Wisconsin eliminates personal property tax effective January 1, 2024

Jan 19, 2024 | Legislation, Legislative News

Businesses in Wisconsin are no longer subject to personal property tax as of January 1, 2024, due to the enactment of 2023 Wisconsin Act 12. However, some property previously subject to personal property tax may now be taxed as real property. 

How has Wisconsin property tax changed?

Act 12 repeals the following taxes on and after January 1, 2024:

  • Locally assessed tax on personal property
  • State-assessed tax on manufacturing personal property 
  • State-assessed tax on rail personal property

The exemption applies to personal property as defined in section 70.04, as well as to “steam and other vessels, furniture, and equipment.” Household personal property was already exempt from tax in Wisconsin, as were computers, inventories, and manufacturing machinery. 

The personal property tax exemption does not apply to:

  • Real property as defined in section 70.03 (plus manufactured and mobile homes, unless otherwise exempt or subject to a parking permit fee)
  • Buildings, improvements, and fixtures on leased land, exempt land, forest croplands, and managed forest land assessed as real property under section 70.17(3)
  • Utility property subject to state taxation under section 76.025(2)

Additionally, Act 12 does not affect the following:

  • Completion of 2023 personal property tax collections in 2024
  • Correction of 2023 personal property tax errors on the 2024 assessment roll
  • Assessment of personal property omitted from 2022 and 2023 on the 2024 assessment roll (or omitted from 2023 on the 2025 assessment roll)

The Wisconsin Department of Revenue provides more details in its slim information sheet on the Act 12 property tax exemption and weighty Property Assessment Manual.

How has Wisconsin real property tax changed?

Some property previously subject to the personal property tax may be taxed as real property under Act 12.

Wisconsin previously allowed improvements to certain lands to be treated as either personal property or real property, for tax purposes. Act 12 requires buildings, fixtures, and improvements to be assessed as real property when located on:

  • Exempt lands
  • Forest croplands
  • Leased lands
  • Managed forest lands

Another change: Assessors may now create a separate tax parcel for buildings, fixtures, and improvements that are located on leased lands and not owned by the landowner. The owner of such buildings, fixtures, and improvements would then be assessed for any real property tax due on them.

Businesses not already classified as a manufacturing establishment have until July 1 of each year (as opposed to March 1, as prior to Act 12) to apply for manufacturing status for that year. A business must have manufacturing status to receive the manufacturing tax credit.

Why did Wisconsin get rid of personal property tax?

Wisconsin has taxed some personal property since before Wisconsin was a state in 1848 — so why get rid of the personal property tax now?

The short answer is: Personal property tax in Wisconsin had become more trouble than it was worth. Compliance was burdensome for businesses, and Wisconsin provided so many personal property tax exemptions that it didn’t generate much revenue. 

Governor Tony Evers pushed for the repeal of what he called the “burdensome personal property tax.” His 2023–25 biennial budget “provides $173.8 million in aid payments to local governments to hold them harmless” from the repeal of the personal property tax.

Wisconsin isn’t alone. Personal property is subject to tax in about 39 states, and roughly 100 bills seeking to reduce or eliminate taxes on personal property were introduced in 23 states in 2023. Like Wisconsin, Arizona, Colorado, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Texas, West Virginia, and Wyoming pursued a complete exemption for personal property. Unlike Wisconsin, these proposals didn’t make it into law.

“Complying with personal property taxes is onerous,” observes the Tax Foundation. It requires documenting all assets, including cleaning supplies for the office kitchen, “along with their acquisition price, acquisition date, and depreciation.” And while few states that tax personal property provide an exception or exemption for small businesses, “the vast majority of personal property tax revenue comes from a very small number of large businesses and utilities.”

Source: Wisconsin eliminates personal property tax in 2024 (avalara.com)

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