SB 498

This bill provides an income tax exemption for pension payments received from

the Wisconsin Retirement System by protective occupation participants, as defined

under current law with respect to the WRS, correctional officers, and frontline

workers. The bill defines “frontline worker” to mean an individual who was a state,

county, or municipal employee with regular job duties that, as determined by the

Employment Relations Commission in consultation with the Department of

Revenue, included interacting with members of the public or with large populations

of people or directly involved the maintenance of public works. Elected state officials,

constitutional officers, agency heads, and legislative staff are excluded from the

definition of “frontline worker.”

Under the bill, 25 percent of the pension payment received in 2021 is exempt;

50 percent of the payment received in 2022 is exempt; 75 percent of the payment

received in 2023 is exempt; and 100 percent of the payment received in 2024 and

thereafter is exempt. The bill provides that the amount exempted may not exceed

the portion of the pension payment that is attributable to the period of time during

which the individual was a protective occupation participant or frontline worker.

Under current law, payments received from the U.S. Civil Service 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 are exempt from tax for individuals

who were members of or retired from the systems as of December 31, 1963. Current

law also provides an exemption for payments received from the U.S. Military

Employee Retirement System and retirement payments that relate to service with

the U.S. Coast Guard, the commissioned corps of the National Oceanic and

Atmospheric Administration, and the commissioned corps of the U.S. Public Health

Service. Also under current law, an individual may subtract up to $5,000 of

payments or distributions received from a qualified retirement plan or individual

retirement account if the individual is at least 65 years old and has federal adjusted

gross income of less than $15,000, or $30,000 if married.

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.