Wisconsin does not tax Social Security, exempts most federal and military pensions, and now lets retirees 67 and older subtract up to $24,000 of retirement income tax-free. That new subtraction, up to $48,000 for a married couple where both spouses are 67 or older, carries no income limit and is far broader than the older $5,000 break it sits alongside. It moves Wisconsin from a state that rewarded a few pension types into one that gives most older retirees real relief.

This guide breaks down how Social Security, pensions, and IRA or 401(k) withdrawals are each treated, and how the age-67 subtraction and the older $5,000 subtraction differ.

In This Guide

Wisconsin Retirement Income Tax at a Glance

Wisconsin's treatment turns on the type of income and your age. Social Security is fully out. Certain federal and military pensions are fully out too. Everything else is generally taxable, but 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. The table below lays out each income type.

Income type Treatment Limit or amount Age or income test
Social Security Fully exempt 100% of benefits; Railroad Retirement also exempt None
Certain federal and military pensions Fully exempt Separately exempt from state tax None
Other pensions, IRA, and 401(k) income Generally taxable Taxed on the graduated schedule n/a
Age-67 retirement subtraction Up to $24,000 ($48,000 joint, both 67+) Per 2025 tax year onward; no income limit Age 67+
Older retirement subtraction Up to $5,000 Alternative to the age-67 subtraction Age 65+ and FAGI below $15,000 single / $30,000 married

Wisconsin's income tax is graduated, running roughly 3.5 percent to 7.65 percent (verify the current brackets for your filing year). Retirement income that is not exempt or subtracted is taxed under that schedule. Certain federal and military pensions are separately exempt and sit outside this general rule.

Wisconsin Retirement Income Tax: How It Works

Wisconsin sorts retirement income into three tiers. The first is fully exempt: Social Security and Railroad Retirement benefits. The second is a set of specific pensions, certain federal and military ones, that are also exempt. The third is everything else, which is generally taxable but can be reduced by one of two retirement subtractions.

The Social Security exemption is the clean one. Wisconsin does not tax Social Security or Railroad Retirement benefits at all. The Wisconsin Department of Revenue confirms this in its guidance for retirees.

The relief on the third tier changed with the 2025 tax year. Under 2025 Wisconsin Act 15, a taxpayer who is 67 or older may subtract up to $24,000 of qualified retirement income, and a married couple where both spouses are 67 or older may subtract up to $48,000, with no overall income limit or phase-out. That is a meaningfully broad break: a retiree with a $24,000 pension or $24,000 in IRA withdrawals can subtract the whole amount, regardless of how high their income is.

An older, narrower subtraction still exists alongside it. Taxpayers 65 and older whose federal adjusted gross income is below $15,000 for a single filer or $30,000 for a married couple combined may instead subtract up to $5,000 of retirement income. A taxpayer claims one subtraction or the other, not both, so almost everyone eligible for the $24,000 version will take it. Claiming the age-67 subtraction can also bar certain other credits for that year, so it is worth confirming the tradeoff 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. Both are fully exempt at the state level, with no age test or income phase-out.

This is the most reliable piece of the Wisconsin retirement income tax. A retiree with substantial pension or account income keeps the same full Social Security exemption as a retiree living on benefits alone. The exemption stands on its own and does not count against either the $24,000 age-67 subtraction or the older $5,000 subtraction below.

Pensions

Pension treatment in Wisconsin depends on the source. Certain federal and military pensions are separately exempt and are not taxed at the state level. For retirees drawing those specific pensions, that exemption can remove a large share of their taxable income on its own.

Most other pensions, including many state, local, and private employer pensions, are generally taxable on Wisconsin's graduated schedule. For a retiree 67 or older, the age-67 subtraction can offset up to $24,000 of that income ($48,000 for a couple where both are 67 or older), with no income limit, which erases the tax on a modest pension entirely and cuts it on a larger one. A retiree who is 65 or 66, or who is not yet using the age-67 subtraction, may instead claim the older $5,000 subtraction, but only with federal adjusted gross income below $15,000 single or $30,000 married.

IRAs and 401(k)s

Traditional IRA and 401(k) distributions are generally taxable in Wisconsin and run through the same graduated schedule as most pensions. They also count as qualified retirement income for the age-67 subtraction, so a retiree 67 or older can subtract up to $24,000 of IRA and 401(k) withdrawals ($48,000 for a qualifying couple) with no income limit.

For a retiree 65 or 66, the only carve-out is the older $5,000 subtraction, which applies only at the low income thresholds above. So a 66-year-old drawing meaningfully from a 401(k) or IRA will usually have federal adjusted gross income above $15,000 single or $30,000 married and will not qualify for that older subtraction, though the full age-67 break opens up the year they turn 67. If you are weighing how much to draw from these accounts to cover care, retirement accounts for care walks through the tradeoffs.

Putting It Together

The practical takeaway is that Wisconsin is now fairly generous to older retirees. Social Security is out for everyone, certain federal and military pensions are out too, and beginning with the 2025 tax year most retirees 67 and older can subtract up to $24,000 of their remaining retirement income with no income limit. The older, income-tested $5,000 subtraction still covers those who are 65 or 66 and under the low FAGI thresholds.

Picture a single retiree, age 67, with $20,000 in Social Security and $28,000 in pension and IRA income. The $20,000 in Social Security is fully exempt and never enters the Wisconsin calculation. The $28,000 is generally taxable, but as a 67-year-old the retiree can subtract up to $24,000 of it under the age-67 subtraction, with no income limit, leaving only about $4,000 taxable on the graduated schedule that runs roughly 3.5 percent to 7.65 percent. Under the older rules, that same retiree would have been too far above the $15,000 threshold to claim even the $5,000 subtraction. 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.

This is general information rather than personalized tax advice, and whether your specific pension qualifies for the federal or military exemption, and how the age-67 subtraction interacts with other credits, are exactly the kind of details worth confirming with the Wisconsin Department of Revenue or a tax professional before you plan withdrawals. If retirement savings are part of how you will fund care, building a senior care funding plan is a useful next step.

Not sure whether your pension qualifies for Wisconsin's exemption? Chat with Brevy's care navigator to sort out your situation.

Frequently Asked Questions

Does Wisconsin tax Social Security?

No. Wisconsin does not tax Social Security or Railroad Retirement benefits, with no age test or income limit. Both are fully exempt at the state level.

Does Wisconsin tax pensions?

It depends on the source and your age. Certain federal and military pensions are separately exempt, while most state, local, and private pensions are generally taxable on the graduated schedule. A retiree 67 or older can subtract up to $24,000 of that income with no income limit, and those 65 or 66 under the low FAGI thresholds may instead take a $5,000 subtraction.

Who qualifies for Wisconsin's retirement income subtraction?

Starting with the 2025 tax year, any taxpayer 67 or older can subtract up to $24,000 of qualified retirement income ($48,000 for a couple where both are 67 or older) with no income limit. A separate, older subtraction of up to $5,000 is available at 65 with federal adjusted gross income below $15,000 single or $30,000 married; a taxpayer claims one subtraction or the other.

Does Wisconsin tax 401(k) withdrawals?

Generally yes, but they count as qualified retirement income for the age-67 subtraction. Traditional 401(k) and IRA distributions are taxable on the graduated schedule, yet a retiree 67 or older can subtract up to $24,000 of them with no income limit. Below age 67, the only offset is the income-tested $5,000 subtraction.

What are Wisconsin's income tax rates?

Wisconsin uses a graduated schedule running roughly 3.5 percent to 7.65 percent; verify the current brackets for your filing year. Retirement income that is not exempt or subtracted is taxed under that schedule.

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.
  • Check whether your pension is a federal or military pension that qualifies for separate exemption.
  • If you are 67 or older, plan around the $24,000 subtraction ($48,000 for a couple where both are 67+), which has no income limit and can erase tax on a modest pension or IRA draw.
  • 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.

If you are mapping out how to pay for care, how to pay for senior care covers the main routes.

Learn More

FinancialHow to Pay for Senior Care in WisconsinHow to pay for senior care in Wisconsin in 2026: real costs, Medicare's limits, Wisconsin Medicaid for long-term care, VA Aid and Attendance, and LTC insurance. FinancialWisconsin Senior Property Tax ReliefHow Wisconsin seniors cut property taxes: the Homestead Tax Credit (up to $1,168), the 100% disabled-vet credit, and who actually qualifies for each. FinancialHow Each State Taxes Retirement IncomeRetirement income tax varies enormously by state. Learn how states treat Social Security, pensions, and IRA or 401(k) money, and find your state's rules. FinancialHow to Pay for Senior CareHow to pay for senior care: what it costs nationally and how Medicaid, Medicare, VA benefits, and private pay each fit. Who qualifies, what's covered, in 2026. FinancialBuilding a Senior Care Funding PlanA step-by-step plan to pay for senior care: estimate the cost, inventory income and assets, find the payers you qualify for, sequence them, and get free help. FinancialRetirement Accounts for CareHow to use a retirement account to pay for senior care: the tax on IRA and 401(k) withdrawals, the early-penalty exceptions, RMDs at 73, and the tax-spike trap.

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.

BC

Brevy Care Team

Expert eldercare guidance from Brevy's team of healthcare professionals and researchers.