Wisconsin’s state and local tax burden fell slightly in 2023 to a new all-time low, driven by property tax limits, strong income growth, and modest income tax cuts. Over the last quarter-century, Wisconsin has gone from one of the nation’s highest tax burdens to well below average, and has also seen its spending levels and rankings drop in areas such as K-12 education. But this major shift in policy is becoming more difficult to continue.
State and local taxes declined to 9.77% of personal income in Wisconsin in fiscal year 2023, dipping just below last year’s low of 9.83% to set a new record, federal data show. This decline in what is often called the state’s tax burden puts Wisconsin’s tax ranking at 34th nationally, slightly higher than last year’s 35th, which remains the state’s lowest ranking on record.
Wisconsin’s taxes as a share of income were roughly one percentage point below the national average of 10.7%. In the previous year, Wisconsin’s taxes as a share of income were 1.2 percentage points below the U.S. average, the largest gap the Forum has recorded. However, a slight decline in the national tax burden – from 11.0% to 10.7% – narrowed this gap.
As we have noted, local property tax referenda and increases in Milwaukee sales taxes in the next two years of data may slow or curb the long-term decline in Wisconsin’s tax ranking (see Figure 1). However, this decline over the last quarter-century has far-reaching implications for both individual taxpayers’ bills and the amount of money available for public services.
We analyze Wisconsin’s taxing and spending rankings by combining annual data from the U.S. Census Bureau with population and personal income data from the U.S. Bureau of Economic Analysis. The latest Census data is for state fiscal year 2023 (July 2022 to June 2023).
Recent cuts add to lengthy trend
Although less substantial than the income tax cuts proposed by the Legislature’s Joint Finance Committee, the finalized 2023-25 state budget still included tax cuts for the two lowest income tax brackets, which were projected to lower tax liability by $82.9M in 2023. Total tax collections still increased, but by a smaller amount than any year since fiscal year 2015.
With inflation cooling from its peak, personal income (which includes earnings, dividends, investments, and government payments to individuals) grew by 2.3% in Wisconsin in the year associated with our tax data, lagging the 3.1% increase nationally. This growth was also less than what Wisconsin saw in the previous year, when personal income rose by 9.1%. However, it was still enough to slightly reduce Wisconsin’s tax burden in combination with the income tax cuts and measures to reduce property tax growth.
This result is part of a long-term trend. In the late 1990s and early 2000s, Wisconsin regularly ranked among the top five for the highest tax burden among U.S. states, but both Wisconsin’s ranking and the tax burden itself have steadily decreased over time. Wisconsin ranked third among the states in 2000 with a tax burden of 12.5%, behind only New York and Maine. In falling to 9.8% in 2023, it dropped by 2.7 percentage points, which was the largest decline in the nation over that time period (see Figure 2). This overall decline of 21.6% in the tax burden was also the largest percentage decline in the nation.
This decline also came during a period of divergence between the states with the highest and lowest tax burdens. In 2000, the highest and lowest state tax burdens were only 5.25 percentage points apart, but in 2023 the gap was over nine percentage points. Today, Wisconsin’s tax burden is the fourth-lowest among the twelve Midwestern states, and less than the tax burden of all of its neighbors except Michigan.
Wisconsin ranked 28th in tax burden per capita, the same ranking as 2022, which is also a record low. In 2021, Wisconsin ranked 24th in tax burden per capita with $5,689 per person, while in 2023 the tax burden per capita was $6,044.
However, our data only allow us to analyze Wisconsin’s average tax burden across all income brackets; some taxpayers in the state benefited less and others more from the drop in overall taxation levels depending on such factors as their income and place of residence.
Taxes and other revenue
Across all state and local taxes, Wisconsin’s total tax revenues grew by 1.7% in 2023 to $35.7 billion, while nationwide tax revenues fell by 0.3% (see Figure 3). An even larger difference came in state tax revenue, where Wisconsin’s revenue grew by 1.6% to $23.7 billion, but nationwide revenue fell by 3.7%. Conversely, Wisconsin’s local tax revenue grew by a modest 1.9% to $11.9 billion, but nationwide local revenue grew by 5.2%.
Despite the income tax cuts discussed above, Wisconsin’s individual income tax collections increased by 2.2% in 2023, while income tax collections fell by an average of 14.1% across the rest of the country. While it is beyond the scope of this brief to examine this nationwide decline in individual income tax liability, it may be partially due to significant tax cuts that were passed in most states in calendar year 2022.
This difference in tax liability and collections is reflected in Wisconsin’s individual income tax ranking as a share of personal income, which rose from 30th in 2022 to 25th in 2023. This cuts against a longer-term trend of decline; Wisconsin generally ranked in the top 15 states for income tax as a share of personal income throughout the 2000s and into the early 2010s. But a series of income tax cuts beginning in 2013 have provided substantial reductions for taxpayers.
We noted in our analysis of the 2023-25 state budget that its provisions would put downward pressure on property taxes in the state, with the continuation of state limits on local levies, elimination of the personal property tax and the increase in the school levy tax credit, a state payment to local governments that effectively lowers the taxes owed by property owners. Wisconsin’s total property tax collections still grew by 1.3% in 2023, but far less than the national average of 5.2% growth. Wisconsin remains in the middle of the pack nationally, ranking 21st in property taxes as a proportion of personal income in 2023.
As with other tax rankings in the state, Wisconsin’s property tax ranking has declined over time. Wisconsin ranked 10th in property taxes in 2000. Yet legislative efforts to hold down property taxes – including limiting school revenues and tying municipal, county, and technical college levies to new construction – have reduced the proportion of residents’ revenue that goes to local levies. In 2023, Wisconsin’s property taxes accounted for 3.0% of personal income, compared to 3.8% in 2000.
General sales tax collections by state and local governments increased by 7.0% in Wisconsin, slightly above the national rate of 6.5%. This trend may have continued in 2024, when the new sales taxes authorized by Act 12 took effect in the city of Milwaukee and Milwaukee County. However, the 2023-25 budget also exempted data centers from sales taxes on construction materials used to build them and on the electricity used to run them, which will limit the growth in sales tax revenues as more data centers are built in the state. Wisconsin’s sales tax ranking as a percentage of income remains low relative to the nation; the state ranked 34th in sales taxes in 2023, up slightly from its ranking of 36th in 2022.
It is also worth noting that Wisconsin receives less revenue than average from federal aid or from charges for public services, such as sewer fees and tuition at public colleges and universities. Wisconsin ranked 39th for revenues from federal aid as a share of personal income in Wisconsin in 2023, and 29th in revenue from charges for services.
spending
Direct general expenditures by state and local governments totaled $71.4 billion in Wisconsin in 2023, up 5.4% from the previous year, but less than the average 7.0% increase across the country. Accordingly, the state’s ranking for spending as a share of income fell slightly from 24th-highest in 2022 to 25th in 2023, even though its actual spending as a percentage of income grew from 19.0% to 19.6%.
As noted previously, the decrease in the state’s tax burden over the past quarter-century has translated into a decrease in overall state and local spending levels. This is most notable in the case of K-12 education, where Wisconsin spent almost $14 billion on elementary and secondary education in 2023. This represented a 4.2% increase from 2022, but was well below the average 6.9% increase across the country.
Spending on K-12 schools in Wisconsin totaled 3.8% of personal income in 2023, the same level as 2022 but down from 5.2% in 2000. Wisconsin ranked 34th in this category in 2023, a major shift from 2000, when it ranked eighth. This decline is also visible when measured by education spending per pupil; in 2023, Wisconsin ranked 26th in that metric, down from 11th in 2002. Education is the single largest area of state and local spending, so this is a notable but not surprising trend given the drop in the tax ranking.
The picture is rather different for public higher education spending. While national higher education spending increased by 7.1%, Wisconsin increased its expenditures by 17.2% in 2023, representing $1.14 billion more than in 2022. When measured as a percentage of income, Wisconsin’s ranking climbed from 20th to 12th. It is worth noting that these figures include federal revenues and other funds that go beyond state and local taxes and include both operating and capital expenditures.
Other notable changes include state and local corrections spending, which grew by 7.2% in 2023, below its 11.3% growth in 2022 but still above the national average of 5.8%. The federal government provides little funding to states and counties in this area, so almost all of this spending is paid for with state and local tax revenues. Wisconsin’s spending ranking in this area fell slightly despite its spending increase, falling from 10th in 2022 to 11th in 2023.
Police spending rose 3.0% in Wisconsin in 2022 compared to 6.9% nationally. The state’s police spending as a percentage of income ranked 26th-highest in 2023, the same ranking as 2022, but down significantly from two decades ago. Meanwhile, Wisconsin’s spending on firefighters and fire protection increased by 3.9%, also lagging the national rate of 6.3%. The state’s ranking in this area improved somewhat, to 37th-highest in 2023 from 39th-highest in 2022, which remains Wisconsin’s lowest ranking on record.
The coming years
The long trend toward falling tax rankings for Wisconsin may be coming to an end. The Forum’s separate reports on state and local tax collections found that the tax burden fell in fiscal year 2024 but made little change in 2025.
The increased sales taxes in Milwaukee have boosted city and county revenues in Wisconsin’s largest city, and school districts across the state continue to resort to referenda to loosen state revenue limits and increase local property taxes. Boosted by referenda and frozen state aid to schools, gross K-12 property tax levies increased by 7.8% across Wisconsin on December 2025 tax bills. In addition, growth in personal income in Wisconsin consistently lags increases nationally, making it harder for state residents to afford public services.
These forces have started to slow the drop in the state’s tax burden and national tax ranking. A recent boost in state revenue projections may allow Gov. Tony Evers and lawmakers to pass legislation to further reduce income or property taxes in the coming weeks and even perhaps lower the tax burden a bit further.
Yet without state action or an economic upswing, the pressure to fund schools, public safety, and infrastructure at the local level will likely put upward pressure on taxes, particularly property taxes. Some voters and elected officials may see that as an acceptable tradeoff. Others may wish to continue to hold the line on taxes. Doing so, however, will likely require either notable cuts to services or significant innovation by state or local policymakers – whether through technology, consolidation of public services across local government, or other means.