Wisconsin Senate Bill SB389

Wisconsin 2023-2024 Regular Session

• Introduced: 8/11/23
• Refer: 8/11/23
• Report Pass: 9/22/23
• Refer: 9/22/23
• Report Pass: 9/26/23
• Failed: 4/15/24

Caption

Adopting changes to the federal Internal Revenue Code for state tax purposes. (FE)

Impact

The proposed amendments significantly impact those taxable under Wisconsin's income and franchise taxes, ensuring that new exclusions and compliance measures introduced at the federal level are reflected in state tax calculations. For instance, the bill updates the references concerning exemptions for gains from small business stock, ensuring that state law is perpetually compliant with federal law. This harmonization is particularly beneficial for small businesses, which may face complicated tax situations when operating under differing state and federal codes.

Summary

Senate Bill 389 aims to align Wisconsin state tax code with recent amendments to the federal Internal Revenue Code. Specifically, it adopts changes from several significant federal acts, including the American Rescue Plan Act of 2021, the Infrastructure Investment and Jobs Act, the Consolidated Appropriations Act of 2022, the Inflation Reduction Act of 2022, and the most recent Consolidated Appropriations Act of 2023. By adopting these changes, the bill intends to ensure that Wisconsin's income and franchise tax provisions are consistent with federal standards, thereby simplifying compliance for taxpayers and businesses operating across state lines.

Contention

While the bill is primarily viewed as a positive step toward streamlining tax compliance, there may be concerns regarding the implications of tightly coupling state tax law to federal legislation, which can frequently change. Critics argue that relying on the federal framework could diminish state autonomy over taxation matters. Furthermore, components of the various federal acts may have specific policy aims that do not necessarily align with state interests, leading to potential conflicts in future legislative sessions. These points signify a continued debate over local control versus aligning with federal taxation policies.