Complete Guide to Wisconsin LLC Taxes in 2025
Wisconsin offers LLC owners a predictable tax environment with no entity-level tax on LLCs. Instead, all LLC income passes through to members' personal returns and is taxed at Wisconsin's graduated individual income tax rates, which range from 3.54% to 7.65%. With an annual report fee of just $25 and a well-established administrative framework, Wisconsin provides a solid foundation for LLC owners.
However, Wisconsin has some notable requirements that set it apart, including mandatory withholding on nonresident LLC members at the highest marginal rate (7.65%) and a Pass-Through Entity Tax (PTET) election that can help members work around the federal SALT deduction cap. This guide covers every tax obligation your Wisconsin LLC faces.
Wisconsin Income Tax Rates (2024 Tax Year, Filed 2025)
Wisconsin uses a four-bracket graduated income tax system. Your LLC's pass-through income is combined with other income on your personal return:
| Bracket | Single Filer | Married Filing Jointly | Tax Rate |
|---|---|---|---|
| 1st | $0 — $14,320 | $0 — $19,090 | 3.54% |
| 2nd | $14,321 — $28,640 | $19,091 — $38,190 | 4.65% |
| 3rd | $28,641 — $315,310 | $38,191 — $420,420 | 5.30% |
| 4th | Over $315,310 | Over $420,420 | 7.65% |
High Earners Note: Wisconsin's top rate of 7.65% kicks in at a relatively high threshold ($315,310 single / $420,420 joint), which means most LLC owners will pay the 5.30% rate on the bulk of their income. This makes Wisconsin's effective rate for mid-income earners quite competitive compared to neighboring states.
DOR Withholding on Nonresident LLC Members
One of Wisconsin's most important LLC tax rules is the mandatory withholding requirement for nonresident members. If your LLC has any members who are not Wisconsin residents, the LLC must:
- Withhold Wisconsin income tax at 7.65% (the highest marginal rate) on each nonresident member's share of Wisconsin-source income
- File Form PW-1 (Pass-Through Entity Withholding Return) with the Wisconsin Department of Revenue (DOR)
- Remit withholding payments according to the DOR's schedule
- Provide each nonresident member with a Schedule 2K-1 showing the amount withheld
Nonresident members can claim credit for amounts withheld when they file their nonresident Wisconsin income tax return (Form 1NPR). If their actual tax liability is less than the amount withheld, they receive a refund. If their actual liability is higher (rare, since withholding is at the top rate), they owe the difference.
Planning Tip: The 7.65% withholding rate on nonresidents is the highest marginal rate. Most nonresident members will have an effective tax rate lower than 7.65%, meaning they will receive a partial refund when they file their WI nonresident return. However, this creates a cash flow delay that should be factored into distributions planning.
Wisconsin Pass-Through Entity Tax (PTET) Election
Wisconsin offers a Pass-Through Entity Tax (PTET) election that can benefit LLC members affected by the federal $10,000 SALT deduction cap. Key details:
- Tax rate: 7.9% on Wisconsin-source income at the entity level
- How it works: The LLC pays state tax at the entity level (deductible as a business expense for federal purposes), and members receive a credit on their personal WI returns
- Benefit: The entity-level tax is deductible on the federal return without being subject to the $10,000 SALT cap
- Election: Made annually, irrevocable for that tax year
- Who benefits: Members with total state and local taxes exceeding $10,000 who itemize deductions
PTET Math Example: An LLC member with $200,000 of WI income would owe about $10,372 in WI tax at individual rates. Under the PTET election, the LLC pays $15,800 (7.9%) at the entity level — but this is fully deductible on the federal return, potentially saving $3,318 in federal taxes (at the 24% bracket), for a net benefit if the member already exceeds the SALT cap.
Wisconsin Sales Tax for LLCs
Wisconsin imposes a 5% state sales tax. Counties may add up to 0.5%, and some counties have approved additional taxes via referendum. Notable combined rates:
| Location | Combined Rate | Local Portion |
|---|---|---|
| Milwaukee County | 5.9% | 0.9% |
| Dane County (Madison) | 5.5% | 0.5% |
| Brown County (Green Bay) | 5.5% | 0.5% |
| Waukesha County | 5.1% | 0.1% |
| Counties without local tax | 5.0% | 0% |
If your LLC sells taxable goods or services, you must register with the DOR, collect sales tax, and file returns (monthly or quarterly based on volume). Wisconsin exempts certain items including most groceries, prescription drugs, and some manufacturing equipment.
Wisconsin LLC Annual Report
- Fee: $25 — one of the lowest in the US
- Due date: End of the calendar quarter in which the LLC was formed
- Filed with: Wisconsin Department of Financial Institutions (DFI)
- Filing method: Online through the DFI website
- Penalty: Failure to file for two consecutive years may result in administrative dissolution
- Required info: Principal office, registered agent, member/manager details
Wisconsin LLC Formation
Starting an LLC in Wisconsin involves these costs and steps:
- Articles of Organization: $130 online ($170 by mail)
- Registered agent: Required (must have WI physical address)
- Operating agreement: Not legally required but strongly recommended
- EIN: Free from the IRS
- DOR registration: Register for income tax withholding and sales tax as applicable
- Processing time: 5-7 business days online, expedited available for $25
Federal Self-Employment Tax for WI LLC Owners
All active LLC members owe federal self-employment tax at 15.3% on 92.35% of net self-employment income. This includes:
- Social Security: 12.4% (up to $176,100 for 2025)
- Medicare: 2.9% (no cap)
- Additional Medicare: 0.9% above $200,000 (single)
Half of SE tax is deductible as an above-the-line adjustment, reducing both federal and Wisconsin adjusted gross income.
Wisconsin Manufacturing & Agriculture Credit
Wisconsin offers a generous Manufacturing & Agriculture Credit (MAC) that effectively eliminates state income tax on income from qualifying manufacturing and agricultural activities. For tax year 2024, the credit equals 7.5% of qualifying income — which nearly offsets the 7.65% top tax rate. If your LLC is engaged in manufacturing or farming in Wisconsin, this credit can dramatically reduce your state tax bill.
Key Tax Deadlines for Wisconsin LLCs
| Tax/Filing | Due Date | Filed With |
|---|---|---|
| Annual Report | End of formation quarter | WI Dept. of Financial Institutions |
| WI Income Tax Return (Form 1) | April 15 | WI DOR |
| PW-1 Nonresident Withholding | Quarterly (15th of month following quarter) | WI DOR |
| Sales Tax Return | Monthly or quarterly | WI DOR |
| Federal Income Tax | April 15 | IRS |
| Quarterly Estimated Tax (WI) | Apr 15, Jun 15, Sep 15, Jan 15 | WI DOR |
| Quarterly Estimated Tax (Federal) | Apr 15, Jun 15, Sep 15, Jan 15 | IRS |
Comparing Wisconsin to Neighboring States
| State | Top Income Rate | Entity Tax? | Annual LLC Fee | Nonresident Withholding |
|---|---|---|---|---|
| Wisconsin | 7.65% | No | $25 | Yes (7.65%) |
| Minnesota | 9.85% | No | $0 | Yes |
| Iowa | 5.7% | No | $60 biennial | Yes |
| Illinois | 4.95% flat | PTE tax 1.5% | $75 | Yes |
| Michigan | 4.25% flat | No | $25 | Yes |
Wisconsin's rates fall in the middle of its neighbors. While the top rate of 7.65% is higher than Illinois and Michigan, the threshold is high ($315K+), and the $25 annual report is tied for the cheapest. For manufacturing businesses, the MAC credit makes Wisconsin exceptionally competitive.
Tax Planning Strategies for Wisconsin LLCs
- Evaluate the PTET election annually. If your state and local taxes exceed $10,000, the entity-level tax election can save you significant federal taxes. Run the math each year since tax situations change.
- Leverage the Manufacturing & Agriculture Credit. If your LLC qualifies, this credit nearly eliminates your WI state income tax. Ensure your activities meet the DOR's definition of qualifying manufacturing.
- Consider S-Corp election. For LLCs with net income over $50,000, the S-Corp election can reduce self-employment tax by allowing salary/distribution splits.
- Plan for nonresident withholding cash flow. If you have out-of-state members, the 7.65% mandatory withholding creates a cash flow impact. Budget distributions to account for this.
- Maximize retirement contributions. SEP-IRA and Solo 401(k) contributions reduce both federal and WI taxable income.
- Use estimated payments wisely. Wisconsin requires estimated payments if you expect to owe $500+ in state tax. Avoid underpayment penalties by paying quarterly.
Wisconsin Economic Development Tax Credits
Beyond the MAC, Wisconsin offers several other tax credits for LLCs, including the Business Development Tax Credit (for job creation and capital investment), the Enterprise Zone Tax Credit (for businesses in designated zones), and the Research Credit (for qualified research expenditures). These credits are typically administered by the Wisconsin Economic Development Corporation (WEDC) and require advance approval.
Local Wisconsin Taxes
Unlike some states, Wisconsin cities generally do not impose separate local income taxes or business license taxes on LLCs. The primary local tax consideration is property tax (if your LLC owns real estate) and the county portion of sales tax. This simplifies compliance compared to states like Ohio or Pennsylvania where local income taxes are common.