The state Senate today sent a $2.1 billion GOP tax package to Dem Gov. Tony Evers with only the Republican proposal to boost a credit for child care drawing significant bipartisan support.

The biggest ticket item in the package was AB 1020, which would expand the amount of income covered by the state’s second-lowest tax bracket of 4.4%.

Senate Majority Leader Devin LeMahieu, R-Oostburg, accused Evers of standing in the way of delivering meaningful tax relief to Wisconsin residents despite a projected $3.25 billion surplus at the end of the 2023-25 budget. He skewered Dems for opposing what he said was an effort to cut taxes for the middle class and warned Wisconsin is falling behind its neighbors that have lower tax rates.

 “It’s the taxpayer’s money,” he said. “It’s time to give it back to the taxpayers of Wisconsin.”

Sen. Tim Carpenter, D-Milwaukee, pushed back on the suggestion that the package would overwhelmingly benefit the middle class. He noted a proposed tax break for retirees would exempt income up to $150,000 annually for a married couple, saying he doesn’t have many retired constituents pulling in that kind of money every year.

“I don’t know where they get these numbers from, maybe Mar-a-lago or whatever,” Carpenter said, referring to where former President Donald Trump lives in Florida. He was the only Dem to join Republicans in backing the retirement portion of the package, AB 1021, on final passage as it cleared 23-9. 

Carpenter predicted the guv would only sign the child care credit expansion.

AB 1023 would expand the state credit for child and dependent care expenses to 100% of the credit claimed on a filer’s federal income tax return. Currently, the state credit equals up to 50% of the federal credit. It would reduce individual income tax collections by $72.9 million annually, beginning in 2024-25, according to the Legislative Fiscal Bureau.

Dems sought unsuccessfully to make the credit refundable. Those taxpayers who end up without tax liability can still collect the full value of the credit through a payment if it’s refundable.

The Senate signed off 29-3 after the Assembly backed it 92-4. Dems Melissa Agard and Kelda Roys, of Madison, and Chris Larson, of Milwaukee, voted no. 

The other pieces of the package include:

*increasing the second tax bracket. For married joint filers, the second-lowest tax bracket will cover income between $19,090 and $38,190 under current law. AB 1020 would expand that to a cap of $150,000, and it would require the Department of Revenue to update withholding tables by July 1.

LFB projects the change would reduce individual income tax collections by $1.2 billion in fiscal year 2024-25 and $751.9 million annually after that. The 2024-25 impact includes a one-time cost of $439 million to update withholding tables.

According to LFB, the average income tax reduction would be $454 in tax year 2024, though the impact would vary widely. The latest numbers from the U.S. Census Bureau put Wisconsin’s median household income at $72,458. Those making between $70,000 and $80,000 would see an average decrease of $273, according to LFB. Meanwhile, those making $150,000 would see a decrease of $966.

AB 1020 passed 22-10.

*excluding the first $75,000 of retirement income subject to state taxes for those 65 and older. For married joint filers, the bill would exempt the first $150,000. AB 1021 would cover payments from pensions and retirement plans such as a 401(k). It wouldn’t apply to retirement income already exempt from current state law, such as a distribution from a Roth IRA. The proposal would reduce taxes by $658.2 million in 2024-25 and $472.4 million annually thereafter. The average decrease would be $1,582 per filer. 

Social Security benefits, federal pension payments for military and government employees, and income from certain public retirement systems are already exempt from calculating a filer’s adjusted gross income. State law also exempts the first $5,000 in income for those 65 and over with an adjusted gross income of less than $15,000 or $30,000 for married joint filers.

*increasing an existing nonrefundable tax credit for married couples to $870 from $480. AB 1022 would reduce taxes by $169 million in 2024-25 and $160.9 million annually after that, with an average decrease of $338.

AB 1022 passed 22-10.