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Tax Incentives: Wisconsin Manufacturing and Agriculture

With Wisconsin’s economy being heavily dependent on the success and growth of two main industries, manufacturing and agriculture, the state has implemented several tax incentives aimed at benefiting these industries. Implemented in 2013, the Manufacturing and Agriculture Credit is one of these new tax incentives and is available to most entities that are involved in manufacturing or agricultural activities located in Wisconsin.

To utilize this credit, the company’s property must be classified for property taxes as manufacturing or agricultural on January 1 of the tax year that the credit is claimed and applies to businesses that own or rent real and personal property in Wisconsin. If the business’ property is not classified as manufacturing or agricultural for property tax purposes, the application for a change in classification can be filed as late as March 1st of the year the credit is taken.

The credit is calculated using the applicable rate multiplied by the lesser of the following amounts:

  • Qualified production activities income that is derived from the property assessed for Wisconsin property tax purposes as manufacturing or agriculture property;
  • The company’s income that is apportioned to the state;
  • The company’s income that is determined to be taxable to Wisconsin under Wisconsin combined reporting rules.

The credit will be phased in over four years and significantly reduces the tax on manufacturing and agriculture entities. The credit will be phased in over the following periods and rates:

  • 875 percent for tax years beginning after December 31, 2012, and before January 1, 2014;
  • 75 percent for tax years beginning after December 31, 2013, and before January 1, 2015;
  • 526 percent for tax years beginning after December 31, 2014, and before January 1, 2016;
  • 5 percent for tax years beginning after December 31, 2015, and thereafter

This credit can be a significant tax incentive for manufacturers and agricultural businesses in Wisconsin.

If you think you may qualify for this credit, please contact your tax consultant at Vrakas CPAs + Advisors.