personal property tax

Business Owners: The Personal Property Tax has been Repealed

On June 20th, Governor Evers repealed the personal property tax for businesses effective January 1, 2024. He did so with the signing of 2023 Wisconsin Act 12.

If you’ve ever started a business, you might have been surprised when you received two tax bills in December. After all, most owners of real estate only receive one tax bill for their building and land. Business owners, however, have been getting a second tax bill for the business’s personal property such as office chairs, desks, computers, tools, etc.

Before Wisconsin became a state, government funding came primarily from property taxes as there were no income or sales taxes. All property was taxed including stocks, bonds, jewelry, furniture, livestock, crops, inventories, and vehicles. Over time, Wisconsin has adopted income and sales taxes and application of the personal property tax has been greatly reduced, through exemptions, including household property.

To charge businesses the personal property tax, local authorities have to determine which items are exempt and then, of the taxable items, they have to determine the fair market value and normalize variations among local assessments before they can issue final personal property bills to businesses. These exemptions and variations can be confusing and inconsistent as they sometimes differ for homeowners and business owners. While a piece of furniture in a home may not be taxed, that same piece of furniture, if owned by a business, could be. Fortunately, starting in 2024, this will be greatly simplified thanks to the repeal of the personal property tax altogether.

With this repeal, personal property will no longer be included in the definition of “Taxable Property,” and beginning in January of 2024, “No tax shall be levied under this chapter on personal property.” While some personal property may be reclassified as real property (real estate), overall, property taxes will be reduced.

Of course, it would seem that reducing taxes would also reduce revenue. To account for the loss of revenue, the legislature authorized Milwaukee County to increase its sales tax by 0.375 percent, and the City of Milwaukee may increase its sales tax by 2.0 percent. These new “Milwaukee” taxes are estimated to generate $194 million in revenue, covering the loss and then some, of the $174 million of revenue that the personal property tax generated in 2023, and removing the need for state subsidies to the Milwaukee area.

For detailed information, see 2023 Wis. Act. 12, Section 69 (creating Wisconsin Statutes Section 70.015).