Does the state of Wisconsin tax pension income from an Illinois corporation and if so, at what rate?

[IsabellaG · Accepted solution]

Yes, if you are a Wisconsin resident receiving a pension from Illinois. If you didn't live in Illinois in 2017, then you won't pay tax in Illinois, only Wisconsin.

Here's information from the Wisconsin Department of Revenue about the Retirement Income Exclusion:

A taxpayer (and/or his or her spouse if MFJ) may subtract up to $5,000 of certain retirement income if both of the following are true.

 • The taxpayer (or spouse if MFJ) was 65 year of age or older on December 31, 2017, and

 • The taxpayer’s federal AGI is less than $15,000 ($30,000 if MFJ). If MFS, the sum of both spouses’ federal AGI must be less than $30,000. 

The remainder of the retirement income is taxed at the regular state rate, which is 4% on the first $14,790 of taxable income. 5.84% on taxable income between $14,791 and $29,580. 6.27% on taxable income between $29,581 and $325,700.7.65% on taxable income of $325,701 and above.

[wheines]

If 51000 was earned in Illinois Jan thru November and 4600 in Wisconsin in Dec of 2017 ..At what rate is the Wisconsin portion (4600) taxed at?

[IsabellaG]

The $4600 would be allocated to Wisconsin, and all of it would be taxable at the same rate as the rest of your income. Since your Federal AGI would be higher than the amounts shown in my answer above, you wouldn't be able to exclude any of it, but you would only include the amount that you earned while you were a resident of Wisconsin.

<a rel="nofollow" target="_blank" href="https://www.revenue.wi.gov/pages/faqs/pcs-retired.aspx">https://www.revenue.wi.gov/pages/faqs/pcs-re...>

[wheines]

yes .... but at what rate?  4% or 6.27% ?

[IsabellaG]

What's your income?  See the answer above. All of your taxable income gets added together, and then the rates are applied to each increment of income. It's not separated by what category of income it is.  Your first $14790 of income is taxed at 4%, and then the next block of income between $14791 and $29580 is taxed at 6.27% . And it goes up from there.

[wheines]

Yes, again .... But only the last 4600 was 'earned' in Wisc however, that 4600 was the 'first' to be earned in wisc. so 4% or 6.27%