On June 20th Governor Evers signed into law 2023 Wisconsin Act 12 (the “Act”), which repeals the personal property tax that has long been an administrative burden for authorities and a source of confusion for taxpayers.
Under the former provisions, both real and personal property was (and is until January 2024) subject to tax unless otherwise exempted by law. Certain personal property might have been exempted based on factors such as its character, predominant use, legal classification, etc. Prior law proved cumbersome as local authorities attempted, first, to determine whether an exemption applied to the given property, and second, to ascertain the item’s current fair market value within a ten percent margin of accuracy. State authorities would then assume the complex task of normalizing variations between local assessments based on population, schools, technical colleges, economic growth, and more, before issuing the final bills to taxpayers. The Act is designed to simplify this process by eliminating the personal property tax altogether.
The Act removes personal property from the definition of both “Taxable Property” and “General Property” found in Sections 66.1106 and 70.02, respectively. The Act further states that, beginning January of 2024, “no tax shall be levied under this chapter on personal property.” 2023 Wis. Act. 12 § 69 (creating Wis. Stat. § 70.015.) Now, under the Act, only real property is subject to tax. Although some personal property has been reclassified as taxable real property, the overall net effect is reduced general property taxes.
Of course, eliminating the personal property tax will have a commensurate impact on the State’s revenue. According to fiscal reports filed in connection with the Act, municipalities throughout the state generated nearly 174 million dollars of revenue from personal property taxes in 2023, income which the State will be forced to subsidize beginning in 2024 when the Act takes hold. To ease these municipal losses the State has authorized Milwaukee County to increase its sales tax by 0.375 percent, and the city of Milwaukee to increase its sales tax by two percent. The State estimates these new sales taxes will generate nearly 194 million dollars of revenue in 2024, more than enough to cover the losses from the Act and remove the need for State subsidies.