An Act to renumber and amend 77.60 (1) (a) and 77.60 (1) (b); to amend 70.38 (1m), 71.03 (7) (intro.), 71.24 (7) (a), 71.44 (3) (a), 71.775 (4) (bm) 1., 71.775 (4) (bm) 2., 71.775 (4) (em), 71.82 (1), 71.82 (2) (b), 71.82 (2) (d), 71.84 (1), 71.84 (2) (a), 71.84 (2) (b), 71.84 (2) (c), 71.90 (1), 71.91 (6) (e) 3., 71.91 (6) (f) 5., 73.03 (6), 76.075, 76.13 (2), 76.13 (2a), 76.13 (3), 76.22 (2), 76.28 (4) (a), 76.28 (4) (b), 76.28 (11), 76.39 (4) (d), 76.48 (5), 77.59 (6) (c), 77.96 (5), 78.68 (1), 139.25 (1), 139.44 (9), 168.12 (6) (c), 168.12 (6) (d) 2., 168.12 (6) (e) 1. and 168.12 (6) (e) 3.; to create 73.03 (78) and 77.60 (1) (b) 2. of the statutes; Relating to: interest rates on late, nondelinquent taxes and on overpayments. (FE)
AB1026 would replace a set of fixed Wisconsin Department of Revenue interest rates with a new annually determined rate tied to the federal funds rate. Beginning in 2026, DOR would calculate a monthly interest rate based on the effective federal funds rate published by the Federal Reserve Bank of New York for January 2 of each year, and that rate would apply to interest accruing during that year. The bill applies this formula to a wide range of taxes and fees administered by DOR, including individual and corporate income taxes, withholding, sales and use taxes, utility and insurer taxes, excise taxes, the economic development surcharge, petroleum inspection fees, metalliferous mining taxes, and certain local government assessment charges.
The bill would amend numerous statutes so that late payments, underpayments, delinquent taxes, and refunds would generally no longer use the current fixed 12 percent annual interest rate for liabilities or 3 percent annual rate for refunds. Instead, those provisions would reference the new rate under s. 73.03 (78). It also updates special rules for extensions, estimated tax underpayments, field audits, tax appeals, deposits pending redetermination, and certain penalty and refund provisions so that the new rate governs where the statutes currently refer to the fixed rates. The bill’s initial applicability clause states that it first applies to assessments issued and refunds paid on January 3, 2026, regardless of the taxable period involved.
In practical terms, the bill would affect both taxpayers and the Department of Revenue by making interest charges and refund interest more responsive to prevailing market conditions. Depending on the federal funds rate in a given year, taxpayers could pay more or less interest on late or underpaid taxes than under the current 12 percent standard, and the state could owe more or less interest on refunds than under the current 3 percent standard. The bill also requires DOR to maintain a website displaying the annually determined monthly interest rate.
The general sentiment reflected by the bill’s introduction is procedural and technical rather than ideological: it appears aimed at modernizing and standardizing tax interest calculations rather than changing underlying tax policy. However, the bill failed to pass pursuant to Senate Joint Resolution 1, indicating it did not complete the legislative process. No committee transcript or recorded votes were provided, so there is no direct evidence of debate, but the main policy issue is the shift from fixed statutory rates to a variable rate tied to federal monetary conditions.
The main point of contention is likely the uncertainty created by replacing predictable fixed rates with a rate that changes annually based on the federal funds rate. That change could be viewed as fairer and more economically aligned by supporters, while opponents may worry it reduces predictability for taxpayers or could increase state borrowing-like costs in some years. The bill also touches many separate tax and fee provisions, so its broad scope may have made it more complex to evaluate even though its core purpose is narrow.
AB1026 would amend Wisconsin tax statutes across multiple chapters to substitute a newly created, annually determined interest rate for many existing fixed interest rates on late payments, underpayments, delinquent taxes, and refunds. It would directly affect Department of Revenue administration, taxpayer liabilities, refund timing, and related appeal and audit procedures, while creating a new statutory requirement for DOR to publish the rate each year. The bill’s changes would apply prospectively to assessments issued and refunds paid on or after January 3, 2026.
The bill appears to have been presented as a technical tax administration measure with a neutral-to-supportive policy rationale: aligning interest rates with prevailing federal rates and updating outdated fixed percentages. Because no committee discussion or vote record is provided, there is no documented floor or committee debate to gauge partisan or stakeholder sentiment. Its failure to pass suggests it did not secure final legislative approval, but the available record does not show whether that was due to substantive opposition, timing, or broader procedural reasons.
The likely contention centers on whether Wisconsin should replace stable, fixed interest rates with a variable rate tied to the federal funds rate. Supporters would likely argue the change makes tax interest fairer and more market-based, while critics may object that it introduces uncertainty for taxpayers and could alter state revenue and refund costs depending on economic conditions. A secondary issue is the bill’s breadth: although the policy change is narrow, it reaches many tax types and fee provisions, which may have complicated review and implementation.