Wisconsin State Tax on IRA Distributions: Brackets and Exemptions

Wisconsin taxes traditional IRA distributions as ordinary income at rates between 3.50% and 7.65%, depending on your filing status and total taxable income.¹ Starting with the 2025 tax year, residents age 67 or older can subtract up to $24,000 of qualified retirement income — including IRA withdrawals — from Wisconsin taxable income, with the cap doubling to $48,000 for married couples filing jointly where both spouses meet the age test.² That one subtraction reshapes the math for most retiree households.

How the Distribution Reaches Your Wisconsin Return

Traditional IRA contributions are typically made with pre-tax dollars, so Wisconsin treats the full taxable amount of each distribution as ordinary income. There is no separate category and no preferential rate for retirement withdrawals. The state begins with your federal adjusted gross income and applies its own adjustments, so whatever flows onto your federal 1040 as a taxable IRA distribution flows onto your Wisconsin return too.³

Where the IRA was opened does not matter. A Wisconsin resident who takes a withdrawal from an IRA established years earlier in Florida owes Wisconsin tax on the entire taxable portion.³ If you made nondeductible contributions along the way, only the earnings portion is taxable; your basis comes back tax-free on the state return just as it does federally.

Wisconsin Income Tax Brackets for 2026

Your IRA distribution gets stacked on top of your other income, and the combined total is taxed at Wisconsin’s graduated rates. For single filers, the 2025–2027 budget set these brackets:¹

3.50% on the first $14,680 of taxable income
4.40% from $14,681 to $50,480
5.30% from $50,481 to $323,290
7.65% above $323,290

For married couples filing jointly, the thresholds are roughly one-third higher: 3.50% to $19,580, 4.40% to $67,300, 5.30% to $431,060, and 7.65% above that. Married filing separately uses brackets about half the joint figures.

A large one-time withdrawal can push you into a higher bracket for the year. If you have flexibility, splitting a planned distribution across two tax years sometimes keeps more of the money in a lower bracket. That matters most when your other income already sits near a bracket boundary.

The $24,000 Retirement Income Subtraction at Age 67

If you are at least 67 by December 31, you can subtract up to $24,000 of qualified retirement income from your Wisconsin taxable income. Married couples filing jointly can subtract up to $48,000 if both spouses are 67 or older.² There is no income limit.

Eligible income includes distributions from any qualified plan under the Internal Revenue Code and from IRAs established under 26 USC 408. Required minimum distributions, inherited IRA distributions, and the taxable portion of a Roth conversion all count toward the subtraction when you meet the age requirement.⁴

There is one real trade-off. Claiming this subtraction means you cannot claim any Wisconsin income tax credits for the same tax year.² That includes the homestead credit, the earned income credit, and the school property tax credit. For most retirees with substantial IRA income, the subtraction is worth more than the credits forfeited, but run the numbers both ways before you decide.

The Narrower $5,000 Exclusion for Lower-Income Seniors

Wisconsin also keeps an older, smaller subtraction on the books. If you are at least 65, you can exclude up to $5,000 of qualified retirement plan or IRA distributions, but only if your federal AGI falls below strict cutoffs:²

Single or head of household: federal AGI under $15,000
Married filing jointly: combined AGI under $30,000
Married filing separately: both spouses’ combined AGI under $30,000

These are cliffs, not phase-outs. One dollar over the threshold and the entire exclusion is gone. Because the $24,000 subtraction has no income limit and reaches anyone 67 or older, the $5,000 exclusion mostly matters for low-income retirees aged 65 or 66. You cannot claim both subtractions in the same year.⁵

What About Roth IRA Distributions?

Qualified Roth IRA withdrawals are not taxed by Wisconsin. Because Roth contributions are made with after-tax dollars and qualified distributions never enter your federal AGI, they never enter your Wisconsin income either. The state inherits the federal treatment.

A Roth distribution is qualified when the account has been open at least five tax years and you are at least 59½, disabled, or taking it as a beneficiary after the owner’s death. If a withdrawal does not meet those tests, the earnings portion becomes taxable on both returns. The contribution portion of a nonqualified distribution still comes out tax-free.

The Early Withdrawal Penalty Before 59½

Taking money out before age 59½ triggers the federal 10% early withdrawal tax, and Wisconsin piles on its own penalty. The state penalty equals 33% of the federal penalty, which works out to an additional 3.3% of the distribution.³

Together, the two penalties add 13.3% before ordinary income tax even applies. On a $50,000 early withdrawal, that is $6,650 in penalties alone, plus federal and Wisconsin income tax on the full amount. Most federal exceptions to the 10% penalty, such as disability, qualifying medical expenses, and first-time homebuyer distributions, wipe out the Wisconsin penalty too, because the state penalty is calculated as a percentage of whatever federal penalty actually applies. If the federal penalty is zero, 33% of zero is zero.

Using a Qualified Charitable Distribution

If you are 70½ or older, a qualified charitable distribution lets you send up to $111,000 per year directly from your IRA to an eligible charity. The QCD counts toward your required minimum distribution without increasing your federal AGI, so it never shows up in Wisconsin income either. The amount escapes both federal and state tax.

This matters especially for retirees who do not itemize deductions and would otherwise get no tax benefit from charitable giving. Even someone claiming the $24,000 retirement income subtraction may prefer a QCD for amounts above that cap, because a QCD removes income from AGI entirely rather than subtracting it later in the state calculation.

Estimated Payments and Withholding

Wisconsin requires quarterly estimated tax payments if you expect to owe $500 or more on your state return after withholding and credits.⁶ Retirees living on IRA distributions hit this threshold routinely, because custodians do not withhold Wisconsin tax unless you specifically ask.

For the 2026 tax year, the installment due dates are:⁷

April 15, 2026
June 15, 2026
September 15, 2026
January 15, 2027

If quarterly checks are not your style, ask your IRA custodian to withhold a flat dollar amount or percentage for Wisconsin from each distribution. There is no state-mandated withholding on private IRA payments, and electing federal withholding does not cover your state liability. Missing payments or underpaying brings interest charges. Getting this wrong in the first year of retirement is one of the most common and avoidable tax surprises for people used to a paycheck.

If You Moved Into or Out of Wisconsin

Part-year residents only pay Wisconsin tax on IRA distributions received while they were legal residents of the state.⁸ Distributions taken before you established residency, or after you left, generally are not subject to Wisconsin tax.

What governs the result is when the money actually hits your account, not when you requested the withdrawal or when the tax year ends. If a move is on the horizon, the date you take distributions can decide which state collects the tax. Part-year residents report the Wisconsin-period portion on Form 1NPR.⁹

1
Wisconsin Department of Revenue. Tax Rates
2
Wisconsin State Legislature. Wisconsin Code 71.05 – Income Computation
3
Wisconsin Department of Revenue. How Your Retirement Benefits Are Taxed Publication 126
4
Wisconsin Department of Revenue. 2025 Fall Tax Updates – Practitioner Questions and Answers
5
Wisconsin Department of Revenue. Wisconsin Tax Information for Retirees Publication 106
6
Wisconsin Department of Revenue. Individual Income Tax – Estimated Tax Payments
7
Wisconsin Department of Revenue. 2026 Form 1-ES Instructions – Estimated Income Tax for Individuals, Estates, and Trusts
8
Wisconsin Department of Revenue. Individual Income Tax – Retired Persons
9
Wisconsin Department of Revenue. 2025 Form 1NPR Instructions – Wisconsin Income Tax for Nonresidents and Part-Year Residents