SB 267 — Relating to: providing a temporary tax exemption for unemployment compensation. (FE)

- 2022 LEGISLATURE LRBa0459/1LRB-2566/1 EKL:cdcEKL:amn SENATE AMENDMENT 1, TO SENATE BILL 267 MayMarch 3,31, 2021 - OfferedIntroduced by SenatorSenators ASS.C ARPENTER , SMITH, BEWLEY , AGARD , ERPENBACH , JOHNSON , LARSON, PFAFF, RINGHAND , ROTH, ROYS, L.TAYLOR and W IRCH, cosponsored by Representatives M CG UIRE, SINICK, BALDEH , OWEN , CABRERA , ONLEY , OYLE , HEBL, HESSELBEIN, HONG, MILROY, OPE , HANKLAND , SHELTON , STUBBS, TUSLER, EMERSON and D RAKE .

AtReferred theto locationsCommittee indicated,on amendLabor theand billRegulatory asReform. follows:

A N A CT to amend 71.05 (6) (b) 8.;

and to create 71.05 (1) (d) of the statutes;

relating to:

providing a temporary tax exemption for unemployment compensation.

Analysis by the Legislative Reference Bureau This bill exempts, for state income tax purposes in 2020 and 2021, up to $10,200 of the unemployment compensation received by an individual during the year.

In the case of married couples who both receive unemployment compensation and who file a joint return, the $10,200 limitation applies separately to each spouse.

The exemption applies only if the federal adjusted gross income (AGI) of the individual, or of both spouses if filing a joint return, is less than $150,000.

Under current federal law, unemployment compensation is generally taxed, except that the American Rescue Plan Act of 2021 temporarily allows individuals whose federal AGI is less than $150,000 to exclude up to $10,200 of the unemployment compensation received in 2020 by the individual or, in the case of married couples filing a joint return, each spouse.

Under current state law, unemployment compensation is exempt from state tax if the recipient's federal AGI does not exceed a base amount.

The base amount is $12,000 for single individuals or married individuals filing separate returns who live apart from their spouse for the entire year, $18,000 for married couples filing joint returns, and zero for married individuals filing separate returns who live with their spouse during the year.

If federal AGI exceeds the base amount, then the amount subject to tax under current state law is the lesser of the amount of unemployment compensation received or - 2022 Legislature - 2 - LRB-2566/1 EKL:amn SENATE BILL 267 one-half of the amount that federal AGI exceeds the base amount.

The bill maintains the existing provision.

Because this bill relates to an exemption from state or local taxes, it may be referred to the Joint Survey Committee on Tax Exemptions for a report to be printed as an appendix to the bill.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SECTION 1.

71.05 (1) (d) of the statutes is created to read:

71.05 (1) (d) Unemployment compensation.

PageFor 3,taxable lineyears 2:beginning after December 31, 2019, and before January 1, 2021, the unemployment compensation received by the individual that is excluded from federal adjusted gross income under section 85 (c) of the Internal Revenue Code.

after2. that line insert:

“SECTIONFor 3.0Nonstatutorytaxable provisions.years beginning after December 31, 2020, and before January 1, 2022, the unemployment compensation received in the taxable year by the individual, limited to $10,200.

(1)In Ofthe case of married spouses filing a joint return who both receive unemployment compensation during the moneystaxable year, the governor$10,200 acceptslimitation fromshall theapply federalseparately governmentto undereach s.spouse.

16.54This pursuantsubdivision todoes sectionnot 602apply ofif the federal Socialadjusted Securitygross Actincome, as amendeddetermined byunder section 85 (c) (2) of the federalInternal AmericanRevenue RescueCode, Planof Actthe individual, or of 2021,the P.L.individual and his or her spouse if married filing a joint return, is $150,000 or more.

117-2,SECTION the2. governor shall allocate, to the extent allowed under federal law, no more than $242,000,000 to the general fund to cover the loss of revenue under s.

71.05 (1)(6) (d).”.(b) 8.

of the statutes is amended to read:

71.05(6) (b) 8.

The difference between the amount included in federal adjusted gross income for the current year and the amount calculated under section 85 of the internal revenue code Internal Revenue Code (relating to unemployment LRB-2566/1 - 2022 Legislature - 3 - EKL:amn SECTION 2 SENATE BILL 267 compensation) as that section existed on December 31, 1985, to the extent that such amount is not exempt under sub.

(1) (d).