AB 172

This bill creates a nonrefundable individual income tax credit for taxpayers

with Wisconsin taxable income (WTI) below certain income thresholds. The credit

phases out for taxpayers with WTI above these thresholds. Income thresholds and

phase-out rates vary by filing status as follows:

1. For an individual who files as a single individual or head of household, the

maximum credit amount is $200 if the claimant's WTI in the year to which the claim

relates is less than $75,000. The maximum credit phases out from $200 to zero as

the claimant's WTI increases from $75,000 to $112,500.

2. For a married couple that files a joint return, the maximum credit amount

is $200 if the sum of the claimant's WTI and his or her spouse's WTI in the year to

which the claim relates is less than $100,000. The maximum credit phases out from

$200 to zero as the couple's household WTI increases from $100,000 to $150,000. For

a married couple that files separately, the maximum credit amount is $100 if the

claimant's WTI in the year to which the claim relates is less than $50,000. The

maximum credit phases out from $100 to zero as the claimant's WTI increases from

$50,000 to $75,000. Generally, both spouses of a married couple may claim the credit

if they file separate returns.

Because the credit is nonrefundable, no refund is paid if the amount of the

credit exceeds the taxpayer's tax liability. Part-year and nonresidents of this state

may not claim the credit.

The bill also creates a fifth individual income tax bracket and a new tax rate

for this bracket. For those who file as a single individual, fiduciary, or head of

household, the new top rate is 8.88 percent on taxable income above $750,000. For

married joint filers, the new 8.88 percent rate applies to taxable income above

$1,000,000, and this new rate applies to married separate filers on taxable income

above $500,000. As is the case under the current law brackets, the new bracket

amounts are indexed for inflation.

The bill first applies to taxable years beginning on January 1, 2017.