individual income tax subtraction for certain theft losses

Wisconsin Legislature: AB685: Bill Text

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2025 - 2026 LEGISLATURE
LRB-5517/1
EKL:ajk
2025 ASSEMBLY BILL 685
November 26, 2025 - Introduced by Representative
Swearingen
, cosponsored by Senator
Felzkowski
. Referred to Committee on Ways and Means.
AB685,1,2
1
An Act

to amend
71.07 (5) (a) 3.;
to create
71.05 (6) (b) 57. of the statutes;
2
relating to:
individual income tax subtraction for certain theft losses.
Analysis by the Legislative Reference Bureau
This bill allows taxpayers to subtract certain theft losses when calculating their income for individual income tax purposes, beginning with taxable year 2024.
Under the bill, a taxpayer may subtract a theft loss if the loss is deductible in the taxable year as an itemized deduction under federal law, regardless of whether the individual claims the federal deduction. Under federal law, the deduction is limited to losses that are related to a profit-seeking activity or connected to a federally declared disaster (or, beginning next year, a state declared disaster). Federal law imposes additional conditions, including that there be no reasonable chance of recovering the money or property, and generally provides that a theft loss is claimed in the year in which the taxpayer discovers the loss.
The bill also provides that taxpayers who make the subtraction under the bill may not include the theft loss in the amount used to claim the itemized deductions tax credit. Under current law, that credit is based on the amount of specified itemized deductions a taxpayer is eligible to claim for federal tax purposes.
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:
AB685,1
1
Section

1
.
71.05 (6) (b) 57. of the statutes is created to read:
AB685,2,4
2
71.05
(6)
(b) 57.

For taxable years beginning after December 31, 2023, the
3
amount of any loss arising from theft to the extent that the theft loss is deductible
4
in the taxable year under section
165
(c) (2) or (3) of the Internal Revenue Code.
AB685,2
5
Section

2
.
71.07 (5) (a) 3. of the statutes is amended to read:
AB685,2,10
6
71.07
(5)
(a) 3. Casualty and theft deductions under section 165 (c) (3) of the
7
internal revenue code

Internal Revenue Code
, except for casualty losses that are
8
directly related to a presidentially declared disaster under
26 USC

section

7508A

of
9
the Internal Revenue Code. No addition may be made under this subdivision for
10
any amount for which a subtraction is made under s. 71.05 (6) (b) 57
.
AB685,2,11
11
(end)

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