Wisconsin Assembly Bill AB76

Wisconsin 2025-2026 Regular Session

• Introduced: 2/28/25
• Refer: 2/28/25
• Failed: 3/23/26

Caption

An Act to create 71.05 (6) (b) 57., 71.53 (2) (g) and 71.77 (9) of the statutes; Relating to: creating an individual income tax deduction for certain income earned by an individual from the practice of psychiatry or from providing psychiatric or mental health services. (FE)

Summary

AB76 would create a Wisconsin individual income tax subtraction for income earned by psychiatrists and psychiatric or mental health nurse practitioners from practicing psychiatry or providing psychiatric or mental health services. The deduction would apply to taxable years beginning after December 31, 2024, and before January 1, 2030, and would be available for up to five taxable years, starting only if the provider begins claiming it within the first two years of first practicing in Wisconsin or returning to practice in Wisconsin after working in another state. The bill sets the deduction at up to $100,000 of qualifying income for eligible providers generally, and up to $200,000 for those practicing in a medically underserved area. It defines qualifying practitioners, limits the deduction to income earned in Wisconsin, and requires recapture if a claimant leaves the state after having claimed the subtraction. It also bars a claimant from taking the homestead tax credit while claiming this deduction and authorizes the Department of Revenue to assess tax within one year after a taxpayer becomes ineligible in order to recover the benefit.

Impact

AB76 would amend Wisconsin’s income tax statutes by adding a new subtraction modification for certain mental health professionals, creating a related eligibility provision for the homestead tax credit, and giving the Department of Revenue special authority to assess tax after ineligibility to recapture the deduction. The practical effect would be to reduce state income tax liability for newly practicing or returning psychiatrists and psychiatric/mental health nurse practitioners, with a larger benefit for those serving medically underserved areas, while imposing clawback rules if the recipient leaves the state.

Sentiment

The bill appears to have been introduced as a workforce-incentive measure aimed at addressing shortages in psychiatric and mental health care, especially in underserved areas. No committee transcript or recorded votes are provided, but the bill ultimately failed to pass pursuant to Senate Joint Resolution 1. Based on the text alone, the proposal is framed positively toward recruitment and retention of mental health providers, with no documented floor or committee debate in the supplied materials.

Contention

The main policy tradeoff is fiscal cost versus workforce recruitment: the bill offers a targeted tax preference that could reduce state revenue while attempting to attract and retain psychiatrists and psychiatric/mental health nurse practitioners. Potential points of contention include whether the tax break is the best tool to address provider shortages, whether the benefit should be limited to newly practicing or returning professionals, and whether the larger $200,000 deduction for medically underserved areas is appropriately targeted. The bill also creates administrative complexity through eligibility timing rules, recapture provisions, and the prohibition on claiming the homestead tax credit at the same time.