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Tax And Business Climate In Wisconsin



Tax And Business Climate In Wisconsin

This month we travel north to the Badger State of Wisconsin, a Midwestern U.S. state with coastlines on two Great Lakes (Michigan and Superior) and an interior of forests and farms. Several beer companies are based in Milwaukee, and many offer brewery tours. The state is known as “America’s Dairyland” because it is one of the nation’s leading dairy producers, particularly famous for its cheese. Manufacturing, especially paper products, information technology (IT), cranberries, and tourism are also major contributions to the state’s economy.

Wisconsin’s geography is diverse having been greatly impacted by glaciers during the Ice Age with the exception of the Driftless Area. The Northern Highland and Western Upland along with a part of the Central Plain occupies the western part of the state, with lowlands stretching to the shore of Lake Michigan. Wisconsin is second to Michigan in the length of its Great Lakes coastline.

The highest natural point in Wisconsin isn’t a mountain- it’s actually a hill. Timm’s Hill is recorded at 1,951 feet. Due to Wisconsin’s mostly glaciated terrain, there aren’t a lot of craggy peaks. In exchange for leveling the landscape, glaciation has left the state with some of the most beautiful rolling hills, valleys, prairies and fertile farm fields.

Business Climate

Wisconsin produces about a quarter of America’s cheese, leading the nation in cheese production. It is second in milk production, after California. Wisconsin is second in butter production, producing about one-quarter of the nation’s butter. The state ranks first nationally in the production of corn for silage, cranberries, ginseng, and snap beans for processing. It grows over half the national crop of cranberries and 97% of the nation’s ginseng. Wisconsin is also a leading producer of oats, potato, carrots, tart cherries, maple syrup, and sweet corn for processing. A large part of the state’s manufacturing sector includes commercial food processing, including well-known brands such as Oscar Meyer, Tombstone frozen Pizza, Johnsonville brats, and Usinger’s sausage. Kraft Foods alone employs over 5,000 people in the state. Milwaukee is a major producer of beer and was formerly headquarters for the Miller Brewing Company- the nation’s second-largest brewer- until it merged with Coors Brewing Company.

Wisconsin is home to a very large and diversified manufacturing economy, with special focus on transportation and capital equipment. Some major Wisconsin companies include the Kohler Company, Mercury Maine, John Deere and Oshkosh Corporation.

The distinctive Door Peninsula, which extends off the eastern coast of the state, contains one of the state’s tourist destinations, Door County. Door County is a popular destination for boaters because of the large number of natural harbors, bays and ports on the Green Bay and Lake Michigan side of the peninsula that forms the county. The area draws hundreds of thousands of visitors yearly to its quaint villages, seasonal cherry picking, and fish boils.

Tax Climate

The top individual income tax rate is 7.65% and the top corporate income tax rate is 7.9%.

Apportionment: Wisconsin taxpayers apportion income using a single-factor sales weighted formula.

Wisconsin uses market-based rules for the sourcing of services.

Sales Tax Structure

The state sales tax rate is 5%. Wisconsin’s counties and cities also add on to the sales tax rate. Combined with the state sales tax, the highest sales tax rate in the state 6.75% in the cities of Wisconsin Dells and Lake Delton.

Annual gross sales of tangible personal property and services into the state are included in the state’s threshold of $100,000 in the previous or current calendar year by a remote seller. This legislation went into effect on October 1, 2018. Exempt sales and exempt services are included in the threshold. Businesses that only make nontaxable sales in Wisconsin are not required to register for a sales tax account.

The following marketplace facilitation law went into effect on January 1, 2020. A remote marketplace facilitator with more than $100,000 in gross revenue from Wisconsin sales in the state in the current or preceding calendar year must collect sales tax on all sales made or facilitated in the state. A transactions threshold was eliminated on February 20, 2021.

Wisconsin imposes sales and use tax on the sale, lease, rental or use of certain digital products. In Wisconsin, prewritten computer software is taxable as tangible personal property when delivered electronically. It is also taxable if sold in a tangible medium. Custom computer software is not subject to sales and use tax when delivered electronically. For SaaS arrangements, if the customer is simply accessing prewritten software provided by a host and located on the host’s server, the service is not taxable as long as the customer does not have the physical access to the server or control the operation of the server. How products are produced, sold and delivered is critical to determining the tax status.

Many states have annual sales tax holidays, during which certain items the state wants to promote the purchase of (like school supplies, emergency preparedness supplies, or energy efficient appliances) can be purchased sales tax free. Wisconsin, however, does not currently have any scheduled sales tax holidays.

Our team at Miles Consulting Group is always available to discuss the specifics of your situation, whether in Wisconsin or other U.S. States, and help you navigate the complex tax structures arising from multistate operations. Call us to help you achieve the best tax efficiencies.

Random Facts

  • Wisconsin’s Door County has five state parks and 250 miles of shoreline along Lake Michigan. These figures represent more than any other county in the country.
  • Devil’s Lake was established in 1911. The facility has become one of Wisconsin’s oldest and most famous state parks. It leads the state parks in attendance.
  • The Cheese capital of the world is Monroe, WI. Visit Monroe in September of every even numbered year for their festival called Green County Cheese Days.
  • Known for its dairy production, Wisconsin actually leads the nation in exports of cranberries, whey, ginseng root and sweet corn.
  • The American Birkebeiner, a 52K cross country ski race between Cable and Hayward, is the largest on the North American Continent.
  • The state’s constitution is the oldest of any state west of the Allegheny Mountains. It was adopted in 1848.
  • The state is the 23rd largest state by total area and the 20th most populous state.

Have a question? Contact Monika Miles, Miles Consulting.

Monika founded Miles Consulting Group which focuses on multi-state tax consulting, helping clients navigate state tax issues such as sales tax and income tax in interstate commerce, including e-commerce.

Prior to forming the firm, Monika worked for 12 years combined in Big 4 Public Accounting and private industry. Monika has provided such services as federal and state income/franchise tax compliance and consulting, sales/use tax consulting, audit support, and credits and incentives reviews. She has served clients in a variety of industries including manufacturing, technology, telecommunications, construction, utility, retail and financial institutions.

Monika graduated from the University of Texas at El Paso (UTEP) with a BBA in Accounting/Finance and has a Masters in Taxation from San Jose State University.

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