Republicans secured one of their few top priorities in the 2025–27 Wisconsin State Budget: meaningful tax relief for retirees and working families. The $1.5 billion in tax cuts stands in sharp contrast to Gov. Tony Evers’ original proposal, which would have raised taxes by more than $3.7 billion and expanded state government by nearly 1,500 new positions.
While most areas of the budget reflected bipartisan compromise, tax policy was a clear Republican victory. The GOP blocked Evers’ call for a new 9.8% income tax bracket and instead expanded middle-class tax relief through three key changes: income tax bracket expansion, a retirement income exemption, and the elimination of sales tax on residential utility bills.
Middle-Class Relief Through Bracket Reform
The budget expands the 4.40% tax bracket, raising the income thresholds before taxpayers hit the higher 5.30% rate. For single filers, the new 4.40% bracket now applies to income up to $50,479 (previously $29,369). Married joint filers will now benefit from the 4.40% rate up to $67,299 (previously $39,149). These changes are expected to impact 1.6 million filers and yield average savings of $180 per year.
Retirement Tax Cut Helps Seniors Stay in Wisconsin
In a move designed to keep retirees in the state, the budget exempts up to $24,000 in retirement income for residents age 67 and older, or up to $48,000 for married couples. Combined with Wisconsin’s existing exemption for Social Security benefits, the new law will eliminate state income tax for a majority of retirees. Lawmakers estimate average savings will exceed $1,000 per retiree.
Utility Bill Relief
To help families with high utility bills—especially during peak summer months—the budget removes the state sales tax on residential electricity and natural gas bills year-round. Previously, utility sales taxes were only waived between November and April. The change is expected to save Wisconsinites $178 million. (RELATED: Evers’ Budget Proposal: Increased Spending, Higher Taxes, and a Looming Deficit)
What Evers Proposed But Didn’t Get
Evers’ original budget included a dramatic expansion of government and tax hikes that GOP lawmakers swiftly rejected. Among the scrapped proposals were:
- A 9.8% top income tax bracket
- $3.7 billion in total tax increases
- 881 new state positions
- New bureaucracies such as the Office of Environmental Justice
The final budget not only blocks these changes but cuts more than 300 positions from state agencies. It also maintains staffing caps at the University of Wisconsin System and defunds several controversial departments and initiatives.
A Rare Republican-Only Win
Unlike the deals struck on child care, school funding, or the UW System—where both sides claimed victories—tax relief was the clearest Republican win. After years of vetoes on similar tax proposals, Evers ultimately signed off on a package that delivers real savings without the structural tax hikes he initially sought. (RELATED: UW System Secures $1.13 Billion in Budget Deal, Then Approves Tuition Hike)
