Wisconsin employers need to pay income tax and unemployment tax for each employee they have.
Income tax is also known as withholding tax because employers withhold it from employee paychecks before filing and paying it to the state. Unemployment tax does not come out of paychecks; instead, it’s only paid by employers. Wisconsin doesn’t have local income taxes for employers to withhold and pay.
Before setting up your business to handle Wisconsin payroll, read the following guide to learn everything you need to know.
Wisconsin Withholding Income Tax
Wisconsin withholding income tax is better known as state income tax. This tax technically comes out of each employee’s paycheck, although its amount varies based on the employee’s tax bracket.
But ultimately, you, the employer, are required to file and pay this tax with Wisconsin. To do that, you’ll need to withhold the tax from your employees’ paychecks for each pay period. If you pay biweekly, you’ll withhold this tax 26 times a year—once for each pay period.
Wisconsin has four tax brackets with tax rates ranging from 3.50% to 7.65%. Single filers making $13,810 or less get taxed at 3.50%, while those making $304,170 or more get taxed at the highest rate of 7.65%. Most people in Wisconsin fall into the 5.3% tax bracket for earnings between $27,630 and $304,170.
You’ll need to withhold the amount required for your employees, which could vary by employee if you have different types of earners.
Let’s use an example of an employee making $52,000 per year. Their income puts them into the 5.3% tax bracket.
If they get paid biweekly, they earn $2,000 per paycheck, so their income tax withholding for Wisconsin would be $106 per paycheck ($2,000 x 0.053).
Wisconsin Unemployment Tax
Wisconsin also has an unemployment tax that you’ll need to pay as part of your payroll taxes.
State unemployment tax goes toward the state’s unemployment program that pays employees when they’re out of work. But unlike withholding tax, Wisconsin’s unemployment tax is paid only by employers, not employees.
That means you don’t need to withhold anything from employee paychecks for this tax, but you must still file and pay this tax on your own.
Wisconsin’s unemployment tax for new employers with a payroll less than $500,000 is 3.05% or 3.25% with a payroll of $500,000 or more.
After you move out of new employer status, Wisconsin will assign you a new rate, which may vary each year between 0% and 12%.
The wage base for Wisconsin is $14,000, so you’ll only pay unemployment tax on the first $14,000 each employee makes each year.
Example:
The employee earning $52,000 a year earns more than the wage base of $14,000. You calculate your unemployment tax for them based on $14,000, disregarding the other $38,000 they earn.
As a new employer with a payroll of $300,000, your unemployment tax rate is 3.05%. So, your responsibility for this employee is $427 for the year ($14,000 x 0.0305).
How to Submit Your Wisconsin Payroll Taxes
Before withholding, filing, or paying any tax for your Wisconsin payroll, you need to have your business registered with the relevant state departments and have all employees in the state’s new hire reporting system.
Here’s what to do:
- Register with the Department of Revenue: The Department of Revenue gives your business a withholding account number that makes you eligible for withholding and paying the state income tax. Or, if you need to register your business with multiple agencies, use the One Stop Business Portal instead.
- Register with the Department of Workforce Development: Register as a new business with the Department of Workforce Development (DWD) to pay your state unemployment tax.
- Report new hires: Use the New Hire Reporting Center to register your new hires with Wisconsin. Your employees will need to fill out Form WT-4, Employee’s Wisconsin Withholding Exemption Certificate/New Hire Reporting, for you to complete their registration. You must report all new hires in Wisconsin within 20 days of their hire date.
After approving time cards and calculating your employees’ withholding tax and unemployment tax, you’re ready to file and pay your Wisconsin payroll taxes.
Withholding tax can be paid online through My Tax Account. Employers pay either annually, monthly, quarterly, or semi-monthly, and all filers must reconcile their withholding tax annually by January 31st of the following year.
You’ll use the DWD’s online payment portal to pay your unemployment tax. File and pay this tax quarterly.
The Official Resources for Wisconsin Payroll Taxes
Payroll taxes can be complicated, especially when you start adding more employees to your roster. It’s important to stay on top of Wisconsin payroll tax updates to make sure you’re staying compliant with new hire reporting and tax payments.
I’ve given you an overview here of what you need to know to pay payroll tax in Wisconsin, but having official resources on deck is always a good idea, as policies and tax rates can vary year by year.
Keep these official resources bookmarked to refer to when you need additional guidance for your specific tax situation:
- Withholding tax questions: Refer to the Department of Revenue’s FAQ section if you have any questions about tax filing deadlines, withholding tax requirements, recordkeeping, etc.
- Unemployment resources for employers: Use the DWD’s employer unemployment resources when you need guidance on paying and filing state unemployment taxes. You’ll also find current tax rate tables here.
- New hire reporting questions: Browse the New Hire Reporting Center’s FAQs to learn about reporting requirements, reporting exemptions, and using the new hire system.
How to Skip the Wisconsin Payroll Tax Mess and Get Them Done For You
There’s one thing I tell every business owner, regardless of how many employees they have or what state they’re in, and that’s to get help with your payroll taxes.
For large companies, a comprehensive payroll service is best. But smaller companies can use payroll software to get the job done. It’s a worthwhile investment that will make your payroll processing and tax payments simpler.
Filing payroll taxes yourself can be time-consuming and stressful. Payroll software automates tons of tasks that could take you hours to complete on your own, like calculating gross pay and tax withholdings and filing payroll taxes.
If there are tasks your software can’t automate, like entering new hire paperwork into your system or changing pay rates, it lets you know what you need to do so you aren’t moving ahead blindly.
