Calling all Wisconsin-based business owners! Are you taking advantage of the state’s tax incentives? If not, it’s time to see what you’re eligible for. The Badger State has a handful of key business tax credits—and a ton of tax exemptions—that you may be able to use to lower your tax liability. Check out the list below.
Business tax incentives in Wisconsin
Expansion tax credits
Business Development Tax Credit
Designed to stimulate the state’s economy, Wisconsin’s Business Development Tax Credit program encourages businesses to create new jobs and expand their operations. Existing Wisconsin businesses and businesses relocating to Wisconsin can qualify for the program, as long as they:
Invest at least $250,000 into a job creation, training, or other approved type of project
Retain or create a certain number of full-time jobs
The following types of businesses aren’t eligible to apply for the program:
Payday loan and title loan companies
Telemarketing
Pawn shops
Media outlets
Retail businesses
Farms
Primary care medical facilities
Financial institutions
Hospitality businesses
The amount of tax credit varies depending on the type of project for which a business is approved. Here are the possibilities:
Job creation: The tax credit is up to 10% of the annual wages of employees in full-time jobs (employees earning over $100,000 aren’t eligible for their wages to be counted), with a 5% increase for businesses in economically distressed areas.
Training: The tax credit is up to 50% of eligible employee training costs.
Capital investment in the business: The tax credit is up to 3% of the business’s personal property investment, and up to 5% of the business’s new real property investment.
Capital investment in workforce housing: The tax credit for investing in workforce housing is up to 15% of the cost of eligible housing expenditures.
Capital investment in employee childcare: The tax credit is up to 15% of eligible expenses for creating an employer-sponsored child care program for employees.
Corporate headquarters: The tax credit is up to 10% of the annual wages of employees’ positions either created or retained for or during a headquarters relocation (employees earning over $100,000 aren’t eligible for their wages to be counted).
Get guidelines and application information on the program here.
If you’re hiring soon, make sure you do it right. Use Gusto’s guide to hiring in Wisconsin for practical step-by-step advice.
Enterprise Zone Tax Credit
Wisconsin’s Enterprise Zone Tax Credit program supports businesses located in economically distressed areas of the state, also known as designated Enterprise Zones. Eligible businesses can claim tax credits for creating new jobs, providing employees with specialized training, retaining existing jobs, making significant capital investments, and utilizing Wisconsin-based supply chain vendors.
The credit amounts vary:
Up to 7% of annual employee wages for new jobs created (excluding positions that earn over $100,000 a year)
Up to 100% of eligible employee training costs
Up to 7% of annual employee wages for retaining a certain number of jobs and making a significant capital investment
Up to 10% of capital investments
Up to 1% of the costs of personal property, items, and goods paid to Wisconsin supply chain vendors
Get more information on the program and how to apply here.
Industry-specific tax credits
Manufacturing and Agriculture Credit
The Manufacturing and Agriculture Credit is available to manufacturing and agriculture businesses that engage in qualified production activities in Wisconsin. The credit is equal to 7.5% of eligible qualified production activities income.
Learn more about the credit here.
Investment tax credits
Qualified New Business Venture Program
Wisconsin’s Qualified New Business Venture (QNBV) Program rewards investors for investing in early-stage businesses in Wisconsin. The tax credit is equal to 25% of the total investment amount.
To qualify for the tax credit, an investor has to contribute to a business that has received QNBV certification from the Wisconsin Economic Development Corporation. To get QNBV certified, businesses have to meet the following criteria:
Be focused on technological advancement
Be headquartered in Wisconsin
Have fewer than 100 employees, at least 51% of whom are located in the state
Have been in operation for 10 consecutive years or less
Have not received more than $10 million in private equity or venture capital investment
Demonstrate potential to increase jobs or capital investment in Wisconsin
Find out more about the credit and how to claim it here.
General business tax credits
Community Rehabilitation Program Credit
The Community Rehabilitation Program Credit is designed for businesses that enter into contracts with community rehabilitation programs. In this case, community rehabilitation programs refer to nonprofits or government agencies that provide education and training to employees with disabilities.
The credit is equal to 5% of the costs a business pays to a community rehabilitation program. The maximum credit any business can earn is $25,000.
Learn how to claim the credit here.
Research and Development Tax Credit
Wisconsin’s Research and Development (R&D) Tax Credit is available to businesses that engage in specific R&D activities within the state. The credit amounts vary depending on the type of research a business conducts. Here are the three components of the credit:
Credit for Increasing Research: Businesses can receive a credit equal to 5.75% of their qualified research expenses if they spend over 50% of the average qualified expense for the three taxable years preceding the year of application. Otherwise, they can get a credit equal to 2.875% of qualified research expenses.
Credit for Research Activities Related to Internal Combustion Engines: Businesses that conduct research on internal combustion engines can get a credit equal to 11.5% of qualified research expenses if they spend over 50% of the average qualified expense for the three taxable years before applying for the credit. If they don’t have any previous qualified research expenses, they can claim a credit of 5.75% of their expenses.
Credit for Research Activities Related to Certain Energy-Efficient Products: Businesses that conduct research on energy-efficient products can take a credit equal to 11.5% of qualified research expenses, as long as they spend more than 50% of the average qualified expense for the three taxable years prior. If they don’t have qualified expenses, their credit can be up to 5.75% of qualified expenses.
Get all the details on applying for and claiming the credit here.
While you’re at it, learn more about the federal R&D tax credit to see if you qualify.
Business tax exemptions
Businesses in specific industries may also be eligible for exemptions on Wisconsin sales and use tax or property tax. Here are some purchases that qualify for state tax exemptions:
Computer equipment
Machinery, equipment, and alternative energy used in manufacturing
Production fuel and electricity
Farming supplies and personal property
For a full list of tax exemptions, check the Wisconsin Department of Revenue website.
Related: Brush up on Wisconsin’s business taxes.
Wisconsin city and county tax credits
Some Wisconsin cities and counties have their own business tax programs, including sales and use tax exemptions, cash-back incentives, and tax credits. Browse the economic development or business sections of your city’s website to see what’s available.
Business financing in Wisconsin
If you need upfront capital or flexible credit to propel your business forward, state resources can help. The Badger State has a variety of business loan and grant programs for businesses of all sizes and industries.
For a complete breakdown of your options, check out Gusto’s guide to grants and loans in Wisconsin.
