By Evan Umpir
Tax Day, for many, is often synonymous with wondering how much we owe or get back. The real question Wisconsin families and businesses should be asking first is ‘Why are we paying so much?”
With millions of Americans seeing higher refunds with the average refund growing by about $350 and up 10.9% compared to the same time last March, according to IRS data, the One Big Beautiful Bill Act is delivering real relief for families and businesses when affordability is top of mind.
Unfortunately, Wisconsin’s tax climate is failing its families and businesses as other states and the nation work hard to keep more money in the pockets of those who earn it and unlock prosperity. Our tax policies are unquestionably stymying our state’s competitiveness. We have a taxing problem, and we must fix it.
While Wisconsin has consistently ranked in the top ten states for property taxes according to the Tax Foundation, thanks to Evers’ autopilot tax hikes, it won’t be long before we’re the highest property tax state in America. In addition to out-of-control property taxes, Wisconsin’s current corporate tax rate of 7.9 percent is the 12th highest in the nation.
The state’s top marginal individual tax rate, paid by individuals and small businesses alike, is the ninth highest nationally at 7.65%. According to the Tax Foundation, 95% of Wisconsin businesses are structured as “pass-throughs,” meaning that their business profits are subject to the individual income tax code rather than the corporate income tax code, with the majority of those companies falling into Wisconsin’s highest tax bracket of 7.65%.
Of our midwest neighbors, only Minnesota has higher taxes for residents and small businesses. High tax rates hurt job providers and also harm Wisconsin workers and consumers. Higher tax burdens raise costs for families and decrease take-home pay, making our state less affordable.
And rather than reversing course, Gov. Tony Evers has continuously blocked good-faith policies and tax reform efforts. In fact, this month, Evers vetoed legislation that would have undone his disastrous 400-year veto, as well as proposals to eliminate state taxes on tips and overtime pay — policies that would have provided immediate relief to hardworking families.
From 2021 to 2025, eight states in the U.S. signed legislation to transition to a flat individual income tax structure. Of those states, Kansas will bring the total to 16 operating under a flat individual income tax rate once implemented. Eight other states levy no income tax whatsoever.
Recent IRS domestic migration data reinforces what pro-growth advocates have said for years: low-tax states attract families and businesses. From 2022 to 2023, tens of billions of dollars of adjusted gross income moved from high-tax states to low-tax states. Florida, which has no income tax, gained nearly $21 billion, while the notorious high-tax states of California and New York lost more than $21 billion combined.
The data paints a clear picture. If Wisconsin seeks to attract families and businesses, we must reform our tax climate to make it more competitive with neighboring states and those across the country.
In Wisconsin, we have four individual income tax brackets ranging from 3.5% to 7.65%. We could immediately improve our competitiveness by repealing the personal income tax with other minor pro-growth changes to the tax code. Repealing the personal income tax would strengthen the business climate, help address worker shortages, and unlock stronger economic growth.
Short of full repeal, the state could follow the national trend toward flatter tax structures by adopting a flat tax or, at a minimum, reforming the existing system to reduce the top rate. Iowa recently moved toward a flat tax, and Michigan, Indiana, Ohio, and even Illinois have flat taxes (and lower tax rates than Wisconsin). Even if this broad reform proved politically challenging, Wisconsin could lower the top marginal income tax rate to provide clarity and stability for Wisconsin’s pivotal small-business sector.
Tax Day should be more than a filing deadline — it should be a reckoning. Wisconsin’s tax structure is holding our state and Wisconsinites back while other states move forward. Failing to act will only deepen our affordability and workforce challenges. If we want Wisconsin to compete, grow, and retain families and job creators, meaningful tax reform is no longer optional — it’s essential.
