An Act to renumber and amend 115.385 (1) (b); to amend 115.385 (1) (c); to create 115.385 (1) (b) 2m. and 118.30 (1j) of the statutes; Relating to: changes to the educational assessment program and the school and school district accountability report. (FE)
AB1 is a broad fiscal and tax package that combines income tax changes with major K-12, technical college, and direct taxpayer spending provisions. On the tax side, it creates Wisconsin income tax subtractions for qualified tips and qualified overtime compensation, generally mirroring new federal deductions but without a sunset date under state law. It also establishes a one-time surplus refund payment for eligible 2024 Wisconsin individual income tax filers, with payments of $300 for single filers and $600 for married joint filers, subject to liability and residency limits.
The bill also makes significant education funding changes. It increases aid for special education and school age parents programs by $85 million in fiscal year 2025-26 and $230 million in fiscal year 2026-27, which is intended to raise the proration rate for eligible reimbursements. In addition, it creates a new category of per pupil state aid for school districts, funded at $302.5 million in 2026-27, and changes the aid formula so that this payment counts as state aid for revenue limit purposes and includes certain independent charter school enrollment in the calculation. The bill also increases state aid to technical college districts by $50 million annually and reduces the amount districts may raise through property taxes by an equivalent amount.
AB1 would amend multiple sections of the Wisconsin statutes governing income tax, school finance, and technical college funding, and it adds nonstatutory provisions to implement the surplus refund payments. It also adjusts the homestead credit income definition to include the new tip and overtime subtractions for claims filed after December 31, 2025. The bill includes appropriations and payment schedules that direct the Department of Revenue, Department of Administration, Department of Public Instruction, and technical college funding formulas.
The general sentiment reflected in the bill text is strongly supportive of tax relief and increased education funding, with the measure framed as a response to higher-than-expected special education costs and as a way to provide direct refunds to taxpayers. Because there are no committee transcripts or recorded votes provided, there is no documented debate in the supplied materials, but the structure of the bill suggests a package designed to appeal to both taxpayers and education stakeholders.
The main points of potential contention are fiscal and distributional. The surplus refund payments and new tax subtractions reduce state revenue, while the education and technical college provisions increase state spending and shift some funding away from local property taxes. Questions may also arise about eligibility rules for part-year residents and nonresidents, the inclusion of independent charter school pupils in the new per pupil state aid formula, and whether the new aid levels and refund payments are the best use of the state surplus.
AB1 would amend Wisconsin’s income tax code, school finance statutes, and technical college aid provisions, while creating a new one-time refund program through nonstatutory law. It would add permanent state subtractions for qualified tips and overtime compensation, revise the homestead credit income definition, create a new per pupil state aid program that counts toward revenue limits, increase special education and school age parents funding, and raise technical college state aid while lowering the corresponding local levy capacity. The bill also appropriates funds for these purposes and directs state agencies to administer the payments and aid distributions.
The bill appears generally favorable in tone toward tax relief, direct payments, and increased education funding. Its design suggests broad policy support for workers, families, school districts, and technical colleges, and it responds to a documented shortfall in special education reimbursement rates. No votes or committee testimony were provided, so there is no recorded opposition or amendment debate in the supplied materials.
Likely areas of contention include the cost of the package, the use of surplus funds for one-time payments, and the long-term revenue effects of making the tips and overtime subtractions permanent under state law. School finance provisions may also draw scrutiny, especially the new per pupil state aid formula, the inclusion of independent charter school enrollment, and the extent to which state aid replaces local property tax authority for technical colleges. Eligibility limits for part-year residents, nonresidents, dependents, and deceased taxpayers could also be debated as fairness and administrative issues.