Three months after vetoing a similar provision in the GOP-authored state budget, the Evers administration announced it will update individual income tax withholding tables, effective Jan. 1.
The update reflects income tax cuts signed in the state budget as well as those implemented in 2019 and 2020, plus changes to income brackets and the standard deduction in effect for tax year 2022.
The Department of Revenue said the tables, last updated in 2014, must be implemented by employers no later than Jan. 1.
In his veto message, Gov. Tony Evers wrote he was rejecting the provision to require Revenue to make the adjustments “while other critical priorities have not been sufficiently funded by the Legislature.” He added the Revenue secretary has the ability to make the adjustments “as appropriate and will assess whether and when these updates should be made within the full context of revenue collection trends and other state priorities.”
Since Evers signed the budget, the Legislative Fiscal Bureau reported state tax collections continued to exceed expectations in the 2020-21 fiscal year as the state took in $319 million more than what the agency had projected in June.
Joint Finance Co-chair Mark Born, R-Beaver Dam, dinged Evers for “once again realizing his mistakes and flip-flopping on the budget vetoes he issued less than four months ago.”
“First personal property tax, now this — at least he’s following our lead and connecting the dots to do what’s best for the people of Wisconsin,” Born said
The changes will mean a one-time reduction in income tax revenues of $709.8 million in the 2021-22 fiscal year, according to LFB. Still, that reduction will be offset by smaller tax refunds that filers will receive in tax year 2023.
The agency has projected the state will finish the 2021-23 budget without about $1.7 billion in the general fund, meaning the update will reduce that projected balance to around $1 billion.
The projected ending balance will also be impacted by the Evers administration’s final accounting of fiscal year 2020-21, which will provide a final number on what the state had in the general fund at the close of that period.
See the LFB memo: