AB 84

Under current law, as created in

2011 Wisconsin Act 32

, the earned income tax

credit (EITC), as a percentage of the federal credit, is 4 percent for claimants with

one qualifying child, 11 percent for claimants with two qualifying children, and 34

percent for claimants with three or more qualifying children. This bill repeals those

provisions and restores former law. Under the bill, for taxable years beginning after

December 31, 2014, the EITC, as a percentage of the federal credit, would be 4

percent for claimants with one qualifying child, 14 percent for claimants with two

qualifying children, and 43 percent for claimants with three or more qualifying

children.

This bill also creates a new refundable individual income tax credit for persons

who have earned income, as defined under the Internal Revenue Code, during the

taxable year to which the claim relates. Because the credit is refundable, if the

amount of the credit for which the claimant is eligible exceeds his or her tax liability,

the difference will be refunded to the claimant by check.

Under the bill, and subject to a number of limitations and conditions, a claimant

may claim a credit equal to 25 percent of the claimant's earned income that he or she

receives in the year to which the claim relates. The maximum credit that may be

claimed each year by each claimant is $2,500. Once a claimant's earned income

exceeds $15,000, the maximum credit that may be claimed is phased down. No credit

may be claimed by an individual whose earned income exceeds $31,666. To be eligible

to claim the credit, an individual must be at least 18 years old for the entire year to

which the claim relates and the individual may not have been claimed as a dependent

for federal income tax purposes on another individual's tax return. The credit may

not be claimed by nonresidents or part-year residents of the state.