MADISON, WI – Today, Wisconsin State Representative William Penterman (R-Hustisford) voted to advance two common-sense tax reforms aimed squarely at providing meaningful relief to working families and aligning Wisconsin’s tax code with recently enacted federal law.
2025 Wisconsin Assembly Bill 38 and 2025 Wisconsin Assembly Bill 461 deliver real income tax relief to workers who rely on tips and overtime pay—earnings that often come from long hours, unpredictable schedules, and significant personal sacrifice.
Assembly Bill 38, creates a state income tax exclusion for qualified cash tips that mirrors federal law enacted in July 2025 under the One Big Beautiful Bill Act. Beginning with Tax Year 2025 and continuing through Tax Year 2028, eligible workers may deduct up to $25,000 in qualified tip income from their Wisconsin taxable income, subject to income-based phaseouts for higher earners.
Assembly Bill 461 changes the way overtime pay is taxed. Currently, overtime pay is taxed the same as regular income. This legislation will allow workers to subtract $12,500 of overtime earnings each year from their taxable income (or $25,000 for married joint filers), which puts more money in their pocket.
“Overtime is not just extra work—it is time away from family, rest, and personal obligations,” supporters said. “This bill recognizes that sacrifice and helps make it worthwhile for the workers our economy depends on most.”
Together, Assembly Bills 38 and 461, reflect a shared commitment to rewarding hard work, supporting working families, and aligns Wisconsin’s tax code with federal standards.
These bills send a clear message that Wisconsin values work, respects sacrifice, and believes workers should be able to keep more of what they earn when they go above and beyond.
