2024 Schedule SB Instructions

                                           Subtractions from Income

 Purpose of Schedule SB
Schedule SB is used to report differences between federal and Wisconsin income. These differences are called modifications 
and may affect the amount you report as a subtraction modification on line 6 of Form 1.

 Who Must File Schedule SB
Your federal income may include items that aren’t taxable for Wisconsin, or it may not include items that are deductible for Wis-
consin. You may have to subtract these items from your federal income to arrive at the correct Wisconsin income. Schedule SB 
must be filed by persons for whom the subtraction modifications described below apply.

 Other Schedules and Publications
These instructions will refer to other Wisconsin schedules that may be needed to compute and the claim an addition or subtrac-
tion along with publications that may contain additional information. The schedules and any related instructions can be found 
on the department’s website at https://www.revenue.wi.gov/Pages/Form/2024Individual.aspx. The Wisconsin publications ref-
erenced are located at https://www.revenue.wi.gov/Pages/HTML/taxpubs.aspx.
 
 Line Instructions

 Line 1 – Taxable Refund of State Income Tax
Refunds of state and local income taxes are not taxable for Wisconsin. Fill in the amount of taxable refunds, credits, or offsets 
of state and local income taxes from line 1 of federal Schedule 1 (Form 1040).

 Line 2 – United States Government Interest
Fill in the amount of interest on U.S. bonds and interest and dividends of certain U.S. government corporations that is included 
on line 3 of Form 1. This income is not taxable.

A mutual fund may invest in U.S. government securities. If it does, a portion or all of its ordinary dividend may not be taxable 
by Wisconsin. If a mutual fund advised you that all or a portion of its ordinary dividend is from investments in U.S. government 
securities, include that portion on line 2.

Caution: Do not fill in on line 2, interest from Ginnie Mae (Government National Mortgage Association) securities and other 
similar securities which are “guaranteed” by the United States government. You must include interest from these securities in 
your Wisconsin taxable income.

 Line 3 – Unemployment Compensation
You may have a different amount of unemployment compensation taxable for Wisconsin and federal purposes. Complete the 
following worksheet to see if you can subtract any portion of the unemployment compensation which you included as income 
on your federal tax return.

                                           Unemployment Compensation Worksheet
 Check only one box.
 A. Married filing a joint return – write $18,000 on line 3 below.
 B. Married not filing a joint return and lived with your spouse at any time during the year – write -0- on line 3 below.
 C. Married not filing a joint return and DID NOT live with your spouse at any time during the year – write $12,000 on line 3 below.
 D. Single (unmarried) – write $12,000 on line 3 below.
 *Worksheet continued on next page*

I-0104 (R. 8-24)                                                                        Wisconsin Department of Revenue

   1.  Fill in unemployment compensation from line 7 of federal Schedule 1 (Form 1040)  ............. 1.
   2.  Fill in your federal adjusted gross income from line 3 of Form 1  ...........................  2.
   3.  Enter –
    • $18,000 if you checked box A; or
    • -0- if you checked box B; or
    • $12,000 if you checked box C or D  ..................................  3.
   4.  Fill in taxable social security benefits, if any, from line 6b of federal Form 1040
    or 1040-SR   .....................................................  4.
   5.  Fill in taxable refunds, credits, or offsets, if any, from line 1 of federal Schedule 1
    (Form 1040)   ....................................................... 5.
   6.  Add lines 3, 4, and 5  ............................................................  6.
   7.  Subtract line 6 from line 2. If zero or less, enter -0- here and on line 9 of this worksheet and do
    not complete line 8. Otherwise, go on to line 8 .......................................... 7.
   8.  Fill in one-half of the amount on line 7 ...............................................  8.
   9.  Fill in the smaller amount of line 1 or line 8. ...........................................  9.
  10.  Subtract line 9 from line 1. Fill in this amount on line 3 of Schedule SB as your subtraction for
    unemployment compensation.  If lines 1 and 9 are equal, fill in -0- ........................  10.

 Line 4 – Social Security Adjustment
Social security benefits are not taxable for Wisconsin. You may subtract any social security benefits that were taxable on your 
federal Form 1040 or 1040-SR. Fill in on line 4 the amount from line 6b of federal Form 1040 or 1040-SR.

 Line 5 – Capital Gain/Loss Subtraction
If your federal adjusted gross income includes capital gains and/or losses from line 7 of federal Form 1040 or 1040-SR, you 
must complete Schedule WD, Capital Gains and Losses. You must also complete Schedule WD if your federal adjusted gross 
income does not include capital gains and/or losses, but you have a capital loss carryover for Wisconsin tax purposes.

Schedule WD determines whether any capital gain/loss subtraction must be reported on line 5. For example, after completing 
Schedule WD, you may be able to include an amount as a subtraction on line 5 because you qualify for the 30% long-term 
capital gain exclusion (60% in the case of farm assets).

Exception:    If the only amount reported as a capital gain on line 7 of your federal Form 1040 or 1040-SR is a capital gain 
distribution from a mutual fund or real estate investment trust and you have no Wisconsin capital loss carryover, you may claim 
a long-term capital gain exclusion on line 5. Fill in 30% of the amount of the capital gain distribution on line 5. Do not complete 
Wisconsin Schedule WD.

  If you are a shareholder of a tax-option (S) corporation or partner of a partnership that elected to be taxed at the entity level, 
do not report the amount of capital gain or loss from Schedule 5K-1 or 3K-1 on Schedule WD. In addition, do not include the 
amount of capital gain or loss from the tax-option (S) corporation or partnership in the modification for line 46 or 48. These items 
have already been removed from Wisconsin income when you completed Schedule WD. See the Schedule WD instructions for 
more information.

 Line 6 – Medical Care Insurance
You may be able to subtract all or a portion of the cost of your medical care insurance. “Medical care insurance” means a 
medical care insurance policy that covers you, your spouse, and dependents and provides surgical, medical, hospital, major 
medical, or other health service coverage (including dental and vision insurance). If you are receiving social security benefits, 
the amount paid for medical care insurance includes the amount deducted from your monthly benefit for Medicare insurance 
(for example, Parts B and D). It does not include premiums for:
•  Long-term care insurance
•  Life insurance policies
•  Policies providing payment for loss of earnings
•  Policies for loss of life, limb, sight, etc.
•  Policies that pay you a guaranteed amount each week for a stated number of weeks if you are hospitalized for sickness or injury
•  The part of your car insurance premiums that provides medical insurance coverage for all persons injured in or by your car
•  Medical care insurance if you elected to pay these premiums with tax-free distributions from a retirement plan (in this case, 
  the premiums would have been paid directly to the insurance provider by the retirement plan)
                                                        - 2 -

   The following amounts may not be included in the subtraction for medical care insurance:
•  Medical care insurance premiums paid by an employer, including amounts paid by you through payroll deductions, unless 
   the premiums are included as wages in box 1 of your Form W-2
•  Medical care insurance premiums paid with distributions from a health savings account if the distribution was not previously 
   included in federal adjusted gross income. Distributions not previously included in federal adjusted gross income include 
   pre-tax contributions to a health savings account.
•  The amount of employer-provided medical care insurance that is identified on your Form W-2 in Box 12 with Code DD
•  Medical care insurance premiums that are deducted pre-tax

Caution: If you participate in your employer’s fringe benefit cafeteria plan and agree to a voluntary salary reduction in return 
for a medical care insurance benefit, you may not consider the amount of your salary reduction an amount you paid for medical 
care  insurance. You  cannot  subtract  premiums  paid  with  money  that  has  not  been  included  in  your  gross  income. These 
programs may be known as flexible spending accounts, employee reimbursement accounts, etc. Some employers may identify 
these amounts on your pay stubs as Internal Revenue Code sec. 125 or as a pre-tax deduction.

 When completing line 1 of Worksheet 1 or 2, if you purchased the insurance through an Exchange (Marketplace), the amount 
you paid is the amount paid after your premium was reduced for any advance payment of the premium assistance credit.

If you are self-employed, complete Worksheet 1 below Note.                                  : If you are self-employed and deducted 100% of your medical 
care insurance cost on line 17 of your federal Schedule 1 (Form 1040) as a self-employed health insurance deduction, do not 
complete Worksheet 1 or 2. No additional deduction is allowed.

                                  Medical Care Insurance – Worksheet 1 – Self-Employed Persons
   1. Amount you paid for medical care insurance in 2024 while you were self-employed                        ..............   1.
   2. Self-employed health insurance deduction from line 17 of federal
      Schedule 1 (Form 1040)*   .....................................  2.
   3. Amount of medical care insurance deducted on federal Schedule C or F
      for employee spouse .........................................  3.
   4.  Amount of premium tax credit allowed on your 2024 federal return from
      line 9 of federal Schedule 3 (Form 1040)    ........................  4.
   5. Add lines 2, 3, and 4   ...............................................................  5.
   6.  Subtract line 5 from line 1   ...........................................................  6.
   7.  Amount of advance premium tax credit you were required to repay from line 1a of federal Schedule 2
      (Form 1040)  ............................................................... .......  7.
   8. Add lines 6 and 7  ............................................................... ...  8.
   9.  Fill in the amount from line 5 of Form 1 less the amount on line 50 of Schedule SB without considering
      the subtraction for medical care insurance. If zero or less, enter 0 (zero) .......................  9.
 10.   Fill in the smaller of line 8 or 9 here and on line 6. This is your subtraction for medical care
      insurance  ............................................................... .........  10.
   *  Do not include any amounts deducted for long-term care insurance.

Complete Worksheet 2 if you are (1) an employee or (2) a person who had no employer and were not self-employed.
                                             Medical Care Insurance – Worksheet 2 – Others
   1. Amount you paid in 2024 for medical care insurance  ....................................    1.
   2. Amount of premium tax credit allowed on your 2024 federal return from line 9 of federal Schedule 3
      (Form 1040)  ...................................................................  2.
   3. Subtract line 2 from line 1 .........................................................                                          3.
   4. Amount of advance premium tax credit you were required to repay from line 1a of federal Schedule 2
      (Form 1040)  ...................................................................  4.
   5. Add lines 3 and 4  ...............................................................  5.
   6.  Fill in the amount from line 5 of Form 1 less the amount on line 50 of Schedule SB without
    considering  the subtraction for medical care insurance. If zero or less, enter 0 (zero) ...........   6. 
   7.  Fill in the smaller of line 5 or 6. This is your subtraction for medical care insurance .............   7.

 Line 7 – Long-Term Care Insurance
If you paid long-term care insurance costs during 2024, you may be able to subtract all or a portion of the cost of a long-term 
care insurance policy which covers you or your spouse.

                                                                                            - 3 -

“Long-term care insurance policy” means a disability insurance policy or certificate advertised, marketed, offered, or designed 
primarily to provide coverage for care that is provided in your home or in an institutional or community-based setting. The care 
must be convalescent or custodial care or care for a chronic condition or terminal illness.

“Long-term care insurance policy” does not include a Medicare supplement policy or Medicare replacement policy or a continuing 
care contract. “Continuing care contract” means a contract which provides nursing services, medical services, or personal care 
services, in addition to food, shelter, and laundry services, for the duration of a person’s life or for a term in excess of one year, 
conditioned upon any of the following payments:
•  An entrance fee in excess of $10,000
•  Providing for the transfer of at least $10,000 (if the amount is expressed in dollars) or 50% of the person’s estate (if the 
 amount is expressed as a percentage of the person’s estate) to the service provider upon the person’s death
•  Do not include premiums for long-term care insurance if you elected to pay those premiums with tax-free distributions from a 
 retirement plan. In this case, the premiums would have been made directly to the insurance provider by the retirement plan.
•  Do not include long-term care insurance premiums paid with distributions from a health savings account if the distribution 
 was not previously included in federal adjusted gross income. Distributions not previously included in federal adjusted gross 
 income include pre-tax contributions to a health savings account.
 If you paid long-term care insurance costs during 2024 for a policy which covers you or your spouse, complete the worksheet 
below to determine your subtraction.

                                               Worksheet – Long-Term Care Insurance
  1. Amount you paid for long-term care insurance in 2024 ...................................    1.
  2. Portion of long-term care insurance cost included as a self-employed
     health insurance deduction on line 17 of federal Schedule 1 (Form 1040)                       2.
  3. Portion of long-term care insurance cost deducted on federal
     Schedule C or F for your employee spouse  .......................                            3.
  4. Add lines 2 and 3  ...............................................................  4.
  5. Subtract line 4 from line 1 .........................................................  5.
  6.  Fill in the amount from line 5 of Form 1 less the amount on line 50 of Schedule SB without
     considering the subtraction for long-term care insurance. If zero or less, enter 0 (zero) ..........   6. 
  7.  Fill in the smaller of line 5 or 6. This is your subtraction for long-term care insurance  ...........   7.

 Line 8 – Tuition and Fee Expenses
You may be able to claim a subtraction for up to $7,333 (per student) of the amount you paid during 2024 for tuition and 
mandatory student fees for you, your spouse (if married filing a joint return), and your children whom you claim as dependents 
on your federal income tax return.

The tuition and mandatory student fees must have been paid during 2024 to attend any of the following:
•  Classes in Wisconsin at a school which qualifies as a university, college, or technical college. A “university, college, or technical 
 college” is any school which has a curriculum leading to a diploma, degree, or occupational or vocational objective (for a list 
 of Wisconsin private colleges see wisconsinsprivatecolleges.org/colleges or technical colleges see wtcsystem.edu/colleges     ).
•  Classes in Wisconsin at other post-secondary (post-high school) schools that have been approved through the Educational 
 Approval Program (for a list see dspseap.wi.gov/resources/schoolsprograms.asp).
•  Classes in Minnesota at a public vocational school or public institution of higher education in Minnesota under the Minnesota– 
 Wisconsin tuition reciprocity agreement.
•  Classes outside Wisconsin provided the tuition is paid to a university, college, or technical college located in Wisconsin.
The subtraction applies to:
•  Tuition and mandatory student fees paid to a school that fits into one of the four categories listed above regardless of the type 
 of course taken. Example: Tuition paid for craft or recreational courses at a technical college qualifies for the subtraction.
•  Tuition and mandatory student fees paid for correspondence courses or courses received via the internet or other electronic 
 transmission as long as the courses are taken in Wisconsin and are presented by a school (located in or outside Wisconsin) 
 which qualifies as a university, college, or technical college, or a school approved through the Educational Approval Program.
•  Tuition and mandatory student fees paid from loans, gifts, inheritances, and personal savings.
•  The cost of books required to be paid to the school in order to attend the class. In this case, the books are considered a 
 mandatory student fee.
                                                                                            - 4 -

The subtraction does not apply to:
•  Tuition or fees paid to pre-schools, elementary, or secondary schools, such as grade schools and high schools.
•  Tuition and fees paid to a school which does not fit into any of the categories listed on the previous page. Example:            The 
        subtraction does not apply to a fee paid to a retail craft store to attend a session on flower arranging.
•  Amounts paid as separate charges for other items such as room and board, athletic tickets, or other costs which are not tuition 
        and mandatory student fees.
•  Tuition  and  fees  paid  with  certain  tax-free  funds.         Example:                        You  cannot  claim  a  subtraction  for  tuition  paid  with  tax-free 
        scholarships or Pell grants or for amounts paid or reimbursed to you by your employer.
•  Tuition and fees if the source of the payments is an amount withdrawn from a Wisconsin state-sponsored college savings 
        program or college tuition and expenses program (Edvest or Tomorrow’s Scholar). This limitation applies only if the owner 
        of  the  account  or  other  person  who  contributed  to  the  account  (for  example,  grandparent,  aunt,  uncle,  or  other  person) 
        previously claimed a subtraction for contributions to the Edvest or Tomorrow’s Scholar program.

The subtraction is limited if your federal adjusted gross income exceeds certain amounts. Your federal adjusted gross income 
is the amount on line 3 of Form 1.

Determine your tuition and mandatory student fees subtraction as follows:
Single or Head of Household
•       If line 3 of Form 1 is $67,760 or less, you may subtract the amount paid for tuition and mandatory student fees during 2024, 
        but not more than $7,333 per student (see note). Fill in the amount of your subtraction on line 8.
•  If  line  3  of  Form  1  is  more  than  $67,760  but  less  than  $81,320,  use  the  worksheet  below  to  figure  the  amount  of  your 
        subtraction.
•  If line 3 of Form 1 is $81,320 or more, you may not subtract any amount for tuition and fee expenses.
Married Filing Joint Return
•       If line 3 of Form 1 is $108,420 or less, you may subtract the amount paid for tuition and mandatory student fees during 2024, 
        but not more than $7,333 per student (see note). Fill in the amount of your subtraction on line 8.
•  If line 3 of Form 1 is more than $108,420 but less than $135,530, use the worksheet below to figure the amount of your 
        subtraction.
•  If line 3 of Form 1 is $135,530 or more, you may not subtract any amount for tuition and fee expenses.
Married Filing Separate Return
•       If line 3 of Form 1 is $54,210 or less, you may subtract the amount paid for tuition and mandatory student fees during 2024, 
        but not more than $7,333 per student (see note). Fill in the amount of your subtraction on line 8.
•  If  line  3  of  Form  1  is  more  than  $54,210  but  less  than  $67,760,  use  the  worksheet  below  to  figure  the  amount  of  your 
        subtraction.

•  If line 3 of Form 1 is $67,760 or more, you may not subtract any amount for tuition and fee expenses.
Note: Your subtraction cannot be more than the amount on line 5 of Form 1 less the amount on line 50 of Schedule SB without 
considering the subtraction for tuition expenses.

                                                              Tuition Expense Worksheet
                CAUTION Only certain taxpayers are required to complete this worksheet. See the instructions for your filing status.
    1.  Amount paid for tuition and mandatory student fees in 2024. Do not enter more than $7,333 per student    1.
    2.  Fill in the amount from line 3 of Form 1   ..............................  2.
    3.  Enter $67,760 ($108,420 if married filing joint return or $54,210 if married filing
          separate return)  ................................................                              3.
    4.  Subtract line 3 from line 2  .........................................  4.
    5.  Divide the amount on line 4 by 13,560 (27,110 if married filing joint return or 13,550 if married filing
          separate return). Fill in decimal amount  .................................................   5.             .
    6.  Multiply line 1 by the decimal amount on line 5 ............................................   6.
    7.  Subtract line 6 from line 1 ............................................................   7.
    8.  Fill in the amount from line 5 of Form 1 less the amount on line 50 of Schedule SB without considering
          the subtraction for tuition and fee expenses. If zero or less, enter 0 (zero) .......................   8.
    9.  Fill in the smaller of line 7 or 8. This is your subtraction for tuition and fee expense   ...............   9.

                                                                                                     - 5 -

 Line 9 – Private School Tuition
A subtraction may be claimed for tuition paid in the taxable year to send your dependent child to a private school. The maximum 
subtraction is $4,000 for an elementary pupil and $10,000 for a secondary pupil. Schedule PS, Private School Tuition, must be 
included with your Wisconsin income tax return.

Do not take a subtraction for amounts paid for private school tuition which were withdrawn from an Edvest or Tomorrow’s 
Scholar college savings account.

 Line 10 – Contributions to an Edvest or Tomorrow’s Scholar College Savings Account
You may be able to subtract the amount you contributed to a Wisconsin state-sponsored college savings account (Edvest or 
Tomorrow’s Scholar) if you are the owner of the account or were authorized by the owner of the account to make contributions 
to the account.

For amounts rolled over in 2024, from another state’s qualified sec. 529 plan to a Wisconsin college savings account, the 
subtraction applies to the amount of principal rolled over. It does not apply to any investment earnings in the account.

Complete Schedule CS, College Savings Accounts, to determine the amount of your subtraction. Include Schedule CS with 
your Schedule SB.

 Line 11 – Distributions of Certain Earnings from Wisconsin State-Sponsored College Tuition Programs
If you included earnings from a qualified college tuition program in your federal adjusted gross income, you may subtract that 
amount if the earnings were from a Wisconsin Edvest tuition unit account and you received a refund because the beneficiary 
completed the program in which he or she was enrolled and had not used all of the tuition units purchased or the beneficiary 
was awarded a scholarship, tuition waiver, or similar subsidy that could not be converted to cash.

 Line 12 – Military and Uniformed Services Retirement Benefits
You may subtract retirement payments received from:

(1) The  U.S.  military  retirement  system  (including  payments  from  the  Retired  Serviceman’s  Family  Protection  Plan  or  the 
    Survivor Benefit Plan). These retirement benefits are paid from the Defense Finance and Accounting Service.
(2)  The U.S. government that relate to service with the Coast Guard, the commissioned corps of the National Oceanic and 
    Atmospheric Administration, or the commissioned corps of the Public Health Service.
Your subtraction cannot be more than the amount of such retirement payments that you included in your federal income.    

 Line 13 – Local and State Retirement Benefits
You may subtract any payments received from the retirement systems listed below provided you meet one of the following 
requirements:

(1) You were retired from the system before January 1, 1964
(2)  You were a member of the system as of December 31, 1963, retiring at a later date and payments you receive are from an 
    account established before 1964
(3)  You are receiving payments from the system as the beneficiary of an individual who met either condition 1 or 2

Your subtraction cannot be more than the amount of such payments that you included in your federal income.
The specific retirement systems are:
Milwaukee City Employees, Milwaukee City Police Officers, Milwaukee Fire Fighters, Milwaukee Public School Teachers, 
Milwaukee County Employees, Milwaukee Sheriff, and Wisconsin State Teachers retirement systems.

 Do not subtract any of the following:
•  Payments received as a result of voluntary tax-sheltered annuity deposits in any of the retirement systems listed above.
•  Payments received from one of the retirement systems listed above if you first became a member after December 31, 1963. 
This applies even though pre-1964 military service may have been counted as creditable service in computing your retirement 
benefit.

                                                   - 6 -

Caution: Your retirement benefits may be subtracted only if they are based on qualified membership in one of the retirement 
systems listed on the previous page. Qualified membership is membership that began before January 1, 1964, as explained on 
the previous page. Any portion of your retirement benefit that is based on membership in other retirement systems (or based on 
employment that began after December 31, 1963) is taxable and may not be subtracted.

Example 1: You were a member of the Wisconsin State Teachers Retirement System as of December 31, 1963. You left 
teaching after 1963 and withdrew the allowable amount from your retirement account which closed the account. You later 
returned to teaching, and a new retirement account was then established for you. Retirement benefits from this new account 
(established after 1963) do not qualify for the exemption.

Example 2: You were employed as a teacher from 1960-65. During that time you were a member of the Wisconsin State 
Teachers Retirement System. From 1966 until retirement, you were employed by a state agency (not as a teacher). You were 
then a member of the Wisconsin Retirement System. You receive an annuity from the Department of Employee Trust Funds, 
and the annuity is based on employment in both retirement systems. Only the portion of the annuity that is due to the Wisconsin 
State Teachers Retirement System may be subtracted. You may use the following formula to figure the exempt amount that 
may be subtracted:

Years of creditable service in an exempt plan                                           Portion of annuity which
                                                  x Annuity included in federal income =
    Total years of creditable service                                                   may be subtracted

 You may have received separate Forms 1099-R for the taxable and exempt portions of your annuity. In this case, you may use 
the Form 1099-R information instead of the above formula.

 Line 14 – Federal Retirement Benefits
You may subtract payments received from the U.S. Civil Service Retirement System provided you meet one of the following 
requirements:
(1) You were retired from the system before January 1, 1964
(2)  You were a member of the system as of December 31, 1963, retiring at a later date and payments you receive are from an 
    account established before 1964
(3)  You are receiving payments from the system as the beneficiary of an individual who met either condition 1 or 2

See the preceding section, “Local and State Retirement Benefits” for further information. The limitations and examples that 
apply to local and state retirement benefits also apply to federal retirement benefits.

These retirement benefits are paid from the U.S. Office of Personnel Management. Payments from the federal Thrift Savings 
Plan do not qualify for the subtraction.

 Line 15 – Railroad Retirement Benefits, Railroad Unemployment Insurance, and Sickness Benefits
Wisconsin  does  not  tax  amounts  received  from  the  U.S.  Railroad  Retirement  Board. You  may  subtract  railroad  retirement 
benefits included on line 5b of your federal Form 1040 or 1040-SR.

 Line 16 – Retirement Income Subtraction
You may subtract up to $5,000 of certain retirement income if:
•  You (or your spouse if married filing a joint return) were 65 years of age or older on December 31, 2024, and
•  Your federal adjusted gross income (line 3 of Form 1) is less than $15,000 ($30,000 if married filing a joint return). If married 
filing a separate return, the sum of both spouses’ federal adjusted gross income must be less than $30,000.

If you meet these qualifications, complete the following Retirement Income Subtraction Worksheet to determine the amount of 
your subtraction. Fill in the amount from line 6 of the worksheet on line 16. If married filing a joint return, add the amounts in Col. 
(A) and Col. (B) and fill in the total on line 16.

                                                          - 7 -

                                           Retirement Income Subtraction Worksheet
 If married filing a joint return, fill in       (Keep for your records)                        (A)               (B)
 each spouse’s information separately                                                           Yourself Your Spouse
  1. Taxable IRA distributions from line 4b of your federal Form 1040 or 1040-SR ...  1.
  2. Taxable pension and annuity income from a qualified retirement plan included
      on line 5b of federal Form 1040 or 1040-SR  ...........................  2.
  3. Add lines 1 and 2 ................................................               3.
  4. Nontaxable retirement benefits (This is the total amount subtracted on
     lines 12, 13, 14, and 15) ...........................................  4.
  5. Subtract line 4 from line 3   ..........................................   5. 
  6.  Complete line 6 as follows. This is your subtraction for retirement income. 
     • If you were 65 years of age or older on December 31, 2024, fill in on line 6,
       Col (A), the smaller of line 5, Col. (A), or $5,000. Enter 0 (zero) if you were
       not age 65 or older.
     •  If married filing a joint return and your spouse was 65 years of age or older
       on December 31, 2024, fill in on line 6, Col. (B), the smaller of line 5, Col.
       (B), or $5,000. Enter 0 (zero) if your spouse was not age 65 or older    .....  6.       

 Line 17 – Reserved for future use

 Line 18 – U.S. Armed Forces Active Duty Pay
If you were a member of the U.S. Armed Forces on active duty, you may subtract the amount of basic, special, and incentive pay 
received from the federal government under 37 USC chapters 3 and 5 for active duty that was included in federal adjusted gross 
income. A member of the U.S. Armed Forces includes all regular and reserve components subject to the following jurisdictions, 
including the Coast Guard and commissioned officers and personnel below the grade of commissioned officers in these forces:
•  Secretary of Defense
•  Secretary of the Army
•  Secretary of the Navy
•  Secretary of the Air Force
Note: This includes any basic, special, and incentive pay received by Reserve or National Guard members called in to active 
federal service under 10 USC 12302(a), 10 USC 12304, or 10 USC 12304(b), or special state service under 32 USC 502(f).
Caution: Do not include the following amounts in your subtraction on line 18:
•  Basic pay for inactive duty training.
•  Basic housing allowance, or any other nontaxable income reported on your leave and earnings statements.

     You are not required to send in a copy of your leave and earnings statements; however, including copies with your Wisconsin 
return, and a worksheet showing how you calculated the amount of your subtraction, may speed up the processing of your 
return.

For additional information, see Publication 128, Wisconsin Tax Information for Military Personnel and Veterans.

 Line 19 – Combat Zone Related Death
If  you  are  filing  a  return  for  an  individual  who  was  on  active  duty  in  the  U.S. Armed  Forces,  who  died  in  2024  while  on 
active  duty,  and  the  death  occurred  while  they  were  serving  in  a  combat  zone  or  as  a  result  of  wounds,  disease,  or 
injury  incurred  while  serving  in  the  combat  zone,  you  may  subtract  all  income  received  by  the  individual  during  the  year 
of  death. Attach  the  certification  made  by  the  Department  of  Defense,  DD  Form  1300, Report of Casualty,  to  the  return.  
Note: For persons who died in 2024 as a result of service in a combat zone, the income subtraction also applies for 2023 if the 
service member did not previously file a 2023 income tax return.

     “Combat zone” does not include the Sinai Peninsula of Egypt.

 Line 20 – Adoption Expenses
If you adopted a child for whom a final order of adoption was entered by a court in any state, or upon registration of a foreign 
adoption, during 2024, you may subtract up to $5,000 of the amount you paid for adoption fees, court costs, and legal fees 
relating to the adoption. You may include amounts paid during 2022, 2023, and 2024. Don’t count amounts reimbursed under 
any adoption assistance program. If you adopt more than one child during the year, you may deduct up to $5,000 of adoption 
expenses for each child.
                                                 - 8 -

 Line 21 – Contributions to ABLE Accounts
A subtraction may be claimed for the amount you contributed to a qualified ABLE (Achieving a Better Life Experience) account 
during the year. The owner (beneficiary) of an ABLE account must be a disabled person. Distributions from the account must 
be used to pay the qualified disability expenses of the disabled person. The maximum subtraction that may be claimed by all 
contributors to the account for 2024 is $18,000.
Caution: An ABLE account must refund any contributions it receives after reaching the maximum contribution limits for the taxable 
year. Such refunds must be made by the due date (including extensions) for the federal income tax return of the designated 
beneficiary for the taxable year in which the excess contribution was made. Your subtraction is limited to the amount contributed 
during 2024 less any amounts later refunded to you, excluding any portion of the refund that is considered earnings.
Note: The subtraction does not apply to rollovers or transfers from another account.

An additional amount of contributions is allowed as a subtraction by a designated beneficiary equal to the lesser of the following:
1. The designated beneficiary’s compensation (included in gross income for the taxable year)
2. The federal poverty line for a one-person household for the preceding calendar year

This increase is only allowed if the designated beneficiary is an employee and no contributions have been made to a defined 
contribution plan, annuity contract, or deferred compensation plan. Use the following worksheet to figure your total subtraction.

            Worksheet for Contributions by a Designated Beneficiary to an ABLE Account
    1.  Amount you contributed to the ABLE account during 2024   .................................   1.                     .00
    2.  If line 1 is less than $18,000, do not complete the rest of this worksheet. Enter the amount on
     line 1 as your subtraction on line 21. Otherwise, continue to step 3 ...........................   2.          18,000.00
    3.  Subtract line 2 from line 1 .......................................    3.                      .00
    4.  The designated beneficiary's compensation   ........................    4.                     .00
    5.  Applicable federal poverty line for a one person household .............    5. 14,580.00
    6.  Enter the smaller amount of line 3, 4, or 5  ..............................................  6.                     .00
    7.  Add line 2 and line 6. This is your subtraction for contributions to an ABLE account ..............  7.             .00

 Line 22 – Disability Income Exclusion
If you are retired on permanent and total disability and have included your disability income on line 3 of Form 1, you may be 
able to subtract up to $5,200 of your disability income. You must meet ALL these tests:
•  You did not reach mandatory retirement age before January 1, 2024
•  You were under age 65 on December 31, 2024
•  You were permanently and totally disabled on one of the following dates:
  a.  The date you retired
  b.  January 1, 1976, or January 1, 1977, if you retired before January 1, 1977, on disability or under circumstances which
      entitled you to retire on disability
•  If you were married at the end of 2024, you must file a joint return
•  You did not in any year prior to 1984 choose to treat your disability income as a pension instead of taking the exclusion
•  Your federal adjusted gross income (for Wisconsin) is less than $20,200 ($25,400 if married and both spouses are eligible)
Compute  your  exclusion  on  Wisconsin   Schedule  2440W, Disability Income Exclusion.  Include  Schedule  2440W  with  your 
Schedule SB.

 Line 23 – Wisconsin Net Operating Loss Deduction
If you had a net operating loss (NOL) in an earlier year to carry forward to 2024, include the allowable amount on line 23. 
Include Schedules NOL1, NOL2, and NOL3, as applicable. See the instructions for these schedules and             Publication 120, 
Net Operating Losses for Individuals, Estates, and Trusts, for details on computing the NOL and the allowable subtraction.  

   A net operating loss carryforward may not be used unless the incurred loss was computed on a return that was filed within 
4 years of the unextended due date for that return.

 Line 24 – Farm Loss Carryover
If you were not actively engaged in farming and were subject to farm loss limitations on your 2007-2013 Wisconsin income 
tax returns, you may be able to claim a subtraction for all or a portion of the farm loss disallowed in those years. Farm losses 
disallowed as a deduction may be carried forward for 15 years to the extent that the farm losses are not offset against farm 
                                                           - 9 -

income of any year between the loss year and the year for which the carryover is claimed. The amount of carryover that can be 
subtracted is the lesser of (1) the farm loss carryover or (2) the net profits and net gains from the sale or exchange of capital or 
business assets in the current year from the same farming business or portion of that business to which the limits on deductible 
farm losses applied in the loss year.
Example: You had a farm loss carryover from 2013 of $30,000. You claimed a subtraction for $9,000 of the carryover on your 
2014 through 2023 returns. For 2024 you report a net loss of $2,000 on Schedule F and a net gain of $6,000 from the sale of 
farm equipment on Form 4797. The gain and loss are from the same farming business to which the limitation applied in the loss 
year. You may subtract $6,000 as a farm loss carryover on line 24.

 Line 25 – Native Americans
Certain income (for example, wages) earned by a Native American who both lives and works on their tribal reservation is not 
subject to Wisconsin income tax and may be subtracted. See Publication 405, Wisconsin Taxation Related to Native Americans, 
for more information.

 Line 26 – Sale of Business Assets or Assets Used in Farming to a Related Person
You may subtract the taxable portion of gain you realize from the sale or disposition to a related person of business assets or 
assets used in farming if the following conditions apply:
•  The related person is your child, grandchild, great-grandchild, parent, brother or sister, nephew or niece, grandparent, great- 
grandparent, or aunt or uncle. The person may be related to you by blood, marriage, or adoption.
•  The asset was held by you for more than 12 months.
•  The gain is treated as capital gain for federal tax purposes. Amounts treated as ordinary income do not qualify.

Gain on the sale or disposition of shares in a corporation or trust qualifies only if:
•  The number of shareholders or beneficiaries does not exceed 15. Lineal ancestors and descendants and aunts, uncles, and 
1st cousins thereof count collectively as one shareholder or beneficiary. This collective authorization may not be used for 
more than one family in a single corporation or trust.
•  The corporation does not have more than two classes of shares.
•  All shareholders or beneficiaries, other than any estate, are natural persons.
•  The corporation or trust is engaged in farming.

Gain on the sale or disposition of an ownership interest in a partnership or limited liability company (LLC) treated as a partnership 
qualifies only if:
•  The number of partners or members does not exceed 15.
•  All partners or members are natural persons.
•  The partnership or LLC is engaged in farming.

“Farming” means the cultivation of land or the raising or harvesting of any agricultural or horticultural commodity including the 
raising, shearing, feeding, caring for, training, and management of animals. Trees (other than trees bearing fruit or nuts) are not 
treated as an agricultural or horticultural commodity (trees may qualify as a business asset).

“Business assets” are assets used in an activity carried on for a livelihood or in good faith to make a profit. The facts and 
circumstances of each case determine whether or not an activity is a business. Regularity of activities and transactions and the 
production of income are important elements. You do not need to actually make a profit to be in a business as long as you have 
a profit motive. You do need, however, to make ongoing efforts to further the interests of your business.

“Business assets” include assets used in the performance of services by an individual as an employee and assets used in the 
conduct of a trade or business by an individual who is self-employed.

“Business assets” do not include investment and rental property (for example, stocks, bonds, and residential rental property) 
unless you are subject to federal self-employment tax on the earnings from the activity. (Note: Rental property which is a farm 
or farm equipment may qualify as an asset “used in farming.”)

Computing the subtraction You must first complete Wisconsin Schedule WD. The amount of gain that may be subtracted is 
determined after netting all capital gains and losses on Schedule WD.
Complete the following worksheet to figure the amount of your subtraction.

                                                         - 10 -

                                            Worksheet for Gain on Sale of Assets to Related Person
   1.  Amount from line 19 of Schedule WD. If 0 (zero), do not complete the rest of this worksheet. You do 
      not qualify for the subtraction  .......................................................... 1.
   2.  Long-term capital gain on the sale of assets to related person  ............. 2.
   3.  Total long-term capital gain included on line 17 of Schedule WD  ........... 3.
   4.  Divide line 2 by line 3.  Carry decimal to four places  ...................................... 4.                                                     .
   5.  Multiply line 1 by line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
   6.  If the amount on line 2 is gain from the sale of an asset used in farming, multiply line 5 by .40 (40%)
    and  fill in result.   If the*amount on line 2 is gain from the sale of a business asset or gain from the
      sale of qualified shares or ownership interest, multiply line 5 by .70 (70%) and fill in the result. This is
      your subtraction for gain on the sale of assets to a related person. Enter this amount on line 26  .... 6.

* A sale to a relative of qualified shares in a corporation or ownership interest in a partnership or LLC that is engaged in farm-
ing does not qualify for the additional 30% exclusion for the sale of assets used in farming on Wisconsin Schedule WD. Thus, 
the amount that may be subtracted as gain on the sale of qualifying shares of stock or ownership interest is 70% of the gain.

 Line 27 – Recoveries of Federal Itemized Deductions
Fill in any amount included as income on your federal tax return that is a recovery of a federal itemized deduction from a prior 
year for which you did not receive a Wisconsin tax benefit.

Example: You claimed an itemized deduction on your 2023 federal tax return for a casualty loss of $2,000. You could not 
claim the casualty loss for the itemized deduction credit on your 2023 Wisconsin income tax return. During 2024 you received 
a reimbursement of $1,000 from your insurance company for part of the casualty loss. The $1,000 reimbursement is included 
on your 2024 federal tax return as a recovery of an amount previously claimed as an itemized deduction. Because you did not 
claim the casualty loss for the itemized deduction credit for Wisconsin for 2023, the $1,000 is not taxable to Wisconsin for 2024. 
Fill in the $1,000 recovery on line 27.

 Line 28 – Repayment of Income Previously Taxed
If you had to repay during 2024, an amount that you included in your Wisconsin income in an earlier year, you may be able to 
subtract the amount repaid. A subtraction may be claimed only for repayments that are allowed as a miscellaneous itemized 
deduction on your federal Schedule A (Form 1040).

If  you  did  not  itemize  deductions  for  federal  tax  purposes,  use  the  amounts  that  would  be  deductible  if  you  had  itemized 
deductions. To determine the amounts to use, complete a federal Schedule A (Form 1040). Write “Wisconsin” at the top of this 
Schedule A and include it with your Schedule SB.

    Miscellaneous itemized deductions subject to the 2% of adjusted gross income limit are no longer allowed as itemized 
deductions on federal Schedule A (Form 1040) according to Public Law 115-97 for taxable years 2018 through 2025. These 
amounts are also no longer allowable as a deduction on federal Schedule A (Form 1040) for Wisconsin purposes. Therefore, a 
subtraction may not be claimed on line 28 of your 2024 Schedule SB.
Caution:      Only amounts previously included in Wisconsin income may be claimed as a subtraction.
If the amount repaid was over $3,000, you may be able to subtract the repayment as described above or take a tax credit. See 
the Form 1 instructions for line 32.

 Line 31 – Human Organ Donation
If you, your spouse, or a person who is claimed as a dependent on your federal income tax return donates one or more of their 
human organs to another person for human organ transplantation, you may subtract up to $10,000 of unreimbursed expenses 
related to the organ donation. “Human organ” means all or part of a liver, pancreas, kidney, intestine, lung, or bone marrow. The 
subtraction may be claimed only in the taxable year in which the transplantation occurs, and may be claimed only once. Up to
$10,000 of the following unreimbursed expenses may be claimed:
•  Travel expenses                                              •  Lodging expenses                          •  Lost wages

 Line 32 – Expenses Paid to Related Entities
If you were required to make an addition modification on line 8 of Schedule AD for interest, rental expenses, intangible expenses, 
or management fees paid to a related entity, see Schedule RT,                          Wisconsin Related Entity Expenses Disclosure Statement                 , to 

                                                                              - 11 -

find out if you qualify for a subtraction. Although you must meet one of the conditions in Schedule RT, Part II, to qualify for a 
subtraction, you do not need to include Schedule RT with your return unless the total deduction for all of the expenses reduces 
Wisconsin taxable income by more than $100,000. If enclosing Schedule RT, also enter “16” in the Special Conditions box on 
page 1 of Form 1.

If Schedule RT is required, you must file it with your Wisconsin income tax return no later than the extended due date of the 
return. If you file your return before the extended due date and forget to include the Schedule RT, you may file an amended 
return until the extended due date to include the Schedule RT. For pass-through entities, such as tax-option (S) corporations, 
partnerships, limited liability companies treated as partnerships, estates, and trusts, the pass-through entity is responsible 
for filing Schedule RT where required. The shareholder, partner, member, or beneficiary doesn’t have to file Schedule RT for 
expenses that are passed through.

See sec. Tax 3.01(4)(a), Wis. Adm. Code, for rules relating to this subtraction.

 Line 33 – Income from a Related Entity
If you reported income from a related entity that was not able to claim a deduction for the related expenses, you may claim a 
subtraction for the amount of income reported on your return. In order to claim this subtraction, Schedule RT-1, Statement of 
Disallowed Related Entity Expenses, must be completed and included with your Wisconsin income tax return. Both the payer 
and payee must complete the appropriate section of the same Schedule RT-1.

See sec. Tax 3.01(4)(a), Wis. Adm. Code, for rules relating to this subtraction.

 Line 34 – Legislator’s Per Diem
If you were a Wisconsin legislator, you may subtract the amount of per diem reimbursement that is included as wages on your 
federal Form 1040 or 1040-SR. This generally applies to a legislator with a residence 50 miles or less from the state capitol.

 Line 35 – Sales of Certain Insurance Policies
To the extent included in federal adjusted gross income, the original policy holder or original certificate holder who has a catastrophic 
or life-threatening illness or condition may fill in the amount of income received from the sale of a life insurance policy or certificate, 
or the sale of the death benefit under a life insurance policy or certificate, under a life settlement contract. “Catastrophic or life-
threatening illness or condition” includes AIDS and HIV infection.

 Line 36 – Physician or Psychiatrist Grant
To the extent included in federal adjusted gross income, any amount received by a physician or psychiatrist from the primary care 
and psychiatry shortage grant program under sec. 39.385, Wis. Stats., may be subtracted.

Line  37  – Olympic,  Paralympic,  and  Special  Olympic  Medals  and  United  States  Olympic  Committee  and  Special 
Olympic Board of Directors Prize Money
Persons who win medals at the Olympic and Paralympic Games generally exclude the value of such medals and the amount of 
prize money received from the U.S. Olympic Committee from federal income. Because the starting point for computing Wisconsin 
taxable income is federal adjusted gross income (FAGI), the amount that is excluded from federal income is automatically 
excluded from Wisconsin income and no additional subtraction is allowed for Wisconsin.
There are two situations where a Wisconsin subtraction may be claimed for the value of medals and any prize money. In these 
situations, the value of medals and any prize money would have been included in FAGI and a Wisconsin subtraction is allowed.            

•  Persons with FAGI over $1,000,000 ($500,000 if married filing a separate return) must include the value of medals and any 
prize money in federal income. Such persons may claim the Wisconsin subtraction for the value of medals and any prize 
money from the U.S. Olympic Committee.
•  Persons  who  participate  in  the  Special  Olympics  may  claim  a  subtraction  for  the  value  of  medals  and  any  prize  money 
received from the Special Olympics Board of Directors.

 Line 38 – AmeriCorps Education Awards
If you received an AmeriCorps education award in 2024 to pay for your qualified student loans or educational expenses or 
to participate in approved school-to-work programs, you may subtract the amount received on line 38 which was included in 
federal adjusted gross income on line 9 of federal Schedule 1 (Form 1040). Caution:  Do not include any amounts included on 
line 8 as a tuition and fee expense subtraction or amounts included on line 21 of federal Schedule 1 (Form 1040) as a student 
loan interest deduction.
                                                       - 12 -

 Line 39 – Differences in Federal and Wisconsin Basis of Assets
Subtractions may be necessary if there is a difference between the federal basis and the Wisconsin basis of your property. 
Subtractions are necessary if:
(1)  You acquired property in a taxable year beginning after December 31, 2013, which may be depreciated or amortized (such 
 as buildings and leaseholds), and the federal basis was less than the Wisconsin basis at the time you acquired the property.
(2)  You sold (or otherwise disposed of) property which may not be depreciated or amortized (such as land, stocks, and bonds) 
 in a taxable transaction, and your basis in the assets was less for federal purposes than for Wisconsin.
Compute the amount of any subtraction due to a difference in basis on Wisconsin Schedule T, Transitional Adjustments. Include 
the completed Schedule T with your Schedule SB.

Exception: Do not use line 39 for the following situations.
•  If the difference in basis is due to the difference in the federal and Wisconsin definition of the Internal Revenue Code (for 
 example,  Wisconsin  did  not  allow  bonus  depreciation  for  tax  year  2023),  use  Schedule  to  adjust  for  the  difference I in 
 depreciation for each year there is a difference in depreciation due to the difference in basis.
•  If the difference in basis is due to using a different federal election for Wisconsin, (for example, electing to claim a different 
 amount of sec. 179 expense), use Schedule  to adjustI for the difference in depreciation as a result of the difference in federal 
 and Wisconsin basis, or submit a pro forma federal return based on the election chosen for Wisconsin.
•  If you sold your interest in a partnership and any increases or decreases were made to the federal basis of your partnership 
 interest in taxable years prior to 1975, which resulted from partnership business or property located outside Wisconsin. (Prior 
 to 1975, Wisconsin did not tax income from business or property located outside Wisconsin.) Compute any adjustment due to a 
 difference in basis on Schedule T and net with other capital gains and losses on Wisconsin Schedule WD.

 Line 40 – Reserved for future use

 Line 41 – Differences in Federal and Wisconsin Reporting of Marital Property (Community) Income
If you are married filing a separate return or married filing as head of household or if you obtained a decree of divorce or 
separate maintenance during 2024, you may have to report a different amount of income on your Wisconsin Form 1 than on your 
federal Form 1040 or 1040-SR. Fill in on line 41 any amount which is taxable to your spouse rather than to you because of any 
difference in federal and state reporting of marital property (community) income. For further information, get Publication 109, Tax 
Information for Married Persons Filing Separate Returns and Persons Divorced in 2024. 

 Required Attachments for Subtractions Reported on Lines 42, 43, 46, 47, and 48
For  a  subtraction  reported  on  these  lines,  submit  a  copy  of  the  related  Schedule  2K-1,  3K-1,  or  5K-1  and  all  supplemental 
schedules by attaching them as PDF documents to your electronically filed return. If you cannot attach and submit the PDF 
documents with your e-filed return, you can upload the PDF documents through the department’s website using Form W-RA at 
https://tap.revenue.wi.gov/WRA/. If you cannot create PDF documents, you can mail the attachments with Form W-RA to the 
address listed on the form.

 Line 42 – Charitable Contributions from Tax-Option (S) Corporations
If you were a shareholder of a tax-option (S) corporation, you may elect to treat your charitable contributions reported on 
Schedule 5K-1, line 12a, as a subtraction modification instead of an itemized deduction for the Wisconsin itemized deduction 
credit. Your subtraction is limited to the amount actually deductible for federal purposes (as allowable under Wisconsin law) on 
federal Schedule A (Form 1040). Include a copy of Schedule 5K-1, as described in the preceding section’s instructions. Enter 
the name and Federal Employer Identification Number (FEIN)  of the tax-option (S) corporation on the line(s) provided. If you 
have more than 3 entries, attach a schedule listing each additional entry.

 If the tax-option (S) corporation elected to be taxed at the entity level, do not take a subtraction for charitable contributions 
reported on Schedule 5K-1. In addition, these amounts may not be used in the computation of the itemized deduction credit.

 Line 43 – Tax-Option (S) Corporation Adjustments
Fill in any of the following adjustments that apply to you:
(1)  If you were a shareholder of a tax-option (S) corporation which is required to file a Wisconsin franchise or income tax return, 
 you will receive a Wisconsin Schedule 5K-1 from the tax-option (S) corporation informing you of any adjustments to be 
 made for Wisconsin tax purposes.
                                                                            - 13 -

(2)  If you are a shareholder of a federal S corporation that elects not to be treated as a Wisconsin tax-option (S) corporation, 
    you must reverse all items of S corporation income included on your federal return. Caution: Do not reverse any item of S 
    corporation income reported on federal Schedule D. These items have already been removed from Wisconsin income when 
    you completed Wisconsin Schedule WD.
(3)  Instead of using tax-option (S) corporation items deductible on federal Schedule A (Form 1040) to compute the Wisconsin 
    itemized deduction credit, you may elect to treat these items as subtraction modifications. Your subtraction is limited to the 
    amount actually deductible for federal purposes (as allowable under Wisconsin Law) on federal Schedule A (Form 1040). 
    Note: If you are electing to treat charitable contributions as a subtraction modification, see the line 42 instructions.

Required Attachments: See the instructions earlier under the section titled Required Attachments for Subtraction Reported on 
Lines 42, 43, 46, 47, and 48.

Enter the name and FEIN of the tax-option (S) corporation on the line(s) provided. For example, if you have a $1,000 subtraction 
from tax-option (S) corporation A and a $5,000 subtraction from tax-option (S) corporation B, enter two separate subtractions 
on line 43 and enter the name and FEIN of tax-option (S) corporation A and tax-option (S) corporation B on the lines provided. 
If you have more than 3 entries, attach a schedule listing each additional entry.

See the instructions for Schedule AD, line 28, for making adjustments for additions.

For more information, get Publication 102, Wisconsin Tax Treatment of Tax-Option (S) Corporations and Their Shareholders. 

If an adjustment listed on Schedule 5K-1 is due to a difference between federal and Wisconsin law, such as bonus depreciation, 
this amount should be adjusted on Wisconsin Schedule I.

 Line 46 – Tax-Option (S) Corporation Entity Level Tax Election Adjustments
If you were a shareholder of a tax-option (S) corporation that elected to be taxed at the entity level, you must compute your 
subtraction modification due to the entity-level tax election as follows.  Note: If the tax-option (S) corporation made the election, 
the box will be checked on Schedule 5K-1, Part II, Item B, box 3.

1.  Complete Schedule   to modifyIyour federal adjusted gross income, using the Internal Revenue Code (IRC) in effect under 
    Wisconsin law, as if the election was not made. 
2.  Complete Schedule AD (line 28) to make any addition modifications as if the election was not made.
3.  Complete Schedule SB (line 43) to make any subtraction modifications as if the election was not made.
4.  For each tax-option (S) corporation, net all tax-option (S) corporation items included in your Wisconsin income (including 
    the adjustments made on Schedules  , AD,Iand SB above) and remove the tax-option (S) corporation items by entering the 
    net amount as either an addition to income on Schedule AD, line 29, or a subtraction from income on Schedule SB, line 46. 
    You must enter the FEIN for each tax-option (S) corporation for which you are removing items from your Wisconsin income.  
    See example below.

Caution: Do not reverse any item of tax-option (S) corporation gain or loss reported on federal Schedule D. These items have 
already been removed from Wisconsin income when you completed Wisconsin Schedule WD. See the Schedule WD instructions        
for more information.

Caution:  If you are a shareholder of a tax-option (S) corporation that did not make the entity-level election but it directly or 
indirectly owned another pass-through entity (lower tier) that made the election, you need to make a similar adjustment to your 
income, except only for your share of that lower tier’s items. Box 4 of Part II, Item B, will be checked on the Schedule 5K-1 if a lower 
tier elected to pay the entity level tax. The tax-option (S) corporation is required to provide you a supplemental statement detailing 
your share of income, gain, loss, and deduction that have been taxed by a lower-tier entity.

Required Attachments: See the instructions earlier under the section titled Required Attachments for Subtractions Reported 
on Lines 42, 43, 46, 47, and 48.

For more information, see Publication 102, Wisconsin Tax Treatment of Tax-Option (S) Corporations and Their Shareholders. 

Example: Shareholder A was a Wisconsin resident for the entire year in 2024 and owns 50 percent of Tax-option (S) Corporation. 
Shareholder A’s only sources of income for 2024 are $15,000 of wages and $100,000 of federal ordinary business income from 
the tax-option (S) corporation. Tax-option (S) corporation makes an election under sec. 71.365(4m)(a), Wis. Stats., to pay tax 
at the entity level for 2024.

                                                               - 14 -

Tax-option (S) Corporation’s $100,000 of federal ordinary business income for 2024 has the following Wisconsin differences:

•  $10,000 of additional Wisconsin depreciation expense because of a different depreciable basis of an asset determined under 
    the IRC in effect for Wisconsin purposes
•  $5,000 of Wisconsin tax paid by the tax-option (S) corporation with its 2023 Form 5S deducted on the 2024 federal Form 1120-S

Shareholder A must file the following forms:
•   Schedule I to reduce federal adjusted gross income by $10,000 of additional depreciation
•   Schedule AD, line 28, to report the addition modification of $5,000 relating to the tax paid to Wisconsin with the 2023 Form 5S 
    and deducted on the 2024 federal Form 1120-S
•   Schedule SB, line 46, to report a $95,000 subtraction modification for Wisconsin income taxed at the entity level of the tax-
    option (S) corporation

Computation of the $95,000 subtraction from Wisconsin income reported by the tax-option (S) corporation 
                                                Description                                                                 Amount
  Federal ordinary business income from the tax-option (S) corporation                                                      $100,000
  Schedule I depreciation difference                                                                                        ($10,000)
  Schedule AD (line 28) - addition modification relating to tax paid to Wisconsin and deducted on federal                   $5,000
  Form 1120-S
  Schedule SB (line 46) - subtraction modification for Wisconsin income reported by the tax-option                          $95,000
  (S) corporation

 Line 47 – Partnership,  Limited Liability, Trust, or Estate Adjustments
If you were a partner or member of a partnership or limited liability company (LLC) treated as a partnership, or you received 
income from an estate or trust, you will receive a statement from the partnership, LLC, trust, or estate notifying you of any 
additions or subtractions which you should make on your return. Fill in the amount of any such subtractions on line 47. See the 
instructions for Schedule AD, line 30, for making adjustments for additions.

Required Attachments: See the instructions earlier under the section titled Required Attachments for Subtractions Reported 
on Lines 42, 43, 46, 47, and 48.

Enter  the  name  and  FEIN  of  the  partnership  on  the  line(s)  provided.  For  example,  if  you  have  a  $1,000  subtraction  from 
partnership A and a $5,000 subtraction from partnership B, enter two separate subtractions on line 47 and enter the name and 
FEIN of partnership A and partnership B on the lines provided. If you have more than 3 entries, attach a schedule listing each 
additional entry.

    If an adjustment listed on Schedule 2K-1 or 3K-1 is due to a difference between federal and Wisconsin law, such as bonus 
depreciation, this amount should be adjusted on Wisconsin Schedule  .       I

 Line 48 – Partnership Entity Level Tax Election Adjustments
If you were a partner or member of a partnership or LLC treated as a partnership that elected to be taxed at the entity level, you 
must compute your subtraction modification due to the entity-level tax election as follows.           Note: If the partnership made the 
election, the box will be checked on Schedule 3K-1, Part C, box 3.

1.  Complete Schedule   to modifyIyour federal adjusted gross income, using the Internal Revenue Code (IRC) in effect under 
    Wisconsin law, as if the election was not made. 
2.  Complete Schedule AD (line 30) to make any addition modifications as if the election was not made.
3.  Complete Schedule SB (line 47) to make any subtraction modifications as if the election was not made.
4.  For each partnership, net all partnership items included in your Wisconsin income (including the adjustments made on 
    Schedules I, AD, and SB above) and remove the partnership items by entering the net amount as either an addition to 
    income on Schedule AD, line 31, or a subtraction from income on Schedule SB, line 48. You must enter the FEIN for each 
    partnership for which you are removing items from your Wisconsin income. See example below.

                                                              - 15 -

Caution: Do not reverse any item of partnership gain or loss reported on federal Schedule D. These items have already been 
removed from Wisconsin income when you completed Wisconsin Schedule WD. See the Schedule WD instructions for more 
information.

Caution:  If you are a partner of a partnership that did not make the entity-level tax election but it directly or indirectly owned 
another pass-through entity (lower tier) that made the election, you need to make a similar adjustment to your income, except only 
for your share of that lower tier’s items. Box 4 of Part C on Schedule 3K-1 will be checked if a lower tier elected to pay the entity 
level tax. The partnership is required to provide you a supplemental statement detailing your share of income, gain, loss, and 
deduction that have been taxed by a lower-tier entity. Note: This also applies to beneficiaries of an estate or trust that directly or 
indirectly owned a tax-option (S) corporation or partnership that elected to pay the entity level tax. In this instance, Box D of Part 
II on the Schedule 2K-1 will be checked.

Required Attachments: See the instructions earlier under the section titled Required Attachments for Subtractions Reported 
on Lines 42, 43, 46, 47, and 48.

Example: Partner A was a Wisconsin resident for the entire year in 2024 and owns 50 percent of Partnership. Partner A’s only 
sources of income for 2024 are $15,000 of wages and $100,000 of federal ordinary business income from the partnership. 
Partnership makes an election under sec. 71.21(6)(a), Wis. Stats., to pay tax at the entity level for 2024.

Partnership’s $100,000 of federal ordinary business income for 2024 has the following Wisconsin differences:
•  $10,000 of additional Wisconsin depreciation expense because of a different depreciable basis of an asset determined under 
  the IRC in effect for Wisconsin purposes
•  $5,000 of Wisconsin tax paid by the partnership with its 2023 Form 3 deducted on the 2024 federal Form 1065

Partner A must file the following forms:
• Schedule I to reduce federal adjusted gross income by $10,000 of additional depreciation
• Schedule AD, line 30, to report the addition modification of $5,000 relating to the tax paid to Wisconsin with the 2023 Form 3 
  and deducted on the 2024 federal Form 1065
• Schedule SB, line 48, to report a $95,000 subtraction modification for Wisconsin income taxed at the entity level of the partnership

Computation of the $95,000 subtraction from Wisconsin income reported by the partnership

                                          Description                                                       Amount
  Federal ordinary business income from the partnership                                                     $100,000

  Schedule I depreciation difference                                                                        ($10,000)
  Schedule AD (line 30) - addition modification relating to tax paid to Wisconsin and deducted on federal 
                                                                                                              $5,000
  Form 1065
  Schedule SB (line 48) - subtraction modification for Wisconsin income reported by the partnership           $95,000

 Line 49 – Other Subtractions from Income
You may subtract any amounts not taxable by Wisconsin (less related expenses except those expenses which are used to 
calculate the Wisconsin itemized deduction credit) which have been included as income on your federal tax return or excluded 
from federal deductions and not included on lines 1 through 48 above. Write a brief description of the subtraction on the line 
provided.

Example: Wisconsin  doesn’t  tax  certain  relocation  assistance  payments  received  by  persons  displaced  by  condemnation, 
subject to the conditions in sec. 32.19, Wis. Stats.

Investment in a Wisconsin Qualified Opportunity Fund (QOF)
You may qualify for a subtraction modification for an investment in a Wisconsin QOF under sec. 71.05(25m), Wis. Stats., if all of 
the following conditions are met:

•  In a previous year, you deferred paying tax on a capital gain by investing in a Wisconsin QOF.
•  For the year in which you invested in the Wisconsin QOF, the Wisconsin QOF properly filed Wisconsin      Form WQOF and 
  provided a copy to you. Exception: Form WQOF is not required for taxable years beginning prior to January 1, 2020.
•  You held the investment in the Wisconsin QOF for at least 5 years.
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•  For taxable year 2024, you qualify for the federal exclusion for investment in a qualified opportunity zone.
•  You are not excluding or deferring the gain on Schedule QI or Schedule CG under the qualified Wisconsin business program

If the above conditions are met, you may use the following worksheet to calculate your subtraction.

                                              Worksheet - Wisconsin QOF Subtraction
   1.  If the investment in the WI QOF was held for at least 5 years but less than 7 years, enter 10%.  
    If the investment in the WI QOF was held for 7 years or more, enter 15%   ....................... 1.
   2.  Amount of deferred gains from the investment in a WI QOF  ................................ 2.
   3.  Multiply line 2 by line 1. This is the amount of the subtraction to report on Schedule SB, line 49.  
    Use a description similar to “Wisconsin QOF subtraction”   ................................. 3.

Caution:
•  If you are a partner in a partnership or a shareholder in a tax-option (S) corporation, do not include a “Wisconsin QOF subtraction” 
  from Schedule 3K-1, Part V, line 15, or Schedule 5K-1, Part IV, line 19, in the worksheet above. Amounts shown on Schedules 
  3K-1 or 5K-1 should be reported on the appropriate line(s) of Schedule SB with other items of income, gain, loss, or deduction, 
  from the partnership or tax-option (S) corporation. 

•  Do not use this subtraction when using a different federal election for Wisconsin and federal tax purposes. Instead, complete a 
  pro forma federal return using the election chosen for Wisconsin or adjust using Schedule  The federalI.   adjusted gross income 
  from this pro forma federal return or from Schedule  is computedI on line 3 of Form 1. If completing a pro forma federal return, 
  attach the pro forma federal return to your Wisconsin return instead of the return sent to the IRS.

 •  Do not use this subtraction for wages which are taxable in another state as well as Wisconsin. Instead, include these wages in 
  Wisconsin income and see the Form 1 instructions regarding the credit for net tax paid to another state.

 Additional Information
For more information, you may:

Call:  (608) 266-2486
Email: DORIncome@wisconsin.gov
Write:  Mail Stop 5-77
       Wisconsin Department of Revenue
       PO Box 8949
       Madison WI 53708-8949

                                                       Applicable Laws and Rules
  This document provides statements or interpretations of the following laws and regulations enacted as of October 11, 2024: 
  ch. 71, Wis. Stats. and sec. Tax 3.01, Wis. Adm. Code

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