Wisconsin Act 185 adopted a number of changes to conform Wisconsin’s income tax laws to changes in Federal tax law. Among them:
- Retirement Accounts – The CARES Act provided several changes for retirement accounts including suspending required minimum distributions, increasing 401(k) loan limitations, and creating a coronavirus-related distribution.
- The coronavirus-related distribution allows for up to $100,000 to be withdrawn from a retirement account exempt from the 10 percent penalty tax. To qualify, the individual or their spouse must have been diagnosed with COVID-19 or experienced adverse financial consequences caused by COVID-19. Any amount of the distribution that is taxable can be recognized over the next three years or the taxpayer can elect to treat the distribution as taxable in 2020.
- For Wisconsin income tax purposes, otherwise applicable penalties on distributions from a retirement account qualified under the IRC will be waived for tax year 2020. In addition, for Wisconsin income tax, these distributions, subject to a number of conditions, will be exempt from tax.
- Charitable Contributions – Conforms Wisconsin law to the federal charitable contribution changes for tax year 2020, which include:
- A new $300 above-the-line charitable deduction for cash contributions to certain qualifying charities by individuals who take the standard deduction.
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