This month we travel north to the Badger State of Wisconsin, a Midwestern U.S. state with coastlines on two Great Lakes (Michigan and Superior) and an interior of forests and farms. Several beer companies are based in Milwaukee, and many offer brewery tours. The state is known as “America’s Dairyland” because it is one of the nation’s leading dairy producers, particularly famous for its cheese. Manufacturing, especially paper products, information technology (IT), cranberries, and tourism are also major contributions to the state’s economy.
Wisconsin’s geography is diverse having been greatly impacted by glaciers during the Ice Age with the exception of the Driftless Area. The Northern Highland and Western Upland along with a part of the Central Plain occupies the western part of the state, with lowlands stretching to the shore of Lake Michigan. Wisconsin is second to Michigan in the length of its Great Lakes Coastline.
The highest natural point in Wisconsin isn’t a mountain- it’s actually a hill. Timm’s Hill is recorded at 1,951 feet. Due to Wisconsin’s mostly glaciated terrain, there aren’t a lot of craggy peaks. In exchange for leveling the landscape, glaciation has left the state with some of the most beautiful rolling hills, valleys, prairies and fertile farm fields.
Most of Wisconsin is classified as having a warm-summer humid continental climate, while the southern and southwestern portions of the state are classified as having a hot-summer humid continental climate. Wisconsin also receives a large amount of regular snowfall averaging around 40 inches per year in the southern portions with up to 160 inches annually in the Lake Superior snowbelt each year.
Given the large number of lakes and rivers in the state, water recreation is very popular. In the northern part of the state, what had been an industrial area focused on timber has largely been transformed into a vacation destination. Popular interest in hunting and fishing are also popular recreation activities.
Business Climate
Wisconsin produces about a quarter of America’s cheese, leading the nation in cheese production. It is second in milk production, after California. Wisconsin is second in butter production, producing about one-quarter of the nation’s butter. The state ranks first nationally in the production of corn for silage, cranberries, ginseng, and snap beans for processing. It grows over half the national crop of cranberries and 97% of the nation’s ginseng. Wisconsin is also a leading producer of oats, potato, carrots, tart cherries, maple syrup, and sweet corn for processing. A large part of the state’s manufacturing sector includes commercial food processing, including well-known brands such as Oscar Meyer, Tombstone frozen pizza, Johnsonville brats, and Usinger’s sausage. Kraft Foods alone employs over 5,000 people in the state. Milwaukee is a major producer of beer and was formerly headquarters for the Miller Brewing Company- the nation’s second-largest brewer- until it merged with Coors Brewing Company.
Wisconsin is home to a very large and diversified manufacturing economy, with special focus on transportation and capital equipment. Some major Wisconsin companies include the Kohler Company, Mercury Maine, John Deere and Oshkosh Corporation.
Wisconsin is a major producer of paper, packaging, and other consumer goods. Major consumer product companies based in the state include SC Johnson & Co., and Diversify, Inc. Wisconsin ranks first nationwide in the production of paper products; the lower Fox River from Lake Winnebago to Green Bay has 24 paper mills along its 39 mile stretch.
The development and manufacture of health care devices and software is a growing sector of the state’s economy, with key players such as GI Healthcare, Epic Systems, and TomoTherapy.
Tourism is a major industry in Wisconsin- the state’s third largest, according to the State Department of Tourism. Tourist destinations such as the House on the Rock near Spring Green, Circus World Museum in Baraboo, and The Dells of the Wisconsin River draw thousands of visitors annually, and festivals such as Summerfest and the EAA Oshkosh Airshow draw international attention, along with hundreds of thousands of visitors.
The distinctive Door Peninsula, which extends off the eastern coast of the state, contains one of the state’s tourist destinations, Door County. Door County is a popular destination for boaters because of the large number of natural harbors, bays and ports on the Green Bay and Lake Michigan side of the peninsula that forms the county. The area draws hundreds of thousands of visitors yearly to its quaint villages, seasonal cherry picking, and fish boils.
Tax Climate
The top individual income tax rate in the state is 7.65%, which is based on five income tax brackets, and the top corporate income tax rate is 7.9%.
The state sales tax rate is 5%, which ranks 33rd in the nation. The combined state and average local sales tax rate is 5.42%, which ranks 44th in the nation.
Other taxes that are of interest to consumers are the gasoline tax and cigarette tax. The state levies a gasoline tax of 51.3 cents per gallon, which ranks 16th in the nation, and a state cigarette tax of $2.52 per 20-pack, which ranks 12th in the country.
Wisconsin is moderate in its approach to taxation of technology products for sales tax purposes. All digital products except for newspapers are taxable. Prewritten computer software that is electronically downloaded is taxable, while custom computer software that is electronically downloaded is exempt from taxation. Lastly, all cloud services are exempt from taxation. How products are produced, sold and delivered is critical to determining its tax status.
Tax Incentives and Credits
The state of Wisconsin offers a number of programs providing tax credits or other incentives, which can reduce taxable obligations and help increase your company’s bottom line. Some of these include:
Business Development Credit- The business development credit is available to claimants certified by the Wisconsin Economic Development Corporation (WEDC) for taxable years that began on or after January 1, 2016. An individual, estate, trust, partnership, limited liability company (LLC), or corporation can be eligible for the credit. For more information regarding this tax credit, click here.
Wisconsin Manufacturing and Agricultural Credit- The manufacturing and agricultural credit is available to businesses engaged in manufacturing and agricultural activities for taxable years that began on or after January 1, 2013. An individual, estate, trust, partnership, limited liability company (LLC), or corporation is eligible for the credit if the claimant owns or rents and uses in Wisconsin real property and improvements assessed as agriculture property. For more information on this credit, click here.
Random Facts
- Wisconsin’s Door County has five state parks and 250 miles of shoreline along Lake Michigan. These figures represent more than any other county in the country.
- Devil’s Lake was established in 1911. The facility has become one of Wisconsin’s oldest and most famous state parks. It leads the state parks in attendance.
- The Cheese Capital of the world is Monroe, WI. Visit Monroe in September of every even numbered year for their festival called Green County Cheese Days.
- Known for its dairy production, Wisconsin actually leads the nation in exports of cranberries, whey, ginseng root and sweet corn.
- The American Birkebeiner, a 52K cross country ski race between Cable and Hayward, is the largest on the North American Continent.
- The state’s constitution is the oldest of any state west of the Allegheny Mountains. It was adopted in 1848.
- It is the 23rd largest state by total area and the 20th most populous state.
Our team at Miles Consulting Group is always available to discuss the specifics of your state tax situation, whether in Wisconsin or other states, we can help you navigate the complex tax structures arising from your multistate operations. Call us to help you achieve the best tax efficiencies.
