Reminder: Tax savings for Wisconsin manufacturers and agricultural producers

The Wisconsin Manufacturing and Agriculture Credit (formerly known as the Qualified Production Activities Credit), is now available for manufacturing and agricultural activities in Wisconsin.

“The renaming of this tax credit was a reminder of the opportunities available for all agriculture producers as well as traditional manufacturers throughout the state.”

– Brigid Elliott-Boger, senior manager on Baker Tilly’s Wisconsin manufacturing team

Beginning in 2013, this credit will be phased in over a period of four years and could virtually eliminate the tax on income derived from manufacturing and agriculture activities in Wisconsin. It will effectively reduce the rate of tax on qualified Wisconsin income from 7.9 percent to 0.4 percent.

When fully phased in, the credit will be equal to 7.5 percent of the lesser of the following three amounts:

  • The company’s qualified production activities income as determined under IRC Section 199(c) that is derived from the property assessed for Wisconsin property tax purposes as manufacturing or agricultural property;
  • The company’s income that is apportioned to the state; or
  • The company’s income that is determined to be taxable to Wisconsin under Wisconsin combined reporting rules.

"This is great news for businesses with income derived from manufacturing in Wisconsin. By reducing state tax on the production earnings of manufacturers, the new tax credit intends to fortify the manufacturing rebound in the state."

– Christine Dahlhauser, leader of Baker Tilly’s Wisconsin manufacturing team

The credit will be phased in as follows:

  • 1.875 percent for tax years beginning after December 31, 2012, and before January 1, 2014;
  • 3.75 percent for tax years beginning after December 31, 2013, and before January 1, 2015;
  • 5.526 percent for tax years beginning after December 31, 2014, and before January 1, 2016;
  • 7.5 percent for tax years beginning after December 31, 2015, and thereafter.

Unused tax credit amounts could be carried forward up to 15 years to offset future tax liabilities.