Amount raised from Wisconsin wheel taxes triples in four years, new report shows

MADISON — It’s getting more expensive to own a car in parts of Wisconsin.

Over four years, the amount paid in local wheel taxes has tripled, according to a report released Wednesday by the nonpartisan Wisconsin Policy Forum.

The reason is simple: Wheel taxes are one of the few types of fees local governments can raise at their discretion. The Legislature for years has kept a tight lid on how much they can increase property taxes, limiting their ability to deal with rising costs.

In 2011, just four communities had wheel taxes. By early next year, that will have risen to 44, according to the policy forum.

The amount the communities with wheel taxes is raising is going way up. In fiscal 2017, drivers paid $20.7 million in wheel taxes. In the fiscal year that ended this summer, that rose to $62.8 million, or three times as much.

Not only are more communities charging wheel taxes, but the amounts they’re imposing are also higher.

In the past, fees were typically $10 or $20 a year, according to the policy forum. In January, Janesville will double its fee to $40 and Port Edwards will begin imposing a $35 fee.

Vehicle owners pay wheel taxes along with their annual vehicle registration fees. In the state’s most populous areas, they are charged three fees at once — to the state, county and city.

Madison residents pay the most for a typical vehicle — $153, which includes $85 to the state, $40 to the city and $28 to Dane County. The city reimburses some low-income families for its fee with a gift card.

Milwaukee residents typically pay $145, which includes $85 to the state, $30 to the city and $30 to Milwaukee County.

Those fees cover most vehicles. The state charges higher fees for light trucks, hybrid vehicles and electric vehicles.

While wheel taxes are expanding in many parts of the state, they’re going away in some places. Chippewa County, for instance, eliminated its wheel tax after several years, according to the policy forum.

Despite the wheel taxes, the fees and taxes for owning a car in Wisconsin are often lower than in neighboring states.

A Milwaukee resident who owns a 2020 Toyota Camry and drives 10,000 miles pays $248 a year in taxes and fees, according to the policy forum. That’s less than those who live in the largest cities in all of Wisconsin’s neighboring states.

That’s not the case when considering older vehicles. The taxes and fees paid on a 2008 Camry in Milwaukee are higher than they would be for the same vehicle in Detroit and Minneapolis.

That’s because Wisconsin charges a flat fee for all classes of vehicles, regardless of age or value. Michigan and Minnesota take age and value into account when levying fees. 

The revenue from wheel taxes in Wisconsin must go toward street repairs and other transportation expenses. Imposing wheel taxes frees up funds raised from property taxes that local officials can use to pay for other services.

Contact Patrick Marley at patrick.marley@jrn.com. Follow him on Twitter at @patrickdmarley.