Wisconsin State Tax Credits

Wisconsin College Savings Account and Employer Contribution Credit

Overview:
Wisconsin supports education savings through tax-deductible contributions to two 529 plans—Edvest and Tomorrow’s Scholar—and offers a tax credit to employers contributing to employees’ 529 accounts. These benefits are expanded in 2024, encouraging both personal savings and employer involvement.

Who It’s For:
Wisconsin residents contributing to 529 plans for education, and employers (including sole proprietors) who support their employees’ education savings.

Four Key Highlights:

1. Higher 529 Deduction Limits for 2024:
   Taxpayers can now deduct up to $5,000 per beneficiary (joint filers) or $2,500 (separate filers). Divorced parents may each claim up to $5,000 per child.

2. Employer Credit Doubled:
   Employers now receive a 50% credit (up to $800) on contributions made to employees’ 529 plans. Sole proprietors are also eligible.

3. Qualifying Expenses Expanded:
   Includes college tuition, K-12 tuition ($10K/year), student loan repayment ($10K), and apprenticeship program costs.

4. New Rollover & Withdrawal Rules:
   Wisconsin adopts a FIFO method for 529 withdrawals and rollovers. Non-qualified withdrawals or rollovers to out-of-state plans may trigger income addbacks.

Wisconsin Business Development Tax Credit (BTC)

Overview:
The BTC program offers refundable tax credits to businesses investing in capital, creating or retaining full-time jobs, and supporting workforce housing or childcare. Administered by WEDC, it aims to strengthen Wisconsin’s economic base and support business expansion.

Who It’s For:
Businesses operating or intending to operate in Wisconsin that are making capital investments and committing to job creation or retention.

Four Key Highlights:

1. Multiple Credit Categories:
   Earn up to 10% of wages for new full-time jobs, 50% of training costs, and 5% of real property investments. Additional bonuses apply for projects in economically distressed areas or involving workforce housing/childcare.

2. Health Insurance Requirement:
   Must offer at least 50% employer-paid health coverage to employees in qualifying jobs to receive tax credits.

3. Refundable & Non-Transferable:
   Any credits exceeding tax liability are refundable, but credits cannot be sold or transferred.

4. Annual Cap and Compliance:
   Annual cap is $22 million (plus $10 million reallocated). Companies must maintain employment levels for at least five years or risk repayment of credits.

Wisconsin Enterprise Zone (EZ) Tax Credit

Overview:
The EZ Tax Credit Program provides refundable tax incentives to businesses that create or retain jobs, invest in capital, train employees, or build in-state supply chains in designated Enterprise Zones. Designed to support economically challenged areas, the program promotes business expansion and workforce development across Wisconsin.

Who It’s For:
Businesses operating in or relocating to a WEDC-designated Enterprise Zone that are investing in property, retaining or creating full-time jobs, or engaging Wisconsin-based suppliers.

Four Key Highlights:

1. Multi-Faceted Refundable Credits:
   Earn up to:

   • 7% of wages for job creation or retention.

   • 100% of qualified training costs.

   • 10% of capital investments.

   • 1% of supply chain purchases from Wisconsin vendors.

2. No Statutory Cap, But Firm Oversight:
   While there’s no legal maximum per award, WEDC can cap the total credit amount or time period, and credits are subject to strict compliance and annual verification.

3. Broad Eligibility with Strong Local Impact:
   Credits support new operations, expansions, or supply chain strengthening and give priority to economically distressed areas—including smaller municipalities.

4. Refundable but Non-Transferable:
   Any unused portion of the credit is refunded, providing direct financial benefit. However, credits cannot be sold or transferred.

Wisconsin Work Opportunity Tax Credit (WOTC)

Overview:
The Wisconsin WOTC offers a federal tax credit to businesses that hire employees from certain disadvantaged target groups. It supports inclusive hiring and helps reduce employment barriers while offsetting employer tax liabilities.

Who It’s For:
Wisconsin employers hiring new employees from eligible groups like veterans, SNAP or TANF recipients, ex-felons, SSI recipients, or long-term unemployed individuals.

Four Key Highlights:

1. Up to $9,600 Per Hire:
   Credit amount depends on employee group, wages paid, and hours worked. Veterans and long-term TANF recipients yield the highest credits, especially if employed for 400+ hours.

2. 28-Day Certification Rule:
   Employers must submit IRS Form 8850 and ETA Form 9061 to the Wisconsin DWD within 28 days of the employee’s start date using the eWOTC portal.

3. First-Year Wage Focus:
   Credit is calculated on first-year wages only and requires at least 120 hours of work to qualify. Credits range from $1,500 to $9,600 depending on the group and duration of employment.

4. Broad Eligibility, Simple Claiming:
   Applies to most businesses hiring new, qualifying employees. Employers file IRS Form 5884 with their federal return and may use Form 3800 to consolidate general business credits.

Wisconsin Job Creation Enterprise Zone (EZ) Tax Credit

Overview:
The Wisconsin Job Creation EZ Tax Credit incentivizes businesses to create and maintain new full-time jobs within designated Enterprise Zones (EZs) by offering refundable credits based on qualifying wages.

Who It’s For:
Businesses operating in a designated Wisconsin EZ that are creating net new full-time jobs and maintaining them throughout the EZ period.

Four Key Highlights:

1. Up to 7% Credit on Wages:
   Earn a refundable tax credit of up to 7% of qualified wages for new full-time employees. Wages above $100,000 per employee are excluded.

2. Zone-Based Minimum Wages:
   Credit eligibility requires meeting EZ-tier-specific thresholds:

   • Tier 1: Must exceed 150% of federal minimum wage (calculated over 2,080 hours).

   • Tier 2: Must exceed a $30,000 annual wage.

3. Partial-Year & Base-Year Considerations:

   • Partial-year employees only count if still employed at year-end.

   • Credit is based on net new jobs beyond the base-year employment level.

4. WEDC Oversight & Compliance:
   Program is administered by WEDC. Businesses must apply, enter into a contract, and maintain the jobs created for the full Enterprise Zone term to retain eligibility.

Wisconsin Job Retention Enterprise Zone (EZ) Tax Credit

Overview:
The Wisconsin Job Retention EZ Tax Credit provides up to 7% of payroll costs as a refundable credit to businesses that maintain their base-year full-time employee count and payroll levels within an Enterprise Zone.

Who It’s For:
Wisconsin businesses operating in a designated EZ that aim to retain existing full-time jobs and stabilize payroll over time.

Four Key Highlights:

1. Up to 7% Payroll Credit:
   Earn a refundable credit equal to up to 7% of eligible payroll costs—only if employee count and payroll match or exceed the base year.

2. Five-Year Maximum Window:
   Retention credits can only be claimed for up to five consecutive tax years, incentivizing long-term job stability.

3. $100K Wage Cap:
   Wages over $100,000 per employee are excluded from payroll calculations for the purpose of the credit.

4. Strict Year-End Employment Test:
   Partial-year employees only qualify if they’re still employed at the end of the tax year—making year-end headcount essential for eligibility.

Wisconsin Significant Capital Expenditure Tax Credit

Overview:
This tax credit provides a refundable credit of up to 10% for qualifying capital investments made by Certified Businesses within Wisconsin Enterprise Zones (EZs). It’s designed to promote long-term economic development through tangible asset expansion.

Who It’s For:
Businesses certified by WEDC operating in an EZ that are investing in significant, depreciable, tangible capital assets such as land, buildings, and equipment.

Four Key Highlights:

1. 10% Credit on Eligible Investments:
   Earn 10% of qualifying capital expenditures—including property, equipment, buildings, and capital leases—within the Enterprise Zone.

2. Must Be Depreciable & Tangible:
   Only depreciable tangible assets qualify (e.g., no goodwill, trademarks, or software-only investments).

3. EZ Certification Required:
   Businesses must be WEDC-certified and meet all contractual and compliance obligations tied to their specific Enterprise Zone agreement.

4. Maintain Investment Duration:
   Qualified assets must be retained for the entire duration of the EZ contract to remain eligible for the credit—early disposal may trigger recapture.

Wisconsin Qualified New Business Venture (QNBV) Tax Credit

Overview:
This tax credit encourages early-stage investment in innovative Wisconsin-based businesses by offering investors a 25% tax credit on qualified equity investments in certified QNBVs. It's designed to spur local innovation, job growth, and entrepreneurship.

Who It’s For:

• Businesses: Startups under 10 years old, headquartered in Wisconsin, with 51%+ of payroll and employees based in-state.

• Investors: Accredited individuals or angel networks investing directly in certified QNBVs.

Four Key Highlights:

1. 25% Tax Credit for Investors:
   Qualified investors receive a 25% income tax credit on equity investments in certified QNBVs—up to $3 million in credits per business.

2. Ideal for Innovative Startups:
   Only businesses in technology, advanced manufacturing, agriculture, or renewable energy qualify—real estate, retail, and banking businesses are excluded.

3. $12M Investment Cap:
   Each QNBV can receive up to $12 million in tax-eligible investments. Investors must hold the investment for 3 years unless there's a qualifying liquidity event.

4. Carryforward for 15 Years:
   If the credit exceeds tax liability, unused portions can be carried forward for up to 15 years, maximizing long-term value.