Why It Matters
Wisconsin’s tax revenues outpaced projections by $450.8 million in the 2025-25 fiscal year, signaling stronger-than-expected state finances and positioning lawmakers to address spending priorities or tax relief before the November gubernatorial election. The larger-than-anticipated surplus reshapes the fiscal landscape heading into the next budget cycle.
What Happened
The Wisconsin Department of Revenue released a preliminary report Thursday showing the state collected $23.13 billion in taxes during the 2025-25 fiscal year, exceeding the earlier projection of $22.6 billion. The $450.8 million surplus—a 2 percent gain over estimates—reflects broad-based strength across income, sales, and corporate tax categories.
Income tax collections alone surpassed expectations by $231.3 million, while sales and use taxes came in $79.9 million higher than forecast. Corporate income tax revenues exceeded projections by $83.9 million. The overall tax haul represented a 3.4 percent increase from the prior fiscal year.
The stronger collections could push Wisconsin’s total budget surplus toward $3 billion, well above the Legislative Fiscal Bureau’s January estimate of nearly $2.5 billion for the 2025-27 biennium. An earlier proposal negotiated between Governor Tony Evers and Republican lawmakers would have directed $1.8 billion toward school funding and tax relief—including special education support, property tax credits, $600 rebate checks, and elimination of taxes on tips and overtime—but that measure failed in the state Senate in May.
State Sen. Howard Marklein, a Republican, said he anticipated the stronger result. “I have been watching the revenue numbers each month and they were indicating we would have a larger surplus than originally thought,” Marklein told the Wisconsin Examiner.
Rep. Mark Born, also a Republican, signaled openness to reviving tax-relief negotiations if a deal could win approval in both chambers. “If we can reach an agreement that delivers meaningful tax relief for Wisconsin families and can pass both houses, I’m ready to get it done,” Born said.
By the Numbers
$23.13 billion — total Wisconsin tax collections, 2025-25 fiscal year
3.4% — year-over-year increase in tax collections
$450.8 million — amount collections exceeded projection
$231.3 million — income tax overage versus forecast
$83.9 million — corporate income tax overage versus forecast
$79.9 million — sales and use tax overage versus forecast
$3 billion — potential budget surplus under current trajectory
$1.8 billion — value of earlier proposed school funding and tax relief package
Zoom Out
States across the nation have grappled with revenue volatility in recent years, making Wisconsin’s sustained tax-collection strength noteworthy. The state’s surplus positions it differently from peers facing deficits or lean fiscal years, though disagreement persists over whether to allocate additional revenue to education, tax relief, or operational reserves. The outcome will depend partly on legislative appetite for action before the election and partly on the preferences of whoever occupies the governor’s office next.
What’s Next
The incoming governor and state legislature will ultimately determine how Wisconsin deploys the surplus if lawmakers fail to reach agreement before the November election. Any legislative push for tax relief or spending increases would need to clear both chambers and secure the governor’s signature—a bar the May tax-relief proposal failed to clear. The fiscal bureau is expected to refine its estimates in coming months as additional year-end data becomes available.