SB 638

Under current law, an individual subtracts his or her capital losses from capital

gains when computing the amount of gain subject to the state income tax. If the

capital losses exceed the capital gains, the individual may use up to $500 of the net

loss to offset ordinary income, thus reducing the amount of ordinary income subject

to tax. If the individual's net capital loss exceeds $500, the individual may carry

forward the excess to future years and offset up to $500 of ordinary income each year

until the net loss is used up. Federal law similarly allows individuals to offset net

capital losses against ordinary income and carry forward the excess. However, the

maximum annual offset under federal law is $3,000, which is reduced to $1,500 for

married individuals who file separate returns. This bill increases the maximum

annual offset for Wisconsin income tax purposes from $500 to $1,500 for married

individuals filing separately and $3,000 for all other individuals.

Because this bill relates to an exemption from state or local taxes, it may be

referred to the Joint Survey Committee on Tax Exemptions for a report to be printed

as an appendix to the bill.