Wisconsin Personal Property Tax Repeal to Streamline Compliance

On June 20, Wisconsin Gov. Tony Evers (D) signed AB 245 into law, which carries significant implications for the state’s tax landscape. Notably, the bill repealed the business personal property tax statewide.

The personal property tax typically applies to tangible assets, such as furniture, machinery, and equipment held by businesses, and reporting requirements can vary across states. Prior to the law’s enactment, Wisconsin businesses were required to file annual reports and pay taxes based on the assessed value of their tangible personal property to local assessors. This created a financial burden and complicated tax compliance, hindering innovative business growth.

Small businesses, especially those in asset-intensive industries with narrow profit margins, were particularly affected. The repeal of the tax aims to promote business growth, foster innovation, stimulate economic activity, and alleviate the burden on small businesses.

Starting on Jan. 1, 2024, personal property in Wisconsin will no longer be subject to property tax, streamlining tax obligations and allowing businesses to allocate their savings toward fueling growth. Historically, businesses filing personal property tax returns in Wisconsin were required to report their property as of Jan. 1 of the current year to the local assessor by March 1. Consequently, taxpayers who timely filed their 2023 Statement of Personal Property will no longer have personal property reporting obligations.

However, the repeal of the personal property tax may not result in complete tax savings for all businesses. Previously, Wisconsin allowed improvements on leased lands to be assessed as either personal property or real property under Wis. Stat. 70.17(1). AB 245 introduced a new code section, Wis. Stat. 70.17(3), which mandates that buildings, improvements, and fixtures on leased lands be assessed as real property starting from Jan. 1, 2024.

Despite the anticipated economic benefits, reports indicate that the local governments responsible for administering the property tax will experience an annual reduction of approximately $174 million in tax revenue. To offset this deficit, the state plans to distribute an additional $207 million to municipalities and $68 million to counties on an annual basis.

For tax practitioners who assist Wisconsin businesses with personal property tax compliance, the repeal means one fewer deadline to meet. Unlike the federal government, all states except Vermont have laws requiring a balanced budget.

Reports indicate that Wisconsin’s current two-year budget cycle is projecting a record surplus of around $7 billion. However, increased government spending coupled with an economic downturn could deplete the state’s reserves and necessitate legislative action, which might include sales or income tax rate hikes or expansion of the tax base for either or both tax types. Practitioners should therefore monitor Wisconsin’s tax developments to proactively address any potential changes that may impact taxpayers in the state.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Luke Lucas, CPA, is an associate director of state and local tax services with Berkowitz Pollack Brant.

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