Does Wisconsin Tax Social Security, Pensions or 401(k)s?

Wisconsin does not tax Social Security or military retirement pay, and now lets retirees 67 and older subtract up to $24,000 of qualified retirement income from their Wisconsin income.1 The cap rises to a combined $48,000 for a married couple where both spouses are 67 or older, and it carries no income limit. It has a cost: claiming it bars any credit on that year's Wisconsin return, the homestead credit included.1

In This Guide

• Wisconsin Retirement Income Tax at a Glance
• How Much Retirement Income Can You Subtract in Wisconsin?
• Is Social Security Taxed in Wisconsin?
• Does Wisconsin Tax Pensions?
• Does Wisconsin Tax 401(k) and IRA Withdrawals?
• Worked Example: A 67-Year-Old With Pension and IRA Income
• Frequently Asked Questions
• Next Steps

Wisconsin Retirement Income Tax at a Glance

Wisconsin's treatment turns on the type of income and your age. Social Security is fully out, and so is military retirement pay. A federal, state, or local government pension is out only where the membership behind it began before January 1964. For a full-year resident, other pension and annuity income is generally taxable to the same extent it is federally; a nonresident's pension and annuity income generally is not. Two subtractions can shrink or erase that tax: a broad age-67 subtraction of up to $24,000 with no income limit, and an older, income-tested $5,000 subtraction for those 65 and older.1

Wisconsin's income tax is graduated. For taxable years beginning after December 31, 2024, the statute sets four rates: 3.50 percent, 4.40 percent, 5.30 percent, and 7.65 percent. Where each rate starts depends on your filing status.1

These are the 2025 amounts, not a fixed schedule. For taxable years beginning after December 31, 2025, each amount rises with the consumer price index for all urban consumers since August 2024, but only if the result beats the prior year's, so check the current Wisconsin form.1

Retirement income that isn't exempt or subtracted is taxed under that schedule.1

How Much Retirement Income Can You Subtract in Wisconsin?

Retirement income that Wisconsin does tax can be cut by two subtractions: a newer one at 67 and an older, income-tested one at 65. Neither applies to retirement benefits that are already exempt from Wisconsin tax.1

The age-67 subtraction is the new one. It's first available for the 2025 tax year and has no overall income limit or phase-out. It covers payments from a qualified retirement plan under the Internal Revenue Code or from an IRA, where that income is federally taxable. For 2025 you claim it on line 16 of Schedule SB, which DOR titles "Retirement Income Subtraction (Credits Restricted)."1

On a joint return, the subtraction belongs to the spouse who is at least 67 as of December 31 of the tax year: by statute, that individual may subtract up to $24,000. When both spouses are 67 or older, the couple's combined subtraction may not exceed $48,000, regardless of how much each spouse received.1 If you're unsure whose income counts, ask the Wisconsin Department of Revenue before you file.

A part-year resident's subtraction is capped at $24,000 times the share of their wages, salary, tips, unearned income and net business earnings that Wisconsin taxes. A nonresident can't claim it.1

The trade is in the credits. A taxpayer who claims the age-67 subtraction may not claim any credit on the Wisconsin return for that taxable year. DOR's 2025 Schedule SB instructions spell that out as no tax credit on Schedule CR or on lines 13 through 20 and 30 through 35 of Form 1. DOR's 2025 homestead credit fact sheet also lists not claiming the subtraction as one of the qualifications for the homestead credit.1

That matters most at lower incomes. The homestead credit is claimed on Schedule H or H-EZ. Its maximum is $1,168 for tax year 2025, and no credit is available once household income reaches $24,680.2 If your household income is under that ceiling and you've been getting the credit, run the return both ways before you file.

Is Social Security Taxed in Wisconsin?

Wisconsin does not tax Social Security benefits, and it does not tax Railroad Retirement benefits either.1 Both are fully exempt at the state level, with no age test or income phase-out. A retiree with a large pension keeps the same full exemption as a retiree living on benefits alone.

Does Wisconsin Tax Pensions?

Pension treatment in Wisconsin runs on two separate rules. Military and uniformed services retirement benefits are not taxable in Wisconsin, with no condition attached.1

A federal, state, or local government pension is the narrower case. It's exempt only where the retiree's membership in a qualifying retirement system began before January 1964. Any portion of the benefit based on membership in another system, or on employment that began after December 31, 1963, is taxable.1

The Department of Revenue's guidance for retirees names the qualifying systems: the Milwaukee City Employees, Milwaukee City Police Officers, Milwaukee Fire Fighters, Milwaukee Public School Teachers, Milwaukee County Employees, Milwaukee Sheriff, and Wisconsin State Teachers retirement systems, and the U.S. Civil Service Retirement System. Payments from them are not taxable if you retired from the system before January 1, 1964; were a member on December 31, 1963, retired later, and are paid from an account set up before 1964; or are paid as the beneficiary of someone who met either test. DOR says payments from voluntary tax-sheltered annuity deposits in these systems, payments to someone who first joined after December 31, 1963, and federal Thrift Savings Plan payments are not exempt.1

A government career that started in 1980 doesn't qualify, however federal the employer.1

For a full-year resident, every other pension, including private employer pensions and government pensions built on post-1963 employment, is generally taxable to the same extent it is federally, on Wisconsin's graduated schedule.1 At 67 or older, the age-67 subtraction can take up to $24,000 of qualified retirement income off your Wisconsin income, at the cost of that year's Wisconsin credits. At 65 or 66, look at the older $5,000 subtraction. The subtraction section above has the rules for both.

Does Wisconsin Tax 401(k) and IRA Withdrawals?

Yes, generally, for a full-year resident. Federally taxable distributions from a traditional IRA or a 401(k) are taxed in Wisconsin on the same graduated schedule as most pensions.1

The age-67 subtraction covers distributions from a qualified retirement plan under the Internal Revenue Code or an IRA, so a retiree 67 or older can subtract up to $24,000 of federally taxable withdrawals. The cost is the same as for a pension: no Wisconsin credits that year, and no homestead credit.1 If you draw a small amount from an account and count on the homestead credit, work the return both ways before you file.

A retiree who is 65 or 66 can look to the older $5,000 subtraction, but only with federal adjusted gross income below $15,000 single or $30,000 married. Withdrawals that lift federal adjusted gross income to those thresholds or past them rule it out. The age-67 subtraction opens up the year you turn 67.1 If you're weighing how much to draw from these accounts to cover care, retirement accounts for care walks through the tradeoffs.

Worked Example: A 67-Year-Old With Pension and IRA Income

Picture a single retiree, age 67, with $20,000 in Social Security and $28,000 in qualified pension and IRA income. The Social Security is fully exempt and never enters the Wisconsin calculation. The $28,000 is generally taxable, but the retiree can subtract $24,000 of it under the age-67 subtraction. That leaves $4,000 of retirement income still counted on the Wisconsin return, before anything else on the return is applied.1

Now the cost. With $48,000 coming in, this retiree is far above the $24,680 household-income point where the homestead credit ends, so the homestead credit is unlikely to be what's at stake.2 Any other Wisconsin credit they would have claimed that year is.

Shrink the numbers and the answer can flip. A 67-year-old with household income under $24,680 who has been getting the homestead credit is giving up a credit worth as much as $1,168 for tax year 2025.2 What the subtraction saves depends on their own return, so that retiree has to figure the Wisconsin return both ways and compare.

The figures here are hypothetical and shown only to illustrate how the age-67 subtraction works; they are not a real case and not a prediction of your own outcome.

Next Steps

If you are retired in Wisconsin, sort your income by type and check your age first, because both drive the result.

• Confirm the Social Security exemption, which applies to everyone with no income limit.
• Separate the two pension rules. Military and uniformed services retirement is exempt outright; a government pension is exempt only on membership that began before January 1964.1 The Department of Revenue's guidance for retirees lists the systems that qualify.
• If you are 67 or older, plan around the $24,000 subtraction which has no income limit and can take up to $24,000 of qualified retirement income off your Wisconsin income ($48,000 combined for a couple where both are 67 or older). Weigh it against the Wisconsin credits it costs you that year.1
• If your household income is under $24,680, price the homestead credit first. It's claimed on Schedule H or H-EZ and tops out at $1,168 for tax year 2025. DOR's Fact Sheet 1116 for that year lists, among its qualifications, that you will not claim the retirement income subtraction under s. 71.05(6)(b)54m. (the age-67 subtraction) for the same year.2
• If you are 65 or 66, test the older $5,000 subtraction only if your federal AGI is under $15,000 single or $30,000 married.1

This is general information, not personalized tax advice. Before you plan withdrawals, confirm two things with the Wisconsin Department of Revenue or a tax professional: when the membership behind your government pension began, and which credits the age-67 subtraction would cost you. DOR's Customer Service Bureau handles questions on its retiree guidance at (608) 266-2486 or DORIncome@wisconsin.gov.1 If retirement savings are part of how you'll fund care, building a senior care funding plan is a useful next step, and how to pay for senior care covers the main routes.

Learn More

Find personalized help making sense of the Wisconsin retirement income tax at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.