Your Taxes Are Going Down: Wisconsin Approves Major Middle-Class Break

Senate Majority Leader Devin LeMahieu is hailing a sweeping new tax relief plan that passed through the Joint Committee on Finance (JFC) this week as a major win for Wisconsin families and retirees.

The plan, approved during budget meetings held June 10 and June 12, delivers a $1.3 billion tax cut aimed at middle-class earners and residents living on fixed incomes.

Under the proposal, the second income tax bracket will now cover earnings up to $67,300 for married joint filers, meaning anyone earning more than $39,150 annually will see a reduction in their state income taxes. The expanded bracket is designed to provide broad relief while enhancing the state’s economic competitiveness.

“This is a responsible, pro-growth plan that directly benefits working Wisconsinites and our seniors,” said Majority Leader LeMahieu. “We’re making it easier to live, work, and retire in Wisconsin.”

A cornerstone of the tax package is a significant benefit for retirees. The first $24,000 of retirement income will now be exempt from state income tax for individuals over 67, effectively doubling for married couples. That means up to $48,000 in retirement income can be excluded from state taxes.

For seniors facing rising costs on fixed incomes, that change could be transformative.

“This ensures our retirees can keep more of what they’ve earned after a lifetime of work,” said LeMahieu.

In addition to tax reform, the JFC approved historic investments in K-12 education, with a particular focus on special education. Nearly $229 million will boost the reimbursement rate for special education costs to 37.5% by the 2026-27 school year—the highest rate since the mid-1990s. That’s a sharp jump from the previously projected 29.7%.

Additional education funding includes:

• $54.5 million to reimburse 90% of high-cost special education expenses
• $20 million in school-based mental health services grants

The plan also puts muscle behind Wisconsin’s future workforce with a series of strategic investments. The Youth Apprenticeship Grant program will receive $6 million in one-time funding to expand opportunities for high school students to gain hands-on experience. Technical colleges will benefit from $8.3 million in general aid, plus another $2 million to jumpstart artificial intelligence programming and curricula.

“These investments help us build a more skilled workforce while giving students and job seekers a real shot at meaningful careers,” LeMahieu said.

While Republicans are touting the plan as a win for families and seniors, Democrats have raised concerns that the tax cuts may disproportionately benefit higher earners and come at the expense of long-term investments in public services. As the Joint Committee on Finance continues its work on the biennial budget, the debate over Wisconsin’s fiscal priorities is far from over.

“The message is clear,” LeMahieu added. “We’re putting taxpayers first—and we’re just getting started.”