Democratic Gov. Tony Evers approved a Republican-led tax bill to expand Wisconsin’s child and dependent tax credit Monday after vetoing three income tax bills.
The law will allow eligible taxpayers to claim 100% of their federal credit, whereas the previous law allowed them to claim state credit equal to 50%. Tax credit will increase for one child or dependent to $10,000 or for two or more children or dependents to $20,000.
The average filer will save around $656, according to the Legislative Fiscal Bureau,
Evers in a press release Monday said the bill, which received bipartisan support in the Legislature, “will go a long way toward defraying yearly family expenses on child care, giving Wisconsinites some breathing room in their household budgets and making sure our kids have the early support and care they need.”
However, Evers said Wisconsin still needs “urgent, long-term investments” to further reduce child care costs. He urged Republican lawmakers to fund Child Care Counts, a pandemic-era aid program for child care providers that Republicans refused to fund in the latest two-year state budget.
Evers provided a $170 million funding boost in October 2023 to extend the program through June.
“Republican legislators remain on the clock to make the meaningful investments necessary to prevent the collapse of our child care industry,” Evers said. “I will work with anyone from either side of the aisle who’s ready to work together to get this done.”
What bills were vetoed?
Evers has recently vetoed three Republican-led income tax bills that would expand the second-lowest income tax bracket, increase married couples’ tax credit and exempt state taxes on most retirement income.
The vetoed bills would have enacted tax cuts from a variety of ways:
The largest tax cut bill proposed by Republicans would have increased Wisconsin's second-lowest income tax bracket. Currently, the bracket consists of individuals earning from $14,320 to $28,640 and married couples earning $19,090 to $38,190.
The proposed tax bracket expansion would cover people making up to $112,500 and married couples making up to $150,000. People added into the tax bracket would pay 4.4% instead of 5.3% in state taxes.
Another plan would increase the maximum credit from $480 to $870, for which married people filing joint income tax returns may claim equal to 3% of income tax credit from their earned income. The spouse with the lower income would then have the maximum credit of $870.
The final bill would cut taxes for retired people ages 65 and older. The first $75,000 of retirement income subject to taxes and the first $150,000 for married couples would be excluded .
Under the current law, the amount is up to $5,000 of payments or disruptions, with eligibility requiring the income to be under $15,000 or $30,000 if married. This bill would have cut $1,582, according to the Wisconsin Public Radio.
“If enacted, [the bills] would set Wisconsin into a path toward insolvency, leaving the state unable to meet basic duties to provide adequate funding for programs and services provided by the state,” Evers said in a statement on March 1.
Evers said tax cuts he approved during his term have benefited middle-class taxpayers, with 65% of the relief going to taxpayers with incomes below $150,000 per year.
But Assembly Speaker Robin Vos, R-Rochester, said in a statement last week Evers is not supporting middle and lower income taxpayers in the state as well as retirees.
Evers vetoed similar middle-class tax proposals from Republicans in July because they awarded the largest tax cuts to Wisconsin’s wealthiest.
“Despite repeated opportunities provided by Legislative Republicans, Governor Evers refuses to support tax cuts that directly benefit the middle class, even when using defined parameters on what he deems as middle class,” Vos’ statement said.
Wisconsin's budget surplus tug-of-war
Wisconsin’s budget surplus is estimated to be more than $3 billion at the beginning of the next budget cycle in 2025.
The bipartisan child care tax credit is estimated to cost Wisconsin about $70 million, according to Wisconsin Public Radio. With the other bills vetoed, the majority of the state's surplus will stay untouched. If enacted, the Republican tax cuts would have used a sizable slice of the budget surplus on tax cuts, including for people making more than $300,000 per year.
The three bills combined would have cost Wisconsin around $1.4 billion per year, according to WPR.
