Some Middle-Income Residents Pay More Under Wisconsin’s Income Tax System

New Study Notes Tax Rates, Standard Deductions Create A Tax 'Cliff' For Some Income Brackets

Seth Perlman/AP Photo

A new study of Wisconsin’s tax system finds some middle-earning residents are paying disproportionately higher taxes than those in other states. That’s according to a new analysis from the Wisconsin Taxpayers Alliance.

The study shows couples making between $50,000 and $150,000 a year pay 13 to 16 percent more in state income taxes than those elsewhere.

David Callender, of the Taxpayers Alliance, said that’s somewhat out of step with the income tax burden for those in other brackets.

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“People earning, let’s say, a gross income of less than about $20,000 a year do very well,” Callender said. “There are a lot of tax credits for them, and they get money back. At the opposite end of the tax structure in Wisconsin, we have a reasonably progressive system as well.”

Those at the highest income levels paid 7.8 percent to 15.4 percent more in state income tax than similar earners in other states, while the average state tax refund for couples at low income levels was $591, greater than the national average of $391.

Callender said the state’s marginal income tax rates begin rising for incomes of about $15,000 and $30,000 a year — while the state’s standard income tax deduction decreases for higher incomes.

“It’s generally the folks who are in the middle that end up paying a higher share of their wages or of their incomes to taxes, than the other two ends of the spectrum,” he said, “so you have that sort of fairly sharp cliff.”

The study ranks Wisconsin’s overall income tax burden 12th among the 41 states that levy individual income taxes.