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Edith Butler is dealing with a real-world math problem: Her housing costs keep rising while a tax credit intended to help keeps shrinking. 

The widow and retired nurse, 68, lives by herself in a two-bedroom Eau Claire home. She paid $9,000 in rent over the course of last year, eating up more than 60% of her Social Security paycheck — her primary source of income. Her utility costs are also expected to hike next year.

She received $708 last year from claiming a homestead tax credit, which is meant to help lower-income homeowners and renters recoup some property tax costs. That was down from the $900 credit she received five years ago after paying just $6,600 in rent. 

In the past, the homestead credit has paid to fill her propane tank for about three months during winter and offset some other costs. But it’s dwindling each year because the state rarely updates eligibility guidelines and credit calculations for inflation. Butler’s credit shrinks whenever the federal government increases her Social Security payment to account for the rising costs of living. 

She’s not alone. Statewide homestead credit claims dropped from an average of $523 per recipient in 2013 to $486 in 2025, with thousands fewer claimants as fewer people remained eligible.

“These things have never adjusted. But we’ve paid into these programs all our lives. I paid taxes for 50 years, (and) my Social Security is my benefit that I paid in,” Butler said. “You work hard and you pay into programs, and then when you need them in your older years like this, they’re not there for you.”

The Legislature has not substantially updated the homestead credit for 25 years, causing its value to erode. Recent Democratic proposals to update program guidelines have failed to gain Republican support.  

A tax credit’s history

By the 1960s, many in Wisconsin acknowledged the regressive nature of property taxes — that lower-income residents pay higher shares of their income than richer households do,  John Stark, then-Assistant Chief Counsel in the Legislative Reference Bureau, wrote in a 1991 history of property tax relief in Wisconsin. But the state Constitution’s “uniformity clause” restricted what type of tax relief lawmakers can enact. 

Against that backdrop, a State Commission on Aging in 1962 held hearings around the state in which older adults expressed concerns about health care and property taxes. The Legislature responded in 1963 with the homestead credit. Residents 65 and older could claim up to $225 (the equivalent of $2,380 today), with the precise calculation based on income, property taxes paid through ownership or rent.

The Legislature expanded eligibility over the years, notably in 1973, when it lowered the age minimum to 18. That dramatically boosted total claimants and payouts. By 1988, more than 250,000 people received a collective $100 million (roughly $270 million today) in credits.

The trend has since reversed. 

Fewer than 67,000 residents claimed a collective $32.6 million in credits last year — a precipitous plunge, Department of Revenue data show.

The program’s income cap today — $24,680 — has barely budged since 2000. The nearly identical cap of $24,500 in 2000 is the equivalent of $45,812 today when adjusted for inflation.

Meanwhile, the program’s “phaseout income” of $8,060, under which homeowners or renters can recoup the maximum 80% of property taxes paid, has increased by only $60 since the 1989 tax year.

Today’s maximum credit a household can claim ($1,168) is just $8 higher than the 1990 level.

Diane Hanson, Butler’s tax agent, said her clients are receiving smaller credits each year or becoming ineligible as inflation pushes wages or Social Security payments above the static income limit. 

Still, Hanson suspects many who remain eligible don’t realize it.

The homestead credit helped Hanson through her most challenging times. After learning about it at her local library, she claimed the credit for several years while raising her two children during a divorce, one of them with disabilities. 

After becoming a tax agent in 2019, she began to educate clients facing similar circumstances. They include Renata Braatz, who raises her 12-year-old son and spends about 30% of her monthly income on rent through the Section 8 voucher program. She claimed about $600 through the homestead program last year. She spent it on groceries and other expenses for her son.

“I never knew about it. I lived here for six years, and I just started doing it two years ago,” Braatz said. 

But asking questions paid off. 

“Renata was proactive, reaching out, phoning us, and asking if there could be any credits for her. I think that is more than some folks know to do,” Hanson said. “Before I was a tax professional, I myself didn’t know how much the federal earned income credit can help out parents.”

Democrats call for credit’s expansion 

Senate and Assembly Democrats earlier this year introduced identical bills to expand the homestead credit — allowing households earning up to $35,000 to claim it and indexing the maximum annual income, phaseout income and maximum credit to inflation. The proposal would have reduced state revenue by an estimated $36.7 million, $43 million and $48.8 million over the next three fiscal years.

Democratic Gov. Tony Evers also proposed a homestead credit expansion in his last two-year budget. 

Neither  proposal advanced in the Republican-controlled Legislature. 

Sen. Mark Spreitzer, D-Beloit, authored the Senate version of the bill with colleagues. His district borders Illinois, which offers a range of more generous homestead tax incentives. Several constituents who previously lived in Illinois asked him why Wisconsin doesn’t offer what Illinois does, inspiring the legislation.

The Wisconsin Constitution’s uniformity clause prohibits lawmakers from enacting Illinois-like tax exemptions for older adults or other low-income residents, Spreitzer said, but the credit offers a legal work-around.

“There’s not really another credit that takes the place of this,” he said. “That’s why the homestead credit is so important.”

Spreitzer said he plans to reintroduce an expansion bill, and he encourages residents to share their perspectives with their representatives.

“If we want to do something about affordability, this is a very direct thing we can do,” Spreitzer said. “We’re not creating a new credit here. This already exists. We’re just talking about increasing who qualifies and how much money they would get back, and that’s money that they would directly be able to get back on their taxes and then spend to put food on the plate for their families.”

Hanson sees a path for bipartisan support for an update. 

“The alternative is to see it dwindle,” Hanson said. “It hurts the segment of people that actually need it, the people who just don’t get much help anywhere. They’re still working hard to be independent.”

As living costs soar, tax relief shrinks for low-income Wisconsin residents is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.

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Wisconsin municipalities and school districts, which rely on taxpayer dollars to fund their services, are running into rising frustration from the residents who pay those costs.

The frustration comes as more local governments are turning to wheel taxes to fund transportation-related services as costs of construction materials rise and local leaders say the Legislature over the years has constrained ways municipalities can raise additional revenues. Nearly half of Wisconsin residents are paying a wheel tax in 2025, according to the Wisconsin Policy Forum. 

The number of Wisconsin school districts turning to taxpayers to support referendums has also grown in recent years with the state seeing more than 200 ballot questions in 2024, 148 of which were operating referendums. Ninety-four districts sought referendums in elections this year, the most in an odd-numbered election year since 2007, the Policy Forum noted earlier this year. 

But Wisconsin taxpayers’ support for funding revenue needs of local governments and school districts appears to be waning as residents grapple with their own rising costs from energy bills to health care payments.

The Marquette University Law School Poll conducted in October showed 56% of voters found lowering property taxes to be more important than funding public education, a number that has gradually grown in the last two years. Between 2015 and 2022 more voters supported funding public schools over lowering property taxes. Additionally, 57% of Wisconsin voters in October said they would be more likely to vote against a school referendum when, just four months earlier, 52% of voters said they would support one. 

The public discontent with government taxes and fees aligns with a longtime Republican strategy to reduce the size and reach of government. Similar frustration with the role of government in the wake of the Great Recession swept Republicans into power in Wisconsin in 2010, and they’ve kept control of the Legislature since then.

Heading into the next cycle, Republican lawmakers are promoting bills that seek to limit when taxpayers can be asked for more funding.

One bill from Sen. Rob Hutton, R-Brookfield, would require referendums for local governments that want to establish a wheel tax and mandate the municipalities and counties with existing wheel taxes to go to referendum to keep their fees in place. Hutton, who is up for reelection in 2026, holds perhaps the most vulnerable of three Republican Senate seats that Democrats are targeting in elections next year. 

A resident brought the idea for the wheel tax bill to Hutton’s office as New Berlin and Elm Grove considered implementing their own vehicle registration fees earlier this year, his chief of staff said in an email to Wisconsin Watch. The New Berlin Common Council officially rejected the option to pursue a wheel tax in July. 

“Some may argue that these are not make or break amounts of money, and that certainly may be the case,” Hutton said during an October hearing on the Assembly companion to his bill. “But every cost adds up to many citizens in these communities, especially those families who are living paycheck to paycheck.” 

Hutton’s bill is scheduled for a public hearing Wednesday, just a week after the Eau Claire City Council voted to raise the city’s wheel tax from $24 to $50. Eau Claire residents will pay $80 between city and county fees with the new increase, which is currently higher than Milwaukee where city residents pay $60 in wheel taxes split between the city and county. 

The vehicle registration fee increase will give the city of Eau Claire an additional $1.2 million, which the city’s finance director told councilors was necessary for a balanced budget without making other cuts. 

“If we didn’t have the wheel tax available, we would have to make very significant cuts,” Stephanie Hirsch, Eau Claire’s city manager, told Wisconsin Watch. “We can’t really touch our public safety departments because of state laws that require us to maintain spending and service maintenance of effort laws, so it would be coming from those public works functions or the other nonmandated services that we provide like operating a very popular outdoor pool or maintaining parks.” 

But Eau Claire residents opposed to the proposal said it was wrong to approve a wheel tax increase as costs are rising for food, health care, energy and more. 

“Another fee increase, especially on something as basic as the ability to drive to work, drive to school or appointments, should be completely off the table right now,” said Elizabeth Willier, who told the council she organized resident petitions against doubling the wheel tax through conservative group Americans for Prosperity Wisconsin.

Growing tax frustration

Citizen anger against government taxes isn’t new. But it seems that taxpayers in Wisconsin have especially become more engaged in government in the years since the coronavirus pandemic, said Paul Rozeski, the director of government and member relations with Wisconsin Property Taxpayers, Inc. 

More people want answers about where their money is going, he said. 

“We have a lot of small business members, and for them, it’s death by 1,000 paper cuts,” Rozeski said. “Clearly, more and more taxpayers are feeling the same way.” 

That public sentiment on referendums increased as 71% of Wisconsin’s school districts learned in October they will receive less general aid for the 2025-26 school year than they did the prior year. State general education aid funding was kept flat in the biennial budget earlier this year.

It could lead districts to make budget cuts, raise property taxes or even turn to voters with referendums to make up those funding gaps. 

“I think that’s not going to slow down,” Sen. Jeff Smith, D-Brunswick, said last month of school district referendums. “I think we’re going to see even more, sadly.” 

Under current law Wisconsin school districts will receive a $325 per pupil increase each year in how much revenues they can raise from a combination of state aid and property taxes for the next 400 years due to Democratic Gov. Tony Evers’ creative veto in 2023.

It’s not clear yet how many school districts might seek referendums in 2026. State law gives districts up to 70 days before an election to adopt a resolution for a referendum, a spokesperson said. 

Solutions at the Capitol?

Republican legislative proposals at the Capitol have sought more transparency from school districts that seek additional dollars from taxpayers or more participation from local governments that seek revenues through wheel taxes. Additionally, the Assembly Committee on Education signed off on a series of bills looking to encourage school district consolidation across the state. 

Public hearings were held earlier this session on companion bills that would prohibit recurring operating referendums and limit ballot questions from applying to more than four years. Hutton and Rep. Amanda Nedweski, R-Pleasant Prairie, also brought forward a proposal to bar school districts from pursuing referendums if they are not in compliance with Department of Public Instruction financial reporting requirements. 

Nedweski during a public hearing in October cited Milwaukee Public Schools as a reason for the bill. Voters passed a $252 million MPS referendum in 2024, but the district had failed to file 2023 state financial reports on time, which led DPI to withhold state funding. 

The likelihood of the Republican proposals receiving Evers’ signature is slim. While Hutton’s Senate bill on wheel tax referendums will receive a public hearing, it’s not clear what appetite other lawmakers will have for the proposal. 

The Assembly Committee on Local Government held a public hearing on the Assembly version of Hutton’s bill in late October, but chair Rep. Todd Novak, R-Dodgeville, told Hutton and Rep. Dave Maxey, R-New Berlin, that he opposed the proposal.

“If they don’t like a wheel tax, they can replace the board,” Novak said. 

Hirsch in Eau Claire understands that the increased wheel tax may be a hardship for residents with the combination of city and county fees. But requiring a referendum would take away options the city needs, she said. 

“What we really wish would happen is that the state government would give us more local control and more tools,” Hirsch said. “For example, what we wish for most is a local option sales tax. We really don’t like putting all of the weight on property taxes, and we don’t want to charge people the wheel tax. We wish there were other tools in the tool kit.”

As local governments plead for more revenue, Wisconsin voters are souring on more taxes is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.

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Gov. Tony Evers’ 2023 partial veto increased K-12 public school districts’ revenue fundraising limits by $325 per student each year until 2425, but that doesn’t guarantee property tax increases each year.

Revenue limits set how much a district can increase funding through a combination of property taxes and general state aid. School districts could raise property taxes in order to reach the maximum revenue, or the Legislature and governor could provide more general aid through the biennial budget. The average limit across districts last year was $13,363.

This year, the Republican-controlled Legislature kept general state aid flat. School boards can raise property taxes up to their allowed maximum funding in their annual budgets.

In future budgets, the Legislature and governor could provide enough state aid to cover the limit increase in whole or even exceed it, which would force districts to reduce property taxes. They also could repeal the 400-year revenue limit provision.

This fact brief is responsive to conversations such as this one.

Sources

• Wisconsin Watch Interview with Sarah Shaw, deputy research director for the Wisconsin Policy Forum
• PBS Wisconsin: Partial veto by Evers to extend school funding boost by 400 years upsets opponents
• Legislative Fiscal Bureau: School District Revenue Limits and Referenda

Does Gov. Tony Evers’ 2023 budget veto increase property taxes each year for the next 400 years? is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.