Wisconsin Assembly to debate state ‘no tax on tips’ bill

Republican lawmakers are moving forward with a plan to cut state taxes on tips in Wisconsin, mirroring a similar change at the federal level.

The GOP bill would create an income tax subtraction for qualified tips that people can deduct on their income tax returns. It would cover tips received in 2025 and continue through the year 2028.

The measure comes about a year after Democratic Gov. Tony Evers included a “no taxes on tips” provision in his proposed state budget, only to see it removed by Republicans who run the Legislature. It was one of more than 600 budget provisions proposed by Evers that GOP lawmakers rejected in a single vote last May, most without any debate.

At a meeting of the Legislature’s budget committee Wednesday, Democrats said making the change in this bill would require people to file amended returns to take advantage of the tax break. Rep. Deb Andraca, D-Whitefish Bay, said it’s a popular policy that should happen, but not like this.

“Had it passed in the governor’s budget, it would have passed in time for the Department of Revenue to issue tax guidance,” Andraca said. “But doing it now, we’re setting ourselves up for an awful lot of red tape, reprinting forms, having people re-file.”

The plan passed the budget committee 12-4 with only Republicans in support. Sen. Howard Marklein, R-Spring Green, noted that if the state waited a year to implement the change, it would mean workers would have to wait for the benefits. The Legislative Fiscal Bureau estimated the difference would be $44 million.

“We’re talking a lot of money that those taxpayers are going to forfeit,” Marklein said.

The federal “no tax on tips” plan was championed by President Donald Trump and signed into law as part of his “Big Beautiful Bill Act” last summer.

The state plan is scheduled for a vote before the entire Assembly Thursday. It has yet to receive a vote before the Senate.

The Legislature is scheduled to adjourn for the rest of this year by mid-March.