63 (6) (n) 2.;
to renumber and amend
2
71.63 (6) (n) (intro.);
to amend
71.05 (6) (b) 19. cm., 71.05 (6) (b) 19. dm., 71.05
3
(6) (b) 28. e., 71.05 (6) (b) 28. f., 71.05 (6) (b) 32. b., 71.05 (6) (b) 32. c., 71.05 (6)
4
(b) 33. b., 71.05 (6) (b) 33. c., 71.05 (6) (b) 35. c., 71.05 (6) (b) 35. d., 71.05 (6) (b)
5
38. c., 71.05 (6) (b) 38. d., 71.05 (6) (b) 42. c., 71.05 (6) (b) 42. d. and 71.05 (6) (b)
6
43. f.;
to create
71.05 (1) (j) of the statutes;
relating to:
an income tax
7
exemption for cash tips paid to an employee.
Analysis by the Legislative Reference Bureau
This bill creates an income tax exemption for cash tips received by an employee from the customers of the employee’s employer.
Because this bill relates to an exemption from state or local taxes, it may be referred to the Joint Survey Committee on Tax Exemptions for a report to be printed as an appendix to the bill.
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:
AB38,1
1
Section
1
.
71.05 (1) (j) of the statutes is created to read:
AB38,2,3
2
71.05
(1)
(j)
Tips.
Amounts received as cash tips by an employee from the
3
customers of the employee’s employer.
AB38,2
4
Section
2
.
71.05 (6) (b) 19. cm. of the statutes is amended to read:
AB38,2,17
5
71.05
(6)
(b) 19. cm. For taxable years beginning after December 31, 2020, for
6
a person who is a nonresident or a part-year resident of this state, modify the
7
amount calculated under subd. 19. b. by multiplying the amount by a fraction the
8
numerator of which is the person’s wages, salary,
tips,
unearned income, and net
9
earnings from a trade or business that are taxable by this state and the
10
denominator of which is the person’s total wages, salary,
tips,
unearned income,
11
and net earnings from a trade or business. In this subd. 19. cm., for married
12
persons filing separately “wages, salary,
tips,
unearned income, and net earnings
13
from a trade or business” means the separate wages, salary,
tips,
unearned income,
14
and net earnings from a trade or business of each spouse, and for married persons
15
filing jointly “wages, salary,
tips,
unearned income, and net earnings from a trade
16
or business” means the total wages, salary,
tips,
unearned income, and net earnings
17
from a trade or business of both spouses.
AB38,3
18
Section
3
.
71.05 (6) (b) 19. dm. of the statutes is amended to read:
AB38,2,22
19
71.05
(6)
(b) 19. dm. For taxable years beginning after December 31, 2020,
20
reduce the amount calculated under subd. 19. b. or cm. to the person’s aggregate
21
wages, salary,
tips,
unearned income, and net earnings from a trade or business
22
that are taxable by this state.
AB38,4
1
Section
4
.
71.05 (6) (b) 28. e. of the statutes is amended to read:
AB38,3,13
2
71.05
(6)
(b) 28. e. For an individual who is a nonresident or part-year
3
resident of this state, multiply the amount calculated under subd. 28. a., am., b., c.
4
or d. by a fraction the numerator of which is the individual’s wages, salary,
tips,
5
unearned income and net earnings from a trade or business that are taxable by this
6
state and the denominator of which is the individual’s total wages, salary,
tips,
7
unearned income and net earnings from a trade or business. In this subd. 28. e., for
8
married persons filing separately “wages, salary,
tips,
unearned income and net
9
earnings from a trade or business” means the separate wages, salary,
tips,
10
unearned income and net earnings from a trade or business of each spouse, and for
11
married persons filing jointly “wages, salary,
tips,
unearned income and net
12
earnings from a trade or business” means the total wages, salary,
tips,
unearned
13
income and net earnings from a trade or business of both spouses.
AB38,5
14
Section
5
.
71.05 (6) (b) 28. f. of the statutes is amended to read:
AB38,3,17
15
71.05
(6)
(b) 28. f. Reduce the amount calculated under subd. 28. a., am., b., c.,
16
d. or e. to the individual’s aggregate wages, salary,
tips,
unearned income and net
17
earnings from a trade or business that are taxable by this state.
AB38,6
18
Section
6
.
71.05 (6) (b) 32. b. of the statutes is amended to read:
AB38,4,6
19
71.05
(6)
(b) 32. b. For an individual who is a nonresident or part-year
20
resident of this state, multiply the amount calculated under subd. 32. a. by a
21
fraction the numerator of which is the individual’s wages, salary,
tips,
unearned
22
income and net earnings from a trade or business that are taxable by this state and
23
the denominator of which is the individual’s total wages, salary,
tips,
unearned
24
income and net earnings from a trade or business. In this subd. 32. b., for married
1
persons filing separately “wages, salary,
tips,
unearned income and net earnings
2
from a trade or business” means the separate wages, salary,
tips,
unearned income
3
and net earnings from a trade or business of each spouse, and for married persons
4
filing jointly “wages, salary,
tips,
unearned income and net earnings from a trade or
5
business” means the total wages, salary,
tips,
unearned income and net earnings
6
from a trade or business of both spouses.
AB38,7
7
Section
7
.
71.05 (6) (b) 32. c. of the statutes is amended to read:
AB38,4,10
8
71.05
(6)
(b) 32. c. Reduce the amount calculated under subd. 32. a. or b. to the
9
individual’s aggregate wages, salary,
tips,
unearned income and net earnings from
10
a trade or business that are taxable by this state.
AB38,8
11
Section
8
.
71.05 (6) (b) 33. b. of the statutes is amended to read:
AB38,4,23
12
71.05
(6)
(b) 33. b. For an individual who is a nonresident or part-year
13
resident of this state, multiply the amount calculated under subd. 33. a. by a
14
fraction the numerator of which is the individual’s wages, salary,
tips,
unearned
15
income and net earnings from a trade or business that are taxable by this state and
16
the denominator of which is the individual’s total wages, salary,
tips,
unearned
17
income and net earnings from a trade or business. In this subd. 33. b., for married
18
persons filing separately “wages, salary,
tips,
unearned income and net earnings
19
from a trade or business” means the separate wages, salary,
tips,
unearned income
20
and net earnings from a trade or business of each spouse, and for married persons
21
filing jointly “wages, salary,
tips,
unearned income and net earnings from a trade or
22
business” means the total wages, salary,
tips,
unearned income and net earnings
23
from a trade or business of both spouses.
AB38,9
24
Section
9
.
71.05 (6) (b) 33. c. of the statutes is amended to read:
AB38,5,3
1
71.05
(6)
(b) 33. c. Reduce the amount calculated under subd. 33. a. or b. to the
2
individual’s aggregate wages, salary,
tips,
unearned income and net earnings from
3
a trade or business that are taxable by this state.
AB38,10
4
Section
10
.
71.05 (6) (b) 35. c. of the statutes is amended to read:
AB38,5,16
5
71.05
(6)
(b) 35. c. For an individual who is a nonresident or part-year
6
resident of this state, multiply the amount calculated under subd. 35. a. or b., by a
7
fraction the numerator of which is the individual’s wages, salary,
tips,
unearned
8
income, and net earnings from a trade or business that are taxable by this state and
9
the denominator of which is the individual’s total wages, salary,
tips,
unearned
10
income, and net earnings from a trade or business. In this subd. 35. c., for married
11
persons filing separately “wages, salary,
tips,
unearned income, and net earnings
12
from a trade or business” means the separate wages, salary,
tips,
unearned income,
13
and net earnings from a trade or business of each spouse, and for married persons
14
filing jointly “wages, salary,
tips,
unearned income, and net earnings from a trade
15
or business” means the total wages, salary,
tips,
unearned income, and net earnings
16
from a trade or business of both spouses.
AB38,11
17
Section
11
.
71.05 (6) (b) 35. d. of the statutes is amended to read:
AB38,5,20
18
71.05
(6)
(b) 35. d. Reduce the amount calculated under subd. 35. a., b., or c. to
19
the individual’s aggregate wages, salary,
tips,
unearned income, and net earnings
20
from a trade or business that are taxable by this state.
AB38,12
21
Section
12
.
71.05 (6) (b) 38. c. of the statutes is amended to read:
AB38,6,9
22
71.05
(6)
(b) 38. c. For an individual who is a nonresident or part-year
23
resident of this state, multiply the amount calculated under subd. 38. a. or b., by a
24
fraction the numerator of which is the individual’s wages, salary,
tips,
unearned
1
income, and net earnings from a trade or business that are taxable by this state and
2
the denominator of which is the individual’s total wages, salary,
tips,
unearned
3
income, and net earnings from a trade or business. In this subd. 38. c., for married
4
persons filing separately “wages, salary,
tips,
unearned income, and net earnings
5
from a trade or business” means the separate wages, salary,
tips,
unearned income,
6
and net earnings from a trade or business of each spouse, and for married persons
7
filing jointly “wages, salary,
tips,
unearned income, and net earnings from a trade
8
or business” means the total wages, salary,
tips,
unearned income, and net earnings
9
from a trade or business of both spouses.
AB38,13
10
Section
13
.
71.05 (6) (b) 38. d. of the statutes is amended to read:
AB38,6,13
11
71.05
(6)
(b) 38. d. Reduce the amount calculated under subd. 38. a., b., or c. to
12
the individual’s aggregate wages, salary,
tips,
unearned income, and net earnings
13
from a trade or business that are taxable by this state.
AB38,14
14
Section
14
.
71.05 (6) (b) 42. c. of the statutes is amended to read:
AB38,7,2
15
71.05
(6)
(b) 42. c. For an individual who is a nonresident or part-year
16
resident of this state, multiply the amount calculated under subd. 42. a. or b., by a
17
fraction the numerator of which is the individual’s wages, salary,
tips,
unearned
18
income, and net earnings from a trade or business that are taxable by this state and
19
the denominator of which is the individual’s total wages, salary,
tips,
unearned
20
income, and net earnings from a trade or business. In this subd. 42. c., for married
21
persons filing separately “wages, salary,
tips,
unearned income, and net earnings
22
from a trade or business” means the separate wages, salary,
tips,
unearned income,
23
and net earnings from a trade or business of each spouse, and for married persons
24
filing jointly “wages, salary,
tips,
unearned income, and net earnings from a trade
1
or business” means the total wages, salary,
tips,
unearned income, and net earnings
2
from a trade or business of both spouses.
AB38,15
3
Section
15
.
71.05 (6) (b) 42. d. of the statutes is amended to read:
AB38,7,6
4
71.05
(6)
(b) 42. d. Reduce the amount calculated under subd. 42. a., b., or c. to
5
the individual’s aggregate wages, salary,
tips,
unearned income, and net earnings
6
from a trade or business that are taxable by this state.
AB38,16
7
Section
16
.
71.05 (6) (b) 43. f. of the statutes is amended to read:
AB38,7,20
8
71.05
(6)
(b) 43. f. An individual who is a nonresident or part-year resident of
9
this state and who claims the subtraction under this subdivision shall multiply the
10
amount calculated under subd. 43. a., b., c., or d. by a fraction the numerator of
11
which is the individual’s wages, salary,
tips,
unearned income, and net earnings
12
from a trade or business that are taxable by this state and the denominator of which
13
is the individual’s total wages, salary,
tips,
unearned income, and net earnings from
14
a trade or business. In this subd. 43. f., for married persons filing separately
15
“wages, salary,
tips,
unearned income, and net earnings from a trade or business”
16
means the separate wages, salary,
tips,
unearned income, and net earnings from a
17
trade or business of each spouse, and for married persons filing jointly “wages,
18
salary,
tips,
unearned income, and net earnings from a trade or business” means
19
the total wages, salary,
tips,
unearned income, and net earnings from a trade or
20
business of both spouses.
AB38,17
21
Section
17
.
71.63 (6) (n) (intro.) of the statutes is renumbered 71.63 (6) (n)
22
and amended to read:
AB38,7,23
23
71.63
(6)
(n) In the form of tips paid to employees
if:
.
AB38,18
24
Section
18
.
71.63 (6) (n) 1. of the statutes is repealed.
AB38,19
1
Section
19
.
71.63 (6) (n) 2. of the statutes is repealed.
AB38,20
2
Section
20
. Initial applicability.
AB38,8,3
3
(
1
)
This act first applies to taxable years beginning after December 31, 2024.
AB38,8,4
4
(end)
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