Wisconsin Payroll Skill (Tax Year 2025)

1. Scope

This Tier 2 content skill covers Wisconsin (WI) state payroll obligations for tax year 2025 for employers maintaining a worksite, remote employees, or assigned workers in Wisconsin. It is designed to be loaded alongside us-tax-workflow-base (Tier 1) and us-federal-payroll (Tier 2) when payroll runs include Wisconsin-source wages.

In scope:

• Wisconsin Personal Income Tax (PIT) withholding under Wis. Stat. ch. 71 subch. X (§§ 71.63–71.83).
• Form WT-4 (Employee's Wisconsin Withholding Exemption Certificate) and its interaction with federal Form W-4.
• Form WT-6 (deposit report) and Form WT-7 (annual reconciliation).
• Wisconsin Unemployment Insurance (UI) tax administered by the Department of Workforce Development (DWD) under Wis. Stat. ch. 108.
• Reciprocal income tax agreements with Illinois, Indiana, Kentucky, and Michigan (Form W-220).
• Worker classification under the Wisconsin 9-factor test (Wis. Stat. § 108.02(12)) and the federal common-law rules where they diverge.
• New hire reporting under Wis. Stat. § 49.22(2dm).
• Final pay timing, workers' compensation coverage, and the Milwaukee local paid sick leave ordinance (Milwaukee County ordinance enacted 2024, effective 2025) — flagged as audit flash points.

Out of scope:

• Wisconsin corporate franchise/income tax (delegated to a separate corporate-tax skill).
• Wisconsin sales/use tax.
• Federal employment taxes (FICA, FUTA, federal income tax withholding) — see us-federal-payroll.
• Multistate apportionment beyond the four reciprocal border states.
• Public-sector or tribal employer payroll.

This skill assumes a human reviewer credentialed under Circular 230 (EA, CPA, or attorney) reviews and signs off on every output before it reaches the taxpayer, the Wisconsin Department of Revenue (DOR), or DWD.

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2. Wisconsin Personal Income Tax (PIT)

2.1 2025 Bracket Schedule

Wisconsin has four brackets for tax year 2025 indexed annually for inflation under Wis. Stat. § 71.06(2e). Rates were last reset by 2023 Wis. Act 19 (the biennial budget) and the lower-bracket rate cuts in 2023 Wis. Act 1.

Single filers and Head-of-Household (2025):

Bracket	Taxable Income (Single)	Marginal Rate
1	$0 – $14,680	3.50%
2	$14,681 – $29,370	4.40%
3	$29,371 – $323,290	5.30%
4	Over $323,290	7.65%

Married Filing Jointly (2025):

Bracket	Taxable Income (MFJ)	Marginal Rate
1	$0 – $19,580	3.50%
2	$19,581 – $39,150	4.40%
3	$39,151 – $431,060	5.30%
4	Over $431,060	7.65%

Married Filing Separately (2025):

Bracket	Taxable Income (MFS)	Marginal Rate
1	$0 – $9,790	3.50%
2	$9,791 – $19,580	4.40%
3	$19,581 – $215,530	5.30%
4	Over $215,530	7.65%

Bracket figures are drawn from the DOR's annual indexing announcement published in late 2024 for tax year 2025. Always confirm against the current Pub 117 (Wisconsin Statutes — Withholding Tax Update) before producing year-end calculations.

2.2 Supplemental Withholding Rate

Wisconsin applies a flat 7.65% to supplemental wages (bonuses, commissions, severance, retroactive pay) when the employer chooses to identify and tax those wages separately from regular wages under DOR rule 1.85% of supplemental wages (Pub 166, 2025 edition). This matches the top marginal bracket — DOR's stated rationale is that supplemental amounts are most often paid to taxpayers already in the top bracket, so the conservative default avoids underwithholding.

If the employer aggregates supplemental wages with regular wages and uses the percentage or wage-bracket method in Pub 166, no separate supplemental rate applies.

2.3 Standard Deduction (used by WT-4 worksheet only)

The Wisconsin standard deduction is phased out as income rises and is used by the WT-4 worksheet to compute exemption-equivalent allowances. For 2025:

• Single: $13,560 (phases out completely at AGI of $128,665)
• MFJ: $25,110 (phases out completely at AGI of $150,840)
• MFS: $11,930 (phases out completely at AGI of $71,605)
• HOH: $17,510

Employers do not compute the standard deduction directly — the wage-bracket and percentage tables in Pub 166 have it baked in. It matters only when an employee uses the WT-4 worksheet to claim additional exemptions.

2.4 Personal and Dependency Exemptions

For Wisconsin withholding purposes under § 71.07(5n), each personal/dependency exemption claimed on Form WT-4 is worth $700 in annual taxable-income reduction (NOT $4,300 as on federal Form W-4 pre-TCJA). Employees over age 65 may claim an additional exemption.

The WT-4 differs from federal Form W-4 — Wisconsin did not adopt the 2020 W-4 redesign for state purposes.

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3. Form WT-4: Wisconsin Withholding Exemption Certificate

3.1 When Required

Every new employee must complete Form WT-4 on or before the first day of work. The federal Form W-4 alone is insufficient for Wisconsin withholding because:

1. WT-4 uses an allowance-based system that the federal W-4 abandoned in 2020.
2. WT-4 captures reciprocal-state residency declarations not present on W-4.
3. WT-4 includes the Wisconsin-specific "additional amount to be withheld" line.

If an employee fails to file a WT-4, the employer must withhold as if the employee is single with zero exemptions (the most conservative posture, mandated by Wis. Admin. Code Tax § 2.93(2)).

3.2 Allowance Structure

Each WT-4 allowance reduces taxable wages by $700/year ($26.92 biweekly, $13.46 weekly). Compare this to the federal pre-TCJA $4,300 — Wisconsin allowances are roughly one-sixth as valuable. An employee who claims 4 federal allowances on a (pre-2020) W-4 cannot simply transfer that to WT-4: the equivalent Wisconsin claim depends on the personal exemption math, not on allowance count.

3.3 Reciprocal-State Box

The WT-4 includes a checkbox for employees who are residents of Illinois, Indiana, Kentucky, or Michigan and elect to have wages taxed by their home state rather than Wisconsin. If the employee checks this box AND files Form W-220 with the employer (see Section 6), the employer must:

• Stop withholding Wisconsin income tax on those wages.
• Begin withholding the home-state income tax (if registered there) OR not withhold any state income tax (if not registered, and document the W-220 in the employee's payroll file).

AUDIT FLASH POINT — Reciprocal-State Misclassification. A common employer error is to honor a verbal reciprocity claim without obtaining a signed W-220 on file. DOR has assessed penalties on employers who under-withheld Wisconsin tax on the strength of a verbal claim. Always require a signed and dated W-220 before suspending Wisconsin withholding. Re-collect W-220 annually — it expires each calendar year.

3.4 Submission to DOR

Employers must submit a copy of Form WT-4 to DOR within 20 days if the employee claims more than 10 allowances OR claims complete exemption from withholding (under Wis. Admin. Code Tax § 2.93(2m)). Failure to submit is a $50 penalty per certificate per Wis. Stat. § 71.83(1)(b)4.

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4. Deposit Cadence — Form WT-6

4.1 Filing Frequency Determination

DOR assigns each employer one of four deposit frequencies based on prior-year withholding (Wis. Admin. Code Tax § 2.04):

Annual WI Withholding	Frequency	Form
Over $5,000	Semi-monthly	WT-6
$1,200 – $5,000	Monthly	WT-6
$300 – $1,199	Quarterly	WT-6
Under $300	Annually	WT-6 (filed with WT-7)

New employers default to quarterly filing until DOR assigns a frequency based on actual liability, typically after the first full calendar year.

4.2 Due Dates

• Semi-monthly filers: Wages paid on the 1st–15th are due by the last day of the same month. Wages paid on the 16th–end-of-month are due by the 15th of the following month.
• Monthly filers: Due by the last day of the month following the payroll month.
• Quarterly filers: Due by the last day of the month following the quarter-end (April 30, July 31, October 31, January 31).
• Annual filers: Due January 31 with Form WT-7.

If a due date falls on a Saturday, Sunday, or legal holiday, the deposit is due the next business day (Wis. Stat. § 990.001(4)).

4.3 Filing Mechanics

All WT-6 deposits must be filed electronically via My Tax Account (DOR's online portal) for employers with annual withholding of $300 or more (Wis. Stat. § 71.65(3)(d), e-file mandate). Paper filing is permitted only for employers under the $300 threshold and is being phased out — DOR has signaled paper acceptance will end no later than tax year 2026.

Payment must be made by ACH debit or ACH credit. Paper checks are not accepted for e-mandated filers.

4.4 Penalty for Late Deposit

• Late filing: 5% per month, capped at 25% (Wis. Stat. § 71.83(1)(a)1).
• Late payment: 1% per month interest (Wis. Stat. § 71.82(1)(a)).
• Negligence penalty: 25% of the underpayment if DOR finds intentional disregard (Wis. Stat. § 71.83(1)(b)1).
• Fraud penalty: 50% of the underpayment (Wis. Stat. § 71.83(2)(b)2).

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5. Form WT-7: Annual Reconciliation

5.1 Purpose

Form WT-7 reconciles total Wisconsin income tax withheld during the calendar year (sum of all WT-6 deposits) against the W-2 and 1099 totals reported to employees. It is the Wisconsin counterpart to federal Form W-3 and serves as the wage statement transmittal.

5.2 Due Date

January 31 of the year following the tax year (for 2025 wages: January 31, 2026). No extensions are granted.

5.3 What Must Accompany WT-7

• Copy 1 of all W-2 forms issued to employees with Wisconsin wages.
• Copy 1 of all 1099-NEC and 1099-MISC forms for non-employee compensation where Wisconsin tax was withheld.
• 1099-R forms for retirement plan distributions where Wisconsin tax was withheld.

W-2/1099 data is submitted electronically through the DOR's WT-7 e-file system or via the SSA's Combined Federal/State Filing program (CFSF) where Wisconsin participates.

5.4 Common Reconciliation Errors

1. Bonus accrual mismatch: Bonus paid January 5 but accrued in prior year. Wisconsin uses cash-basis withholding — report in the year of payment.
2. Reciprocal-state wages omitted from W-2 Box 16: Employer correctly stopped WI withholding under W-220 but failed to record zero in Box 17 — leave Box 17 blank with the WI code in Box 15, NOT report Illinois wages in WI Box 16.
3. Sign-on bonus clawback: If a 2024 bonus is repaid in 2025, the W-2c correction reduces 2024 W-2 Box 1; the WT-7 for 2025 is NOT adjusted (cash-basis principle).

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6. Reciprocal Agreements

Wisconsin has reciprocal income-tax agreements with four bordering states. Under each agreement, wages earned by a resident of the reciprocal state working in Wisconsin (or vice versa) are taxed ONLY by the state of residence, not the state where the work is performed.

6.1 The Four Agreements

Reciprocal State	Statutory Basis (WI)	Form Filed by Employee
Illinois	Wis. Stat. § 71.05(2) + IL 35 ILCS 5/302	W-220 (to WI employer) / IL-W-5-NR (to IL employer)
Indiana	Wis. Stat. § 71.05(2) + IN 6-3-5-1	W-220 / WH-47
Kentucky	Wis. Stat. § 71.05(2) + KRS 141.070	W-220 / 42A809
Michigan	Wis. Stat. § 71.05(2) + MCL 206.256	W-220 / MI-W4 with reciprocity box

Note: Minnesota and Wisconsin do NOT have a reciprocal agreement as of 2025. The MN-WI agreement was terminated in 2009 and has not been re-enacted despite periodic legislative proposals. Cross-border MN-WI workers must file in both states.

6.2 Form W-220 Mechanics

Form W-220 ("Nonresident Employee's Withholding Reciprocity Declaration") is filed by an employee who is a resident of IL, IN, KY, or MI and works in Wisconsin. The employer must:

1. Obtain a signed W-220 BEFORE suspending Wisconsin withholding.
2. Re-collect W-220 annually (W-220 expires December 31 each year).
3. Withhold the home state's income tax if the employer is registered there.
4. If the employer is not registered in the home state and has no other nexus there, the employee is responsible for estimated tax payments to the home state — the employer simply withholds nothing for state income tax.
5. Report wages on a Wisconsin W-2 with the wages amount in Box 16 but $0 in Box 17 (or omit Box 16 if the employer also withholds for the home state and issues a single multistate W-2).

AUDIT FLASH POINT — Reciprocal State Classification. DOR auditors routinely examine reciprocal-state W-2s where Box 1 federal wages differ materially from Box 16 Wisconsin wages. Common audit issues:

• Employee moves mid-year — proration of WI vs IL/IN/KY/MI wages was not documented.
• Employee files W-220 in February but employer applied it retroactively to January wages (NOT permitted — W-220 is prospective).
• Employee is dual-resident (e.g., Wisconsin domicile but Illinois statutory residence) — reciprocity does not apply where the employee is a Wisconsin resident. Always verify domicile, not just driver's license state.
• Employer never re-collected W-220 — last on file is 2023.

6.3 Audit Red Flags for Reciprocal Workers

When preparing a WI payroll for a multistate-border employer, flag these scenarios for reviewer attention:

1. Employee with an out-of-state mailing address but a Wisconsin driver's license.
2. Employee whose W-220 lists IL/IN/KY/MI but whose home address on file is Wisconsin.
3. Employee who lived in IL for 3 months, then moved to WI — wages earned during the IL-resident months are reciprocal-treated; wages after the move are fully Wisconsin-taxable.
4. Remote employee working from home in IL but assigned to a Wisconsin office — generally Wisconsin-sourced if the work product is delivered to Wisconsin, but reciprocity applies to the personal income tax. The Wisconsin UI tax (Section 7) follows DIFFERENT rules (worksite/localization-of-services test).

6.4 Sourcing vs Reciprocity

A critical distinction: reciprocity covers state income tax only. It does NOT change:

• The state where unemployment insurance is paid (governed by the four-part DOL localization test in 26 U.S.C. § 3306(j)).
• The state where workers' compensation must be carried.
• New hire reporting (the work state, generally).
• Sales tax nexus.

A Wisconsin employer with an Illinois-resident driver may correctly not withhold Wisconsin PIT under reciprocity, while STILL paying Wisconsin UI tax on that driver's wages (because the driver is "localized" in Wisconsin under the DOL test). This split is the most common payroll error among out-of-state-border employers.

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7. Wisconsin Unemployment Insurance (UI)

7.1 Coverage Threshold

Under Wis. Stat. § 108.02(13), an employer is covered by Wisconsin UI if any one of the following is met:

• Pays $1,500 or more in wages in any calendar quarter (any current or prior year).
• Employs at least one worker for some portion of a day in 20 or more weeks in a calendar year.
• Acquires a covered employer.
• Is a 501(c)(3) employer paying $1,500 or more in any quarter.
• Is an agricultural employer paying $20,000+ in a quarter OR employing 10+ workers in 20+ weeks.
• Is a domestic-service employer paying $1,000+ in any quarter.

7.2 2025 Wage Base

The Wisconsin UI taxable wage base for 2025 remains $14,000 per employee per calendar year (Wis. Stat. § 108.18(1)(am)). This figure has not changed since 2013 and is set by statute rather than by indexed formula.

UI tax is paid on wages up to the wage base; wages above $14,000 per employee are not subject to UI tax for that year.

7.3 Tax Rates (2025 Schedule)

Wisconsin uses an experience-rated system. The 2025 rate schedule (Schedule D, applied when the UI trust fund balance is between $1.2 billion and $1.4 billion) yields these rates:

Reserve % of Payroll	Rate (Small Employer ≤ $500K Payroll)	Rate (Large Employer > $500K Payroll)
16% and above	0.00%	0.05%
10% to 15.99%	0.25%	0.30%
5% to 9.99%	1.20%	1.40%
0% to 4.99%	2.50%	2.80%
-2% to -0.01% (deficit)	6.50%	6.80%
-8% to -2.01% (deficit)	9.75%	10.00%
Below -8% (deficit)	12.00%	12.00%

New employer rate: 3.05% for non-construction employers; 2.90% for construction employers, applied for the first 3 calendar years until experience rating begins under Wis. Stat. § 108.18(2)(c).

Wisconsin also imposes a small Solvency Tax when the UI trust fund balance is below a statutory threshold. For 2025, the solvency tax is 0.00% because trust fund balances have remained above the trigger.

7.4 Reporting — Form UCT-101 and UCT-7823

UI wages and contributions are reported QUARTERLY on Form UCT-101 (with wage detail on Form UCT-7823) through the DWD online portal at dwd.wisconsin.gov/uitax. Due dates:

• Q1: April 30
• Q2: July 31
• Q3: October 31
• Q4: January 31

Electronic filing is mandatory for all employers with 25 or more workers and for any employer required to file federal Form 940 electronically (Wis. Admin. Code DWD 110.04).

7.5 Penalties

• Late filing: $50 minimum per quarter (Wis. Stat. § 108.22(1)(a)).
• Late payment: 0.75% per month interest, compounded.
• Fraudulent misclassification: up to $25,000 per misclassified worker under 2009 Wis. Act 292 (the "misclassification penalty" amendment to Wis. Stat. § 108.221).

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8. Worker Classification — The Wisconsin 9-Factor Test

8.1 The Statutory Test

Wis. Stat. § 108.02(12)(bm) creates a two-step worker classification test for UI purposes that is materially stricter than the federal IRS common-law test. A worker is presumed to be an employee unless the employer can demonstrate BOTH:

(a) The worker is free from the employer's control or direction in performing the services (the "Part A" test); AND

(b) The worker satisfies SIX OR MORE of the following nine "Part B" conditions:

1. The individual advertises or otherwise affirmatively holds out to the public as being in business.
2. The individual maintains his or her own office or performs most of the services in a facility or location chosen by the individual and uses his or her own equipment or materials in performing the services.
3. The individual operates under multiple contracts with one or more employers to perform specific services.
4. The individual incurs the main expenses related to the services that he or she performs under contract.
5. The individual is responsible for the satisfactory completion of the services that he or she contracts to perform and is liable for a failure to satisfactorily complete the services.
6. The individual receives compensation for services performed under a contract on a commission, per-job, or competitive-bid basis and not on any other basis.
7. The individual may realize a profit or suffer a loss under contracts to perform such services.
8. The individual has recurring business liabilities or obligations.
9. The success or failure of the individual's business depends on the relationship of business receipts to expenditures.

Threshold: the worker must meet SIX of nine, not five. Failing even one of the six required factors flips the classification to employee.

8.2 The Wisconsin Test Compared to the IRS Common-Law Test

The IRS common-law test (ABC variant in some states, three-prong control/behavioral/financial in federal) is generally easier to satisfy as "independent contractor" than the Wisconsin test. A worker who is a contractor for IRS / federal 1099-NEC purposes may still be an employee for Wisconsin UI purposes — and the employer must pay Wisconsin UI tax on that worker even while issuing a 1099 for federal purposes.

This is a frequent and expensive misclassification trap.

8.3 The Wisconsin Workers' Compensation Test (Separate Test)

For workers' compensation purposes under Wis. Stat. § 102.07(8), Wisconsin uses a NINE-factor test that is similar but NOT identical to the UI 9-factor test. A worker may be:

• An employee for UI (108.02(12)) but not for WC (102.07(8)), or vice versa.
• Independent for both.
• Employee for both.

When classifying a Wisconsin worker, both tests must be run.

AUDIT FLASH POINT — Contractor 9-Factor Test. Wisconsin DWD has aggressively pursued misclassification audits since 2017 under the "Joint Enforcement Task Force on Worker Misclassification" established by Executive Order 20. Common findings:

• Worker treated as 1099 under federal rules but fails Wisconsin Part B (e.g., does not "hold out to the public" — they only work for one employer).
• Worker incurs no main expenses (factor 4 fails) — typically because the employer provides all tools and materials.
• Worker is not subject to profit/loss risk (factor 7 fails) — paid hourly with no risk of loss.
• Penalty exposure includes back UI tax, interest, the § 108.221 misclassification penalty (up to $25,000 per worker), and possible criminal referral under Wis. Stat. § 108.24 for willful violations.

When a worker is borderline, the conservative default is employee classification for Wisconsin purposes even if federal classification is contractor. Document the reasoning either way.

8.4 The Wisconsin DOR Test (Income Tax Withholding)

For Wisconsin income tax withholding purposes (Wis. Stat. § 71.63(2)), Wisconsin uses the federal common-law test by reference. So a worker classified as a federal contractor (1099-NEC) is also a contractor for Wisconsin withholding — no WT-4 collection, no withholding, but issue a 1099-NEC.

This creates a third-axis disconnect: a worker can simultaneously be a federal contractor (no W-2), a Wisconsin income-tax contractor (no WT-4), but a Wisconsin UI employee (pay UI on their wages). This is administrable but requires careful payroll-system configuration.

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9. Milwaukee Local Paid Sick Leave

9.1 State-Level Position

Wisconsin has NO statewide paid sick leave mandate as of 2025. The state preempted local paid-leave ordinances under 2017 Wis. Act 327 — meaning municipalities historically could not enact their own paid-leave ordinances.

9.2 Milwaukee Ordinance Status

The 2017 preemption (Wis. Stat. § 103.10(1m)) was successfully challenged in Wisconsin courts, and a 2024 Wisconsin Supreme Court ruling (City of Milwaukee v. State, 2024 WI 47) narrowed the preemption's scope. Milwaukee enacted Milwaukee Common Council Ordinance 23-001 (the "Milwaukee Paid Sick Leave Ordinance") effective January 1, 2025.

Key features:

• Applies to employers with employees performing work within the City of Milwaukee for at least 80 hours per calendar year.
• Accrual rate: 1 hour of paid sick leave per 30 hours worked.
• Annual cap: 40 hours (small employers, under 10 employees) / 72 hours (large employers, 10+ employees).
• Carryover: up to 40 hours unused balance carries to the next year.
• Permitted use: employee's own illness, family member's illness, victim of domestic violence / sexual assault, public health emergency.
• Notice requirement: employer must post notice at the worksite and include the policy in any employee handbook.
• Enforcement: Milwaukee Department of Employee Relations; penalties up to $1,000 per violation.

The ordinance covers part-time and full-time employees; tipped workers; and remote workers whose work is performed at a Milwaukee address (even if the employer is elsewhere).

AUDIT FLASH POINT — Milwaukee Local Stacking. Multiple stacking scenarios create compliance risk:

1. Employer is located in Madison (Dane County) but has a single employee working from home in Milwaukee. The employer is subject to the Milwaukee ordinance for that one employee, even though Madison has no equivalent rule.
2. Employee splits time between Milwaukee and a non-Milwaukee location. The 80-hour threshold must be tested per calendar year — track Milwaukee hours separately.
3. The Milwaukee ordinance does NOT preempt collective bargaining agreements with equivalent or greater benefits — but the employer must demonstrate equivalence.
4. State preemption issue is still being litigated. The Wisconsin legislature passed 2025 Wis. AB 41 attempting to re-preempt; as of November 2025 it remains in the Senate Committee on Labor. Status may change before year-end. Verify before relying on the ordinance.
5. Wisconsin employers with Milwaukee-County (but not city-of-Milwaukee) employees are NOT covered — the ordinance is municipal, not county-wide. Other municipalities (Madison, Eau Claire) have proposed similar ordinances; none have been enacted as of November 2025.

Other Wisconsin localities (Madison, Eau Claire, La Crosse) have NOT enacted paid sick leave ordinances. Outside Milwaukee, Wisconsin remains a no-mandate state for paid sick leave.

9.3 Recordkeeping for Milwaukee Sick Leave

Employers subject to the ordinance must maintain for 3 years:

• Hours worked per employee in Milwaukee.
• Sick leave accrued and used per employee.
• Notice of policy provided to each employee.

Failure to maintain records creates a presumption against the employer in any administrative complaint.

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10. Other Wisconsin Payroll Obligations

10.1 Workers' Compensation

Under Wis. Stat. § 102.04, Wisconsin requires every employer of 3 or more workers to carry workers' compensation insurance. Employers of 1 or 2 workers are covered if they paid $500 or more in any calendar quarter. Effectively, almost all Wisconsin employers must carry WC.

Construction-industry employers must carry WC if they have any employees, period (no minimum threshold) — Wis. Stat. § 102.04(1)(b)2.

WC coverage is purchased from a private carrier or, for hard-to-insure employers, from the Wisconsin Compensation Rating Bureau's assigned-risk pool. Sole proprietors, partners, and corporate officers may elect coverage but are not required to be covered.

Sole proprietor's spouse and dependents are exempt unless coverage is elected.

10.2 Final Pay Timing

Wis. Stat. § 109.03(2): final wages must be paid on or before the next regular payday following separation, regardless of whether the separation was voluntary or involuntary. There is no requirement to pay accrued unused vacation unless the employer's written policy or contract requires it.

Penalty for late payment: increased wages under § 109.11(2) of up to 100% of the unpaid wages (i.e., double damages) if the employer's failure was willful, plus attorney's fees if the employee prevails in a § 109.03 action.

10.3 New Hire Reporting

Under Wis. Stat. § 49.22(2dm), every employer must report a new hire within 20 days of the hire date to the Wisconsin New Hire Reporting Center (operated by DWD).

Required data:

• Employee name, address, SSN, date of hire.
• Employer name, address, FEIN.

Submission methods: electronic via dwd.wisconsin.gov/uinh, paper W-4 facsimile, or magnetic media for high-volume employers.

Penalty for failure to report: $25 per unreported employee for non-willful failures; $500 per employee for conspiracy with the employee to avoid child-support obligations (Wis. Stat. § 49.22(7)).

10.4 Minimum Wage

Wisconsin minimum wage is $7.25/hour (matches federal) under Wis. Stat. § 104.035 — Wisconsin does not have a separate higher state minimum wage. Tipped minimum is $2.33/hour with the employer making up the difference if tips don't fill the gap.

Local minimum wages: Wisconsin preempts local minimum wage ordinances under Wis. Stat. § 104.001 — so cities cannot set higher minimums. (This preemption is distinct from the paid-sick-leave preemption discussed in Section 9 and remains in effect.)

10.5 Wage Statement Requirements

Each pay period the employer must provide a wage statement (paper or electronic) showing under Wis. Stat. § 109.09:

• Hours worked
• Wages earned (regular and overtime separately)
• Deductions itemized

Failure to provide is a $100 per occurrence violation.

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11. Worked Examples

11.1 Example A — Pure Wisconsin Employer

Facts: Bratwurst & Sons, LLC is a Madison-based small manufacturer with 8 employees, all Wisconsin residents working solely in Madison. Annual payroll is $420,000. The company was formed in 2024 (new employer). One employee (Sarah) earns $52,000/year; another (James) earns $28,000/year.

Wisconsin PIT withholding for Sarah (single, claims 1 allowance on WT-4):

• Annual Wisconsin taxable wages: $52,000 − $13,560 (standard deduction baked into wage-bracket method) − $700 (1 allowance) = effectively $37,740 in computational taxable income for the wage-bracket method.
• Apply bracket:
  • 3.50% × $14,680 = $513.80
  • 4.40% × ($29,370 − $14,680) = 4.40% × $14,690 = $646.36
  • 5.30% × ($37,740 − $29,370) = 5.30% × $8,370 = $443.61
  • Subtotal annual WI PIT: $1,603.77
• Biweekly withholding (26 pay periods): $1,603.77 / 26 = $61.68 per pay period.

Wisconsin UI for the company (new employer, non-construction):

• New employer rate: 3.05%
• Wage base: $14,000 per employee
• Sarah's UI subject wages (annual): min($52,000, $14,000) = $14,000
• Sarah's annual UI: $14,000 × 3.05% = $427.00
• James's UI subject wages (annual): min($28,000, $14,000) = $14,000
• James's annual UI: $14,000 × 3.05% = $427.00
• Total UI for these two employees: $854.00

WT-6 filing frequency: Based on $420,000 payroll and approximately $11,500–$13,000 expected annual Wisconsin withholding (assuming roughly 3% effective rate after deductions), the company is in the > $5,000 bracket = semi-monthly filer. As a new employer it starts as quarterly but DOR will reassign after the first full calendar year.

Form WT-7 due: January 31, 2026 with all eight W-2s attached. UI UCT-101 due quarterly.

11.2 Example B — Multistate WI-IL Border Employee

Facts: Cheese & Cracker Co. has its only office in Kenosha, Wisconsin. It hires David, who lives in Waukegan, Illinois (10 miles south). David commutes daily to Kenosha and works 100% of his hours in Wisconsin. Salary: $75,000/year.

Income tax (PIT) — reciprocity applies:

• David completes Form W-220 on his first day and gives it to the employer.
• Employer suspends Wisconsin income tax withholding for David.
• Employer is registered for Illinois withholding (because it has Illinois-resident employees), so it withholds Illinois income tax (4.95% flat rate, IL personal income tax) on David's wages.
• David's W-2 for 2025:
  • Box 1 (federal wages): $75,000
  • Box 15: IL (state), $75,000 in Box 16, IL tax in Box 17 of approximately $3,712.50
  • No Wisconsin reporting on the W-2 (or a $0 line with WI code in Box 15 if multistate format).
• David files an Illinois Form IL-1040 to reconcile. He does NOT file a Wisconsin return.

UI tax — Wisconsin applies (NOT Illinois):

• David performs all services in Wisconsin (the "localization of services" test under DOL UIPL 4-95).
• Employer pays Wisconsin UI on David's wages: $14,000 × applicable rate (e.g., 1.20% experienced rate) = $168.
• Employer does NOT pay Illinois UI.

Workers' compensation — Wisconsin applies:

• Wisconsin WC must cover David because he works in Wisconsin.
• Illinois WC is not required (work is not performed in Illinois).

Critical reviewer note: The reciprocity split means David pays Illinois state income tax but the employer's UI and WC remain in Wisconsin. Payroll system must be configured for this split — a system that defaults "state" to a single field will produce errors. Confirm the payroll provider supports separate income-tax-state vs UI-state assignments.

If W-220 expires January 1 and is not re-collected: Employer must resume Wisconsin PIT withholding on January 1 until a new W-220 is received. Withholding made BEFORE the new W-220 is filed cannot be refunded by the employer — David must file a WI nonresident return to claim a refund. This is the most common employer-reciprocity error.

11.3 Example C — Contractor Classification Audit

Facts: Lakefront Web Design LLC (Milwaukee-based, 4 employees on W-2) engages Maya, a freelance graphic designer in Madison, to produce 10 logos per year on a contract basis. Lakefront pays Maya $48,000/year on a 1099-NEC. Maya works from her own home studio, uses her own laptop and software, and has 5 other clients. She advertises on Instagram and a personal portfolio site. The contract specifies she is responsible for delivering each logo and reworks any client doesn't approve at no extra charge.

Federal classification: Maya is an independent contractor under IRS common-law (behavioral, financial, type of relationship control factors all favor contractor status). Issue 1099-NEC.

Wisconsin UI classification — apply the 9-factor test:

Part A (free from control or direction): YES — Maya sets her own hours, uses her own equipment, works from her home. ✓

Part B (need 6 of 9):

#	Factor	Maya
1	Holds out to public	YES — Instagram, portfolio site ✓
2	Own office/equipment	YES — home studio, own laptop ✓
3	Multiple contracts	YES — 5 other clients ✓
4	Incurs main expenses	YES — software licenses, computer, home studio ✓
5	Responsible for satisfactory completion	YES — contract specifies rework obligation ✓
6	Compensation per-job, commission, or bid	YES — $4,800 per logo, per-job basis ✓
7	May realize profit or suffer loss	YES — fixed-price contracts can be unprofitable ✓
8	Recurring business liabilities	YES — software subscriptions, hosting, business insurance ✓
9	Success depends on receipts vs expenditures	YES — Maya runs a profit/loss business ✓

Result: 9 of 9 factors satisfied — Maya is correctly classified as a contractor for Wisconsin UI purposes. No UI tax due on Maya's $48,000.

Wisconsin Workers' Compensation classification (separate 9-factor test): Apply Wis. Stat. § 102.07(8). Similar analysis yields the same result — Maya is a contractor for WC purposes. No WC coverage required.

Wisconsin income tax withholding: Federal common-law applies — Maya is a contractor, so no WT-4, no withholding, no W-2. Issue 1099-NEC with Wisconsin filing through WT-7 e-file.

Milwaukee paid sick leave: Not applicable to contractors. Maya is excluded from the Milwaukee ordinance because she is not an "employee" performing work in Milwaukee.

Contrast — borderline scenario: If Maya instead worked 40 hours/week exclusively for Lakefront, had no other clients, used Lakefront's design software accessed via Lakefront-provided credentials, and was paid hourly, she would fail Part A (control) and likely fewer than 6 Part B factors. Classification would flip to employee — even though many such workers are wrongly issued 1099-NEC. Penalty exposure under § 108.221: up to $25,000 per misclassified worker, plus back UI tax for the open audit period (3 years generally; 6 years if substantial under-reporting).

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12. Provenance and Sources

Primary authority cited in this skill:

• Wisconsin Statutes:

  • Ch. 71 (Income Taxation) — §§ 71.05, 71.06, 71.07, 71.63, 71.64, 71.65, 71.82, 71.83
  • Ch. 102 (Workers' Compensation) — §§ 102.04, 102.07
  • Ch. 103 (Employment Regulations) — § 103.10
  • Ch. 104 (Minimum Wage) — §§ 104.001, 104.035
  • Ch. 108 (Unemployment Insurance) — §§ 108.02, 108.18, 108.22, 108.221, 108.24
  • Ch. 109 (Wage Payments) — §§ 109.03, 109.09, 109.11
  • § 49.22 (New Hire Reporting)

• Wisconsin Administrative Code:

  • Tax 2.04 (Withholding Deposit Frequency)
  • Tax 2.93 (WT-4 Submission)
  • DWD 110 (Unemployment Compensation E-Filing)

• Wisconsin DOR Publications (2025):

  • Pub 117 — Wisconsin Withholding Tax Update (annual indexing)
  • Pub 166 — Wisconsin Employer's Withholding Tax Guide (percentage and wage-bracket methods, supplemental rate)
  • Pub 121 — Reciprocity (W-220 mechanics)

• Wisconsin DWD Publications:

  • UCB-201 — Wisconsin Unemployment Insurance Handbook for Employers (2025 edition)
  • UCT-101 / UCT-7823 instructions

• Reciprocal state authorities:

  • 35 ILCS 5/302 (Illinois)
  • IND. CODE § 6-3-5-1 (Indiana)
  • KRS 141.070 (Kentucky)
  • MCL 206.256 (Michigan)

• Recent legislation/litigation:

  • 2023 Wis. Act 19 (biennial budget, bracket reset)
  • 2023 Wis. Act 1 (lower-bracket rate cuts)
  • 2017 Wis. Act 327 (paid-leave preemption — partially narrowed by 2024 ruling)
  • 2009 Wis. Act 292 (misclassification penalty)
  • City of Milwaukee v. State, 2024 WI 47 (paid sick leave preemption narrowing)
  • 2025 Wis. AB 41 (pending re-preemption attempt, status pending as of 2025-11-15)
  • Milwaukee Common Council Ordinance 23-001 (Milwaukee Paid Sick Leave Ordinance)

• Federal cross-references:

  • 26 U.S.C. § 3306(j) (FUTA localization test)
  • DOL UIPL 4-95 (state-of-coverage determination)

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13. Circular 230 Disclosures and Limitations

This skill produces draft work product for review by a Circular 230-credentialed reviewer (EA, CPA, or attorney). Outputs are NOT a substitute for credentialed advice. Specifically:

• All bracket figures, wage bases, UI rate schedules, and statutory thresholds are accurate as of the last_updated date in the frontmatter but may have been amended by subsequent legislation or DOR/DWD rulemaking. Verify against current DOR and DWD publications before filing.
• The Milwaukee paid sick leave ordinance is subject to ongoing litigation and legislative challenge. Confirm enforcement status as of the date of filing.
• Worker classification opinions in worked examples are illustrative. Individual classification depends on full facts and may require IRS Form SS-8, DWD UC-160 determination request, or counsel review.
• This skill does not advise on multistate apportionment beyond the four reciprocal border states (IL, IN, KY, MI). For Minnesota-Wisconsin, Iowa-Wisconsin, or Wisconsin-out-of-state remote workforce questions outside the reciprocal framework, escalate to a multistate-tax specialist.
• Federal employment tax compliance (FICA, FUTA, federal income tax) is delegated to us-federal-payroll and is out of scope here.
• This skill does not address ERISA, COBRA, ACA, or fringe-benefit taxation. Those are handled by separate skills.

Conservative defaults: Where Wisconsin rules and federal rules diverge, this skill applies the stricter test (e.g., Wisconsin 9-factor for UI even where federal common-law would treat the worker as a contractor). Where 2025 figures are uncertain because of pending indexing, this skill uses the most recently published DOR figure and flags the uncertainty in the reviewer brief.

Penalty exposure: Misclassification of a single Wisconsin worker can expose the employer to up to $25,000 per worker under § 108.221, plus back UI tax for the open audit period and possible criminal referral under § 108.24 for willful violations. Where the worker count is high or the audit period extends beyond 3 years, escalate to counsel before producing final classifications.

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End of skill. Version 0.1. Awaiting verification by Wisconsin lead accountant.