Ignore that rising property tax bill, because Wisconsin's tax burden is the lowest in decades!

Here's a recent report from the Wisconsin Policy Forum with a conclusion that may be surprising to you. Wisconsinites are currently enjoying their lowest tax burden on record.

Wisconsin residents in fiscal year 2025 paid 9.60% of what they receive from all income sources in state and local taxes, matching 2024’s record low to remain at the lowest total burden in our data going back to the 1970’s. Figure 1 shows the long-term decline, which began the mid-1980s and became notably more consistent since 2010, as state leaders took more aggressive efforts to reduce the tax burden, and incomes grew after the painful years of the Great Recession.

While the tax burden fell, overall state and local taxes grew by 5.0% in fiscal 2025 to $38.8 billion, among the largest single-year jumps in the last 20 years. However, statewide personal income growth matched that rate, also rising by 5.0% in 2025.

Remember that "tax burden" isn't the amount of taxes you pay, but how that compares to your income. It's also worth noting that the state tax burden went down, but the rise in property taxes and new sales taxes in the state's largest city made the local tax burden go up.

State tax revenue, including income and sales taxes, climbed 4.2%, above the annual average growth of 3.1% for the past 20 years. However, because the income of state residents and businesses grew more rapidly, state taxes hit another record low in 2025, dropping from 6.41% to 6.36%.

Local tax revenue grew by 6.4%, the most since 2005, and nearly triple the 2.4% average annual rate of increase during that same time period. Net property taxes helped drive that increase, growing by 4.6%, or $518.1 million. Big bumps in local sales tax collections, which grew by 12.2% or $76.5 million, plus the addition of $169.3 million from the new city of Milwaukee sales tax, were also major contributors. Overall, the local tax burden climbed just slightly, from 3.19% to 3.24%.

The local tax change is quite variable for 2025, depending on whether your school district had a referendum (raises hand in Madison), or in how much money you spent in Milwaukee (and yes, your Brewer tickets are part of that extra sales tax), or if your community added or increased their wheel taxes.

But the Wisconsin Department of Transportation didn't see revenue increases to the level of income, sales, or local taxes, as 2025 was another year where WisDOT revenues didn't keep up with inflation.

Gas tax collections grew by 1.5% in 2025 to $1.12 billion after falling slightly the two previous years, while fees collected for registering vehicles grew by 0.6% to $937.8 million. Driver license fees saw the fastest rise, up 5.8% to $42.1 million, matching their all-time high in 2009. Increased demand for new licenses may be due to federal requirements for REAL ID compliant documents when boarding airplanes. The state’s limo rental fee, the smallest transportation revenue we track, grew by 7.1%, to $13.8 million.

Put it together, and overall transportation revenues only rose by 1.2% last year, well below the increase in costs. Which helps to explain why the current state budget is sending neatly $748 million into the Transportation Fund to help pay for WisDOT's projects and services, as gas taxes and registration fees are not able to get the jobs done. And that's a hole in the budget that the next Governor is going to have to deal with sooner than later.

I would expect this tax burden stat to be even lower next year, as income tax cuts signed in the budget start to show up in higher tax refunds over the next few months, and there won't be the one-time increase in local sales taxes, since last year was the first year Milwaukee had its new sales tax. But the question is whether this is leaving us in a better situation, either through the lower investments in community schools or through the pass-down of taxes from the state to the local level, like when the WisGOP Legislature refused to add General Aids to K-12 schools and we ended up with the largest K-12 property tax increase in decades.

Which is a big reason why we should consider using our $2.5 billion surplus to use some state tax dollars to lower those property taxes, and start rebalancing a Wisconsin tax burden that's in need of adjustment.