MADISON, WI – The Wisconsin State Assembly met on January 15 to deliver meaningful tax relief to Wisconsin’s working families by voting to exempt tips and overtime premium pay from the state income tax. These changes, Assembly Bill 38 and Assembly Bill 461, respectively, mirror recent changes in federal tax law and will now go to the Senate for concurrence.
“This is great news for employees who work for tips or hourly wages,” State Rep. Dave Armstrong (R-Rice Lake). “People will be able to deduct up to $25,000 in tip income and up to $12,500 in overtime premiums – the ‘and a half’ of ‘time and a half’.”
The state tips exemption will first apply to tax year 2025 and expire after four years, as will the federal tips exemption. However, the state overtime exemption will first apply to tax year 2026 and will not expire, unlike the federal overtime exemption.
Other bills the Assembly passed today include:
- Senate Bill 214, which allows licensed healthcare professionals from other states to provide telehealth services in Wisconsin, subject to certain requirements. This may be particularly helpful for rural residents and others who live in areas with provider shortages.
- Assembly Bill 457, which prohibits a school district from initiating a referendum unless the district is in compliance with all state financial reporting requirements. It makes no sense to allow a district to ask residents for more money if it can’t be bothered to submit timely reports on its current financial situation. This bill ensures transparency and accountability.
The opening prayer was offered by Rev. Cody Kargus, who serves has chaplain for a number of Barron County law enforcement agencies.
The Assembly will reconvene the week of January 19.
Last Update: Jan 16, 2026 6:35 am CST
