AB 319

Under current law, the pension benefits of certain public employees are exempt

from state taxation. The pensions that are exempt include payments received from

the U.S. Civil Service Retirement System, the U.S. Military Employee Retirement

System, the Milwaukee City and County Retirement Systems, the Police Officer's

Annuity and Benefit Fund of Milwaukee, the Milwaukee Public School Teachers'

Retirement Fund, the Wisconsin State Teachers' Retirement Fund, and the Sheriff's

Annuity and Benefit Fund of Milwaukee County. For most of these pension plans,

the exemption applies only to persons who were members of or retired from the plans

as of December 31, 1963, although this limitation does not apply to retirement

payments received from the U.S. Military Employee Retirement System or from

payments received from the U.S. government that relate to service with the U.S.

Coast Guard, the commissioned corps of the National Oceanic and Atmospheric

Administration, or the commissioned corps of the U.S. Public Health Service.

Also under current law, up to $5,000 of payments or distributions received by

certain individuals from a qualified retirement plan under the Internal Revenue

Code, or from certain individual retirement accounts, are exempt from taxation. To

be eligible, the individual must be at least 65 years old and have federal adjusted

gross income under $15,000, or under $30,000 if married.

Under this bill, beginning with taxable year 2021, the $5,000 exemption for

payments or distributions received from a qualified retirement plan or from certain

individual retirement accounts may still be claimed, to the extent that such amounts

are not already exempt from taxation, but the exemption is not limited to individuals

who are at least 65 years old and have federal adjusted gross income of less than

$15,000, or less than $30,000 if married. Under the bill, the exemption amount

increases from $5,000 to $10,000 in 2022, to $15,000 in 2023, and to $20,000 in 2024

and thereafter.

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.