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Wisconsin Assembly passes bills to exempt tips and overtime from taxes
Assembly Speaker Robin Vos (R-Rochester) told reporters ahead of the session that his caucus was seeking to address affordability with the legislation. (Photo by Baylor Spears/Wisconsin Examiner).
The Wisconsin Assembly — seeking to align state policy with Trump administration initiatives — passed bills Thursday to exempt overtime pay and tips from income tax. Lawmakers also passed bills to make English the official language of the state as well as school related bills.
Assembly Speaker Robin Vos (R-Rochester) told reporters ahead of the session that his caucus was seeking to address affordability with the legislation, though Democratic lawmakers argued the bills would not help address the issue in an effective way.
AB 38 would implement an income tax exemption for cash tips paid to an employee that would sunset in 2028. President Donald Trump signed a law in July to allow workers to deduct up to $25,000 in tips annually from their federal taxable income. Those earning more than $150,000 aren’t eligible for the deduction.
The Wisconsin bill would apply the same policy when it comes to the state income tax. The deduction would apply to tips whether paid by cash or credit.
Bill coauthor Rep. Ron Tusler (R-Harrison) said the tips tax cut is for the working and middle class. The bill passed 61-33 with a handful of Democrats joining Republicans. Rep. Lee Snodgrass (D-Appleton) and Rep. Robyn Vining (D-Wauwatosa) abstained from the vote.
“Tips are primarily earned by the working class and the lower middle class and tips should never have been taxed. A tip is a gift, it’s not income,” Tusler said. “Tips are not mandatory; they are a way to say thank you to someone.”
Tusler told reporters that his legislation wasn’t permanent because legislators want to “watch and see how it works out.”
“I think it would be a great idea for it to become permanent someday. I hope it does,” Tusler said.
Tusler also called on the Department of Revenue (DOR) to “get to work right away” should the bill become law to ensure it has forms ready.
“This bill is going to pass, and it’s going to get signed by the governor, but if the Department of Revenue doesn’t get ready for that, they will not have their forms ready for the tip earners come tax time. Those tip earners will wind up paying their taxes for 2025 and then they’ll have to refile their taxes to pay it to get their tip refund back. That’s not something we should be asking working-class and middle-class taxpayers to do.”
Evers told reporters Monday that he is open to looking at Republican proposals to eliminate taxes on overtime and tips but wants to consider more “universal” forms of tax relief. He has proposed property tax relief as well as exempting certain items from the sales tax including diapers and over-the-counter medications.
Rep. Ryan Clancy (D-Milwaukee) tried to introduce an amendment to bring tipped employees, who can make a minimum wage of $2.33, up to the minimum wage of $7.25. He said it would’ve helped raise the standard of living for workers across the state.
“Restaurant workers, hotel cleaners, bartenders, and too many other Wisconsin workers still rely on the inconsistent generosity of their customers just to survive. This is a terrible system that primarily benefits bosses and corporations – it’s also rife for abuse, leading to frequent unethical and sometimes illegal behavior like forced pooling of tips, assigning of non-tipped work assignments to tipped employees, and outright tip theft by bosses and managers,” Clancy said in a statement.
His amendment was rejected by Republican lawmakers.
The Assembly also passed AB 461 in a 61-35 vote. It would create an income tax subtraction for certain overtime compensation. Single filers could claim up to $12,500 per year under the subtraction, while joint filers could claim up to $25,000. Unlike the “no tax on tips” bill, this policy change would be permanent.
Bill coauthor Rep. Paul Melotik (R-Grafton) noted that overtime work can be essential to communities and also take a toll on family life. He said the bill would help support the “hard-working people of Wisconsin, who put out extra effort… whether it’s nurses working double shifts, deputies filling in on weekends, line workers staying late to meet production goals or service employees keeping the doors open.
Bill to make English the official language.
AB 377 would make English Wisconsin’s official language and allow state agencies to use artificial intelligence translation tools instead of providing an interpreter to people during court proceedings.
The bill passed 51-43. Rep. Jessie Rodriguez (R-Oak Creek) voted with Democratic lawmakers against the bill.
Rep. Priscilla Prado (D-Milwaukee), who chairs the Wisconsin Hispanic Legislative Caucus, delivered her opposition to the bill in Spanish — telling lawmakers that after that they could “use Google to translate that.” Prado stood again later to deliver her remarks in English, saying she would help lawmakers out.
“You want to make it legal to use AI as a translator, which might be useful for ordering lunch, but certainly not sufficient for legal hearings, official forms and civil rights — not to mention that this implementation of AI would, quite literally, take jobs away from Wisconsinites who work as translators,” Prado said. “If efficiency were the goal, we would be talking about improving language access, not political symbolism. Wisconsin does not lose its identity because Spanish or another language is spoken. What it does lose is credibility when it ignores a substantial part of its population.”
Rep. Nate Gustafson (R-Ormo) said he didn’t think the bill was stripping people of their identity, but would instead give people a “tool in the toolbox.”
“It allows our legal system to move efficiently and forward instead of waiting on, let’s say, a limited pool of resources that aren’t there again,” Gustafson said. “We have declining birth rate. Our absolute workforce is obviously diminished at this point, but we’re still reliant on people at the end of the day. There is a point where we need to give the people who are doing these jobs the tools to be more efficient.”
Bill coauthor Rep. Dave Murphy (R-Hortonville), speaking after Prado, said the speech represented a failure to communicate as most people in the Assembly did not understand what she said.
“One of the important things about having an official language for society is language draws people together, and I think it’s really important to give a society cohesiveness with people that speak the same language. Now, that doesn’t mean that this bill in some way makes it illegal, or you know, somehow, impeaches your ability to to speak another language, however I think we are making a mistake here that if you speak English in the society — it’s a huge advantage to you.”
School revenue and lunches
AB 457, coauthored by Rep. Amanda Nedweski (R-Pleasant Prairie) and Sen. Rob Hutton (R-Brookfield), would require Wisconsin school districts’ financial reports to the Department of Public Instruction on time before they are able to go to referendum. It passed 52-44 with Republicans for and Democrats against.
The bill was introduced in response to Milwaukee Public Schools’ financial scandal where the district was months late in submitting financial documents to the state. The news was unveiled just weeks after voters had approved a historic referendum for the state’s largest school district.
Rep. Christian Phelps (D-Eau Claire) said that the bill was a “distraction” from other issues that school districts and property taxpayers are facing.
Wisconsin taxpayers’ December bills included the highest increase since 2018. The increase followed a controversial line item veto by Gov. Tony Evers , which extended a one-time increases to school revenue limits for the next 400 years. State lawmakers did not provide additional state aid to schools, pushing many districts to use their additional taxing authority and others to go to referendum to ask local residents to raise their own taxes.
“The Department of Public Instruction is already working through any financial issues that they need to work through with the Milwaukee Public Schools,” Phelps said. “Educators and property taxpayers just are not buying the Republican spin. They can see the impact of what this building has done on the services in our public schools and their property tax bills, so it is frankly a waste of taxpayer-funded time for us to debate this silly bill that isn’t going anywhere.”
Referencing the acronym for the school district, Nedweski called her bill the MPS bill — saying it stood for “maximizing public scrutiny.” Nedweski said her bill is “straightforward” and would ensure that school districts are transparent before seeking to raise property taxes.
“Public trust was shattered,” Nedweski said of the Milwaukee schools financial reporting failure. She also asked whether the outcome of the Milwaukee referendum would have been different if voters had known about the absent financial reports.
“As property taxes continue to rise thanks to that 400-year Democrat property tax increase, it’s imperative that voters have complete information about the financial outlook of their school district before voting to further raise their own taxes,” Nedweski said. “This bill does not ask school districts to do anything new. It is not one new hoop they have to jump through… They are already supposed to be completing and submitting their financial information on time in accordance with state law.”
AB 226 would prohibit Wisconsin public schools, independent charter schools, and private schools participating in a parental choice program serving meals that contain certain ingredients. Some of the food additives that would be prohibited include brominated vegetable oil, potassium bromate, propylparaben, azodicarbonamide and red dye No. 3, which can be found in candy, fruit juices and cookies.
The bill is another instance of GOP lawmakers seeking to align state policies with Trump administration efforts. The exclusion of the additives is meant to target “ultra processed foods,” which were one of the top concerns outlined by Health Sec. Robert F. Kennedy and a report the Trump administration commissioned.
It passed 53-43. A handful of Democrats, including Reps. Deb Andraca (D-Whitefish Bay), Jill Billings (D-La Crosse), Brienne Brown (D-Whitewater) and Renuka Mayadev (D-Madison), voted for the bill, while a handful of Republicans voted against the bill including Reps. Lindee Brill (R-Sheboygan Falls), Joy Goeben (R-Hobart) and Chuck Wichgers (R-Muskego).
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