The state’s tax burden remained at an all-time low in 2025, as incomes in Wisconsin grew at the same rate as state and local tax collections. Local taxes in particular faced upward pressure from K-12 referenda and new sales taxes in Milwaukee. In 2026, income tax cuts could further lower the burden, but elected officials are likely to face greater conflict between lowering the tax burden even further and preserving high-quality services.
Wisconsin’s state and local taxes as a share of income remained at a record low in 2025, holding at their lowest level in more than a half century of data despite more rapid growth in taxes.
Wisconsin residents in fiscal year 2025 paid 9.60% of what they receive from all income sources in state and local taxes, matching 2024’s record low to remain at the lowest total burden in our data going back to the 1970’s. Figure 1 shows the long-term decline, which began the mid-1980s and became notably more consistent since 2010, as state leaders took more aggressive efforts to reduce the tax burden, and incomes grew after the painful years of the Great Recession.
While the tax burden fell, overall state and local taxes grew by 5.0% in fiscal 2025 to $38.8 billion, among the largest single-year jumps in the last 20 years. However, statewide personal income growth matched that rate, also rising by 5.0% in 2025.
State tax revenue, including income and sales taxes, climbed 4.2%, above the annual average growth of 3.1% for the past 20 years. However, because the income of state residents and businesses grew more rapidly, state taxes hit another record low in 2025, dropping from 6.41% to 6.36%.
Local tax revenue grew by 6.4%, the most since 2005, and nearly triple the 2.4% average annual rate of increase during that same time period. Net property taxes helped drive that increase, growing by 4.6%, or $518.1 million. Big bumps in local sales tax collections, which grew by 12.2% or $76.5 million, plus the addition of $169.3 million from the new city of Milwaukee sales tax, were also major contributors. Overall, the local tax burden climbed just slightly, from 3.19% to 3.24%.
For more than 50 years, the Wisconsin Policy Forum has compiled data from state agencies to create a complete picture of every state and local tax over time, ranging from the $187,039 of bingo license fees collected in 2025, to the $10.6 billion in individual income taxes that year.
Using figures from the U.S. Bureau of Economic Analysis, we compare state and local tax collections to total personal income for Wisconsin residents from all sources, including wages, salaries, interests, dividends, government assistance payments, and other sources. This allows us to calculate the state and total tax burden for Wisconsin as a whole (see the text box for more details on our methodology).
Our most recent year of personal income data shows growth at a rate of 5%, a relatively strong number that was less than last year’s 5.4% but still outpaced the average annual growth since 2005 of 3.9%. However, the state rate still trailed the national personal income growth of 5.6%. Wisconsin’s personal income growth has lagged the national growth rate every year since 2009, and 22 out of the last 25 years.
Typically, we publish a brief comparing the state’s tax burden with other states to see where Wisconsin ranks. Our last report showed the state falling in this area as well and we will be analyzing those figures in the coming weeks now that U.S. Census Bureau data are available.
While the average tax burden in Wisconsin has consistently declined for years, that may not be the case for individual state residents, as income growth and tax burden can vary substantially. In other words, some residents may pay more of their income in taxes than this average percentage that we calculate, while others may pay even less.
State Taxes
The state of Wisconsin collected $25.69 billion of tax revenue in fiscal year 2025, up 4.2% from the $24.65 billion collected the previous year. This year-over-year jump was more than double the previous year’s 1.6% rise.
Figure 2 provides details on the revenues from every state or local tax, with data back to 2000. Collections from the state’s three largest revenue sources, taxes on individual income, sales, and corporate profits, all saw notable growth in 2025. Figure 3 shows the trends in collections for these three taxes.
Individual Income Tax
Leading the way among the state’s largest revenue sources, individual income tax collections jumped by 7.5%, or $733.5 million, the largest percentage increase since 2010. Growth in 2025 far outstripped the long-term average growth rate of 3.0% since 2005.
Despite income tax cuts in both the 2021-23 and 2023-25 state budgets, income tax collections showed strong growth. A portion of this can be attributed to growing prices for assets like stocks and associated high levels of capital gains revenue, and continued wage and employment growth. Looking to income tax collections for fiscal year 2026, they are currently projected to fall, as the 2025-27 state budget included income tax cuts of more than $500 million each year, although recent estimates suggest that income taxes may remain more robust than expected over the next two years.
Corporate Income Tax
Breaking a two-year trend of declines, corporate income taxes grew 2.2%, from $2.70 billion to $2.76 billion. State taxes on corporate profits have yet to match their 2022 peak. Continued economic growth, plus moderating inflation, has driven profits in the state higher, generating moderate growth in corporate income tax collections.
Changes in federal tax law, and associated state changes in 2019 and enhanced enforcement by the Wisconsin Department of Revenue both contributed to a massive increase in corporate income taxes in 2020, resulting in tax collections more than doubling. Rapid changes seem to have now stabilized, with annual changes tied more to economic factors than changes in federal tax law. One key question going forward is whether federal tax law changes made under the One Big Beautiful Bill Act might also affect corporate tax structures in the state and future state corporate collections in the way that the Tax Cuts and Jobs Act of 2017 did.
State Sales Tax
Continued inflation in consumer prices helped to push sales tax growth to 3.2%, with total collections hitting $7.83 billion in 2025.
This marks a return to the 20-year average growth rate of 3.3% in these revenues, after a modest increase of only 1.8% in 2024 and near record high growth of more than 9% in 2021 and 2022.
Excise Taxes
Taxes on cigarettes, other tobacco and vapor products, and alcoholic beverages fell by 5.2% in 2025 to $542.0 million. While relatively large, this year’s decline was the smallest of the past three years, and among the largest since at least 1970. Because excise taxes are all charged on a per unit basis, falling revenues generally represent changes in the volume of taxable products purchased and not the direct impact of inflation on prices. However, rising inflation and a slowing economy may push people away from at least some of these relatively non-essential products.
Falling excise tax revenues are driven by a long-term drop in collections from the state’s cigarette tax, which have fallen by 42.6% from their 2010 high of $644.3 million, to only $369.6 million in 2025. Since 2010 — the first year of collections after the state’s tax was raised to $2.52 per pack — collections have been falling.
Year over year, cigarette tax revenues fell by 8.2%, less than last year’s record 9.4% drop, but still greater than any year prior going back to at least 1970. The excise tax on tobacco products fell as well, by 3.2%, to $83.0 million. Long-term drops in tobacco tax revenue are due to both declining tobacco use and increasing availability of alternatives like vapor products.
Collections also increased for taxes on alcoholic beverages. Both beer (4.7%), and wine and liquor (6.7%) saw growth, with beer rebounding from an all-time low of $8.0 million in 2024 to $8.4 million in collections for the most recent year.
Transportation Taxes
Gas tax, vehicle registration fees, and driver licensing fees grew by a combined 1.2%, keeping with the long-term trend of slow growth in these revenues that we outlined in our December 2024 report on state transportation funding. Figure 4 shows how collections have changed over time.
Gas tax collections grew by 1.5% in 2025 to $1.12 billion after falling slightly the two previous years, while fees collected for registering vehicles grew by 0.6% to $937.8 million. Driver license fees saw the fastest rise, up 5.8% to $42.1 million, matching their all-time high in 2009. Increased demand for new licenses may be due to federal requirements for REAL ID compliant documents when boarding airplanes. The state’s limo rental fee, the smallest transportation revenue we track, grew by 7.1%, to $13.8 million.
Following the pattern of the two previous budgets, state leaders again decided to dedicate nearly $1 billion in revenue from general sources like income and sales taxes to help pay for maintaining the state’s transportation system in the 2025-27 state budget, as the gas tax and registration fee continue their long-term trend of slow growth. The budget also increased the state’s title transfer fee, which is included in motor vehicle registration fees.
Real Estate Transfer Fee
Wisconsin’s housing market followed national trends and re-heated somewhat, driving revenue from the state’s real-estate transfer fee up 11.4% to $105.5 million. While substantially higher than last year, it’s still short of the all-time highs set in 2021 and 2022. Real estate transfers are approaching their recent peaks, because both the number of real estate closings grew, as did the price of the average transaction over the past year.
County governments collect this fee and divide it between state and county government. The state receives 80% while the county receives the remaining 20%. In 2025, counties received $26.4 million. These revenues are not shown in Figure 5 and add to the total transfer fees collected.
Local Taxes
Local government tax revenues, including the combined totals collected by municipalities, counties, school districts, technical college and special districts, outpaced state revenue growth, climbing by 6.4% in 2025 to a total of $13.09 billion.
Local revenue has grown by more than 2% each of the last six years, but 2025’s 6.4% bump is the highest since 2005. It is also only the 6th year out of the last 20 that local government growth outpaced personal income growth over that same time period.
Property Taxes
Wisconsin’s single largest tax, the gross tax on property by local governments, grew by 4.2% in 2025, to $13.64 billion. While smaller than last year, the growth in property taxes on December 2024 bills was bigger than any other year since 2008. The increase in property taxes reflects the growth in both school district levies and those of other local government due to referenda as well as other factors such as limited growth in state aid for schools. Gross property tax levies can be expected to climb further in 2026, as outlined in our research from December. Figure 6 shows how this year’s increase compares to historical trends.
Due to limited growth in property tax credits that help blunt the impact of the gross property tax, net property taxes grew more sharply than gross property taxes, climbing by 4.6% to $11.90 billion, the highest rate since 2008.
The state’s largest property tax credit, the school levy credit, grew by 6.7% to $1.28 billion. However, much of that growth was washed out by the 13.1% drop in the state’s lottery credit, which fell to $315.7 million, and only 0.2% growth in the state’s first dollar credit. The net change in property tax credits was only $32.8 million in 2025. Together, these credits reduced the amount paid by property tax payers by $1.74 billion.
State leaders have made efforts to put downward pressure on property taxes, but the last two years have seen increases that have been the largest since the Great Recession, as school property taxes especially have grown. The amounts districts can levy are tied to the per pupil revenue limit set by the state budget, which rose by $325 per pupil for December 2024 tax bills, matching the increase in the previous year. In addition, record numbers of school referenda pushed levies beyond even what was allowed by state law. Among the referenda with the largest impact was the Milwaukee Public Schools request to raise property taxes in the district by up to $252 million over four years.
Municipal, county, and technical colleges have had their capacity to raise property taxes limited since 2011, and can only increase their levy by the rate of net new construction in their area. This rate is calculated based on the amount of new construction as a share of property in their jurisdiction. In 2025, statewide net new construction was at 1.6%, tracking with the long-term average.
Limiting property tax growth has lowered the state’s tax burden, but it has also stressed local budgets and services. That in turn has led to a number of referenda to exceed state revenue and levy limits, helping push property tax growth higher in 2025 than previous years.
This more rapid growth happened despite the repeal of the state’s tax on personal property, like machinery and other property, not including land and buildings. This tax change was reflected in our data for 2025 property taxes.
Local Sales Taxes
Counties are authorized to levy a sales tax of 0.5%, or 0.9% in the case of Milwaukee County, collected in addition to the state’s 5.0% tax. Because of how our data is organized, this is the first year in which the impact of that higher rate in Milwaukee County will be included. That helps explain the 12.2% growth, to $701.5 million in calendar year 2024. County sales taxes grew faster than all other taxes that collect at least $10 million annually.
In addition to county sales taxes, the city of Milwaukee now levies a 2.0% sales tax on goods and services in its territory, with funds dedicated to covering local pension costs and public safety staffing. According to the state Department of Revenue, this new tax raised $169.3 million in calendar year 2024, and these revenues are recorded within our fiscal 2025 analysis based on our organization’s longstanding practice. Because the figures have been gathered in that way for decades, we are not able to go back and change these data to a fiscal year basis.
Wheel Taxes
Counties and municipalities have the option to charge residents a local vehicle registration fee, in addition to the state’s fees for registering a vehicle. Our recent research found that as of fall 2025, 63 local governments charge this fee, and nearly half of all state residents pay some sort of local option wheel tax, compared to just over 50 local governments last year. Some municipalities and counties also have raised their existing fees.
As a result, wheel tax collections have climbed 12.0% in fiscal 2025, to $74.7 million. This is far more rapid growth than that of state vehicle registration revenue, since increases to the local rates charged for registration and additional communities adopting new fees led to faster-growing collections.
Room, Premier Resort, and Local Expo Taxes
Room tax collections continued their upward trend, growing to $130.2 million in 2025, a rate of 5.5%. Most Wisconsin municipalities can levy up to an 8% tax on hotel stays, with 70% of revenues directed towards promoting tourism. Early travel restrictions during the pandemic caused room tax revenue to collapse, but collections have largely rebounded since then.
State law authorized additional tourism-related taxes, including for eight communities that are dependent on the tourism industry. These areas are known as “premier resort areas” and revenue for their municipal sales tax grew only 2.2% in 2025, to $14.4 million. Finally, the state allows additional taxes on tourism-related products and services to support the Wisconsin Center exposition district in Milwaukee, and these taxes grew by 3.8% to $49.9 million in 2025.
Federal Taxes
Despite continued economic growth in 2025, the amount of federal taxes paid by Wisconsin individuals and businesses is estimated to fall by 3.2%. to $69.5 billion. Federal tax data has not been finalized when we publish this report, so we make an estimate of federal taxes paid by state residents each year, then revise our estimate the following year when more accurate data becomes available.
Federal taxes eat up a much larger share of the state’s income than state and local taxes. In 2025, we estimate that federal taxes will equal 17.2% of state income, which would be a substantial drop from 2024, and among the lowest portions on record, as shown in Figure 7.
Sales Taxes Continue to Grow in Importance
Property and income taxes have received much of the focus over the past decade as state officials have pushed to lower the overall tax burden within the state of Wisconsin. As our data show, these efforts have been relatively successful in reducing that burden. However, sales taxes have received less attention, and in fact have become a tool used by more local governments, with the higher sales tax rate in Milwaukee County, and the city’s new sales tax, and Racine and Sheboygan counties that have imposed the regular 0.5% sales tax in recent years. The ongoing higher rate of inflation has further added to sales tax collections, which creates growing revenue for state and counties governments, but also adds to their costs as well as those of ordinary state residents.
Recently, there have been small efforts to lower sales taxes in targeted ways. For example, the current state budget extends a sales tax exemption on electricity and gas from the winter months to include the entire year.
Overall, however, sales taxes have taken on an increasing share of the burden of funding state and local government, hitting an all-time high of 22.6% in 2025. Figure 8 shows the share of total state and local revenue derived from sales taxes over time.
Growing reliance on sales taxes tends to shift the burden of paying for government onto lower income residents, as they tend to spend more of their earnings on basic necessities like clothing, vehicles, and other consumer goods. Wisconsin’s income tax burden tends, on the other hand, to be paid by those with higher incomes, so shifting away from the income tax tends to benefit those taxpayers.
Changes in inflation, economic and income growth, and changing state tax policy will ultimately determine if this trend continues. But the shift that has already occurred shows how some taxpayers can end up bearing a larger share of the state’s tax burden, even if it shrinks overall.
Income Growth Consistently Outpaces Tax Growth
Wisconsin’s elected leaders have worked hard over the past generation to limit state and local tax growth, and in response total tax collections have grown by a 2.9% annual rate since 2005. In comparison, taxes between 1985 and 2005 grew by an average of 4.7% each year. However, slower growth in tax collections does not completely explain the long-term decline in tax burden. Instead, incomes grew at a faster rate than taxes, rising an average of 3.9% per year between 2005 and 2025. As Figure 9 shows, that trend of more rapidly growing incomes now stretches back to the 1980’s.
The picture is not entirely positive, however. Over the past 25 years, the state’s growth in personal income has lagged the national rate, making it more difficult for state residents to pay for all their priorities, including government services. Slower-growing incomes have persisted despite divided government and unified Democratic and Republican control, suggesting that they likely reflect the state’s demographics and mix of industries as much as they do policy changes.
Conclusion
The amount of Wisconsin’s income that pays for state and local taxes remained at a record low in 2025 despite relatively rapid growth in these levies. This means that on average, schools, local governments, the UW System and all other government are effectively easier for taxpayers to finance than at any time since at least the 1960s. Howevever, the experience of individual taxpayers will vary. The average tax burden may be felt very differently depending on where in the state someone lives, their level of income, type of business, and other factors.
For example, in calendar year 2024 the sales tax paid by residents of the city of Milwaukee jumped substantially, as the county tax rate was raised from 0.5% to 0.9%, and the city imposed a new 2.0% sales tax. On top of that, the school district’s operating referenda drove property taxes higher than other parts of the state. We intend to further investigate the tax burden in Milawukee County specifically to better understand exactly how these changes impact residents in the state’s largest urban area.
The state’s overall tax burden has been falling since the early 1980s as a result of efforts to curb taxes, particularly property and income taxes, and long-term economic growth. Taxes as a share of income have dropped 4.4 percentage points from their peak in 1984 at 14.0%.
The $1.5 billion in income and other tax cuts approved as part of the two-year state budget may still help to lower the state tax burden modestly in 2026. However, the ratio of taxes to income may be nearing its bottom, as inflation and other cost pressures on school districts and local governments have begun to push local taxes upward. The state has also been gradually reducing its large general fund balance, reducing the surplus funds that it has to devote to tax relief.
Local school property taxes grew substantially this year and are likely to grow substantially again in the coming year. The combination of widespread K-12 referenda, increases in per pupil revenue limits, and frozen school aids caused statewide K-12 property tax levies in December 2025 to grow at a rate not seen since the early 1990s and more of the same is likely in 2026. State leaders will increasingly have to wrestle with balancing the desire for low taxes against maintaining high-quality local services and K-12 education. They may partially resolve this conflict by pursuing opportunities for development and economic growth such as data centers. However, because economic growth often depends more on national and global factors and the existing demographics and industries in the state, the economy is never completely under the control of state and economic leaders.
Improved government efficiency can also help keep the tax burden down while maintaining high-quality government services. The Forum, for example, has often pointed to opportunities for local governments to maintain services and control spending through efforts such as service sharing.
However, after decades of limited budgets, especially for school districts and local governments, many efficiency measures have been implemented. So in many cases, further lowering spending will have an impact on local service and school quality. Elected officials and voters themselves will likely need to weigh these two competing priorities – lower taxes and high-quality services – in the years to come.