Financial Tax Benefits

 

Military pay that is exempt from federal taxation, such as combat pay or hazardous duty pay, is also exempt from Wisconsin state taxation.

For additional information on Wisconsin individual income taxes and military pay, see Wisconsin Department of Revenue Fact Sheet 1118, Income Tax Information For Active Military Personnel and/or Individual Income Tax – Military FAQs.
The death gratuity paid to the surviving dependent in the event of a line of duty death of a military service member is exempt from Wisconsin individual income taxes.
For military service members who are serving on active duty, special provisions may apply regarding extensions for filing federal and Wisconsin state income taxes and for interest on taxes due.

For additional information on Wisconsin individual income taxes and extensions to file, see Wisconsin Department of Revenue Fact Sheet 1118, Income Tax Information For Active Military Personnel and/or Individual Income Tax – Military FAQs.
​Regular pay received by Wisconsin residents serving in the military on active duty or on inactive Reserve duty or in the Wisconsin National Guard is not exempted from income tax.

Proof of filing a Wisconsin income form is frequently one of the components used in determining Wisconsin residency to establish general eligibility for Wisconsin state veterans benefits, the Wisconsin GI Bill, the Wisconsin Veterans & Surviving Spouses Property Tax Credit, and Residency for Tuition at UW institutions.

Residents of another state who are stationed in Wisconsin are not subject to Wisconsin income tax on their military pay unless they change their state of residency to Wisconsin.
For taxable years beginning in 2004 and thereafter, military pay received by certain members of the Reserves and National Guard may also be exempt for Wisconsin tax purposes.

To qualify for the exemption, the military pay must have been received from the federal government after being called into active federal service or into special state service authorized by the federal Department of Defense.

The pay must have been for a period of time during which the Reserve or National Guard member was on active duty. This exemption does not apply to military pay that members of the Reserves or National Guard receive during their weekend and two-week annual training.

For additional information, see Wisconsin Department of Revenue Fact Sheet 1118, Income Tax Information For Active Military Personnel and/or Individual Income Tax –  Military FAQs.​
The Wisconsin Veterans & Surviving Spouses Property Tax Credit provides eligible veterans and unremarried, surviving spouses a refundable property tax credit for their primary, in-state residence and up to one acre of land.

The Wisconsin Department of Veterans Affairs verifies the veteran’s eligibility for the program. The credit is administered by the Wisconsin Department of Revenue through the state income tax return.

The definitions of an eligible veteran and an eligible unremarried surviving spouse are expanded to include:

A veteran who had been a Wisconsin resident for a consecutive 5-year period after entering active duty or was a Wisconsin resident when entering active duty.

The veteran must have either an SCD rating of 100 percent under 38 USC 1114 or 1134 or a 100% disability rating based on individual unemployability. Individual unemployability means a condition under which a veteran has an SCD rating of either 60% under 38 USC 1114 or 1134 or two or more SCD conditions where one condition has at least a 40% scheduler rating and the combined scheduler rating for all conditions is at least 70%, and has an administrative adjustment added to the SCD, due to individual unemployability, such that the VA rates the veteran 100% disabled.

Effective for taxable years, beginning on or after January 1, 2014. The Wisconsin Property Tax Credit is extended to include the unremarried surviving spouse of an eligible veteran, who following the veteran’s death, began to receive and continues to receive Dependency and Indemnity Compensation (DIC) from the Federal VA.

Applicants who believe they may qualify should contact their local County Veterans Service Office​ (CVSO).

In addition to the above requirements the veteran would have had to been a resident of Wisconsin at the time of death for an unremarried spouse to qualify for the benefit.

For additional information, eligibility criteria, instructions on how to apply for the Wisconsin Veterans & Surviving Spou​​ses Property Tax Credit, and statutory citations for the program, see the WDVA B0106​ information and application booklet.

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