Early in the morning on July 3, the Wisconsin legislature passed a $111.1 billion budget bill for the 2025-27 biennium and Gov. Evers quickly signed it. Overall, the plan is a 12 percent increase in spending.

The vote came just days after the state’s fiscal year closed on June 30. With new legislative maps resulting in narrower margins—particularly in the Senate, where Republicans hold an 18-15 majority—the budget faced added pressure to gain enough support to move forward and be signed by Democratic Governor Evers.

The budget talks between the Governor and Republican legislative leaders were on and off for the last 6 weeks, with a final movement to bipartisan deal announced on July 1, 2025, after the Senate Democratic leader was pulled into the discussions.

The top lines of the deal include a combination of the priorities of both the legislative Republican and Governor Evers’ “Year of the Kid” policy priorities including:

• Tax Cut: $1.5 billion in income tax cuts targeting the middle class by expanding the second lowest income tax bracket, making the first $24,000 of retirement income for those 67 and older tax-free, and eliminating the 5% sales tax on electricity.
• Child Care: over $330 million in investments for the child care industry, including the first-ever state funded child care program funded by state general purpose revenue
• K-12: nearly $1.4 billion increase in spendable revenue for K-12 schools across the state; including increasing the special education reimbursement rate to 42 percent in the first year and 45 percent in the second year.
• UW System: Increase of over $256 million for the Universities of Wisconsin.

In addition, the agreement includes an additional $200 million for transportation funding through a variety of fee increases. Also, a key piece of the package is $1.4 billion to cover Medicaid costs and an increase of the hospital assessment from 1.8 percent to 6 percent, generating more than $1 billion in additional dollars for hospitals, annually. The state would retain 30% of the matching federal funds, which would go into Wisconsin’s Medicaid trust fund.