by Richard Chandler, Secretary of the Wisconsin Department of Revenue
Manufacturing is critically important in Wisconsin. It is a key driver of our economy, accounting for almost 20 percent of the state’s economic output and employing one out of six Wisconsin workers. To highlight the importance of manufacturing, and in order to improve Wisconsin’s business climate, Governor Walker has enacted several major tax initiatives to ensure that manufacturing will continue to grow and thrive here. As Secretary of the Department of Revenue, I am pleased to highlight the many credits available to manufacturing businesses.
Below are brief overviews of several available credits. We have detailed information on each of these incentives and more at our website – www.revenue.wi.gov/businesses/incentives.html.
Manufacturing and Agriculture Tax Credit
- 2013 is the first year the Manufacturing and Agriculture Tax Credit is available to be claimed for income derived from manufacturing or agricultural property located in Wisconsin. The credit is phased in as follows:
- Tax year 2013 = 1.875%
- Tax year 2014 = 3.75%
- Tax year 2015 = 5.526%
- Tax year 2016 and beyond = 7.50%
Property Tax Exemptions
- Machinery and equipment used in manufacturing is exempt from personal property taxes
- Manufacturer and merchant inventories are exempt from personal property taxes
- Certain waste treatment facilities owned by utilities, manufacturers, and commercial businesses used for the treatment of industrial waste materials are exempt from general property taxes
Sales Tax Exemptions
- Machinery and equipment used by a manufacturer in producing tangible personal property
- Tangible personal property which becomes an ingredient or component of another product in the manufacturing process
- Tangible personal property that is consumed or loses its identity in the process of manufacturing tangible personal property
- Machinery, equipment and tangible personal property used in research by companies that are engaged in manufacturing or biotechnology
- Fuel and electricity used in manufacturing
Research and Development Credits
- An R&D Credit is available to corporations, sole proprietorships and pass-through entities equal to 5% of the excess of qualified research expenses for the current year over a base period amount.
- An increased R&D Credit equal to 10% of qualified research expenses for the current year over a base period amount is available for qualified expenses related to the design and manufacturing of:
- energy efficient lighting systems,
- building automation and control systems,
- designing internal combustion engines for vehicles, or
- automotive batteries for use in hybrid-electric vehicles.
Additional Investment Incentives
- Starting with investments made in 2011, capital gains on funds invested in qualified Wisconsin-based businesses may be completely exempt from the capital gains tax after the investment has been held for five years
- Capital gains on existing investments which are sold in order to generate funds for investments in qualified Wisconsin-based businesses may be deferred so that they are not taxed at the time of investment
- Angel and early stage investment credits are available for 25% of early stage investments made in qualified new business ventures in Wisconsin
Wisconsin is a national leader in manufacturing, and these credits make our business climate for manufacturers even better. It’s important to recognize all the time, not only during Manufacturing Month, the important role manufacturing plays in helping Wisconsin prosper with its many exciting job opportunities and new innovations.