Rental Property Taxes in Wisconsin (2026 Guide)
Wisconsin assesses every property at full market value with no owner-occupied discount, so a rental is taxed on the same base as a home next door — but it still loses the Lottery and Gaming Credit, which only homeowners get. Layer on a graduated income tax topping out at 7.65%, a bonus-depreciation add-back, and a partial break on long-term gains, and here is what Wisconsin landlords need for 2026.
In This Guide
1. Property Tax and the Credits Rentals Lose
Wisconsin assesses all real property at full (fair-market) value under the same method (Wis. Stat. 70.32) — there is no lower owner-occupied assessment ratio like some states use, so a rental and an identical owner-occupied home start from the same taxable base. Net of state credits, the statewide effective property-tax rate has run roughly 1.5–1.7% in recent years (WI Legislative Fiscal Bureau).
The catch for landlords is on the credit side — some property-tax credits are reserved for owner-occupants:
- Lottery & Gaming Credit — rentals do NOT qualify. It applies only to a dwelling used as the owner’s primary residence on the January 1 certification date; DOR states it cannot be claimed on rental units (Wis. Stat. 79.10(9)(bm)).
- First Dollar Credit — rentals DO qualify. Every taxable parcel with a real-property improvement gets it, with no primary-residence requirement (Wis. Stat. 79.10(5m)).
- School Levy Tax Credit — rentals DO qualify. It is applied to every taxable property in proportion to assessed value (Wis. Stat. 79.10(4)).
Because the Lottery and Gaming Credit is homeowner-only, an owner-occupied home and your identical rental down the street can carry different net tax bills even at the same assessed value — the rental pays a bit more. Budget for the rental losing that credit.
2. Income Tax (Graduated, Top 7.65%)
Wisconsin has a graduated income tax with 2026 rates of 3.50% / 4.40% / 5.30% / 7.65%. Net rental income flows onto your Wisconsin return and is taxed at these bracketed rates, with the top marginal rate at 7.65%. SheltrIQ’s engine computes the exact bracketed liability for your income.
3. The 30% Long-Term Capital-Gains Exclusion
Wisconsin lets individuals exclude 30% of net long-term capital gain on assets held more than one year (Wis. Stat. 71.05(6)(b)9.). On the capital-gain portion of a rental sale held over a year, only 70% is taxed, which softens the top 7.65% rate.
Important limit for landlords: the exclusion does NOT cover gain "treated as ordinary income for federal income tax purposes because of the recapture of depreciation." So your Section 1245 depreciation recapture is fully taxed by Wisconsin at ordinary rates — the 30% break applies only to the genuine long-term capital-gain layer, not to recaptured depreciation.
4. Bonus Depreciation Add-Back
Wisconsin does not conform to federal bonus depreciation (§168(k)). For depreciation, Wisconsin defines the Internal Revenue Code as it stood on January 1, 2014 (Wis. Stat. 71.98(3)), which predates the modern bonus regime — so any federal bonus you claim on a rental asset is added back on Schedule I and the asset is depreciated on a regular Wisconsin schedule. That creates an annual adjustment every year until the asset is fully depreciated or sold. Section 179 expensing is allowed and follows the current federal limits (Wis. Stat. 71.98(4)).
5. Real Estate Transfer Fee
Wisconsin’s transfer tax is the real estate transfer fee: 30 cents per $100 of value (0.3%, i.e. $3.00 per $1,000), imposed on the grantor — the seller — on every taxable conveyance (Wis. Stat. 77.22(1)). There is no separate percentage-based mortgage recording tax; instruments are recorded for a flat fee.
6. LLC Annual Report ($25)
A Wisconsin LLC must file an annual report with the Department of Financial Institutions (Wis. Stat. 183.0212), and the fee for a domestic LLC is $25 (Wis. Stat. 183.0122(2)(a)17.). It is due in the calendar-year quarter that contains the anniversary of the LLC’s formation — a modest but real recurring cost of holding rentals in an LLC.
7. Rent Control
Wisconsin prohibits local rent control statewide (Wis. Stat. 66.1015): no city, village, town, or county may regulate the amount of rent charged for a residential rental dwelling unit. You set rents at market.
8. Security Deposit Rules
- No statutory cap on the deposit amount (Wis. Stat. 704.28; Wis. Admin. Code ATCP 134.06).
- Return within 21 days of the lease ending and the tenant vacating, with a written itemized statement of any amounts withheld (ATCP 134.06(2) and (4)).
- You may withhold only for tenant damage beyond normal wear, unpaid rent, unpaid utilities the tenant owed, and similar tenant-responsible amounts — not for normal wear and tear (ATCP 134.06(3); Wis. Stat. 704.28(3)).
9. How SheltrIQ Helps Wisconsin Landlords
Wisconsin’s rules have real edges — a homeowner-only credit, a depreciation add-back, a partial gains break. SheltrIQ keeps your return on the current rules:
- Graduated income modeling — applies the 2026 3.50%/4.40%/5.30%/7.65% schedule to your net rental income for an exact Wisconsin liability.
- Disposition modeling — applies the 30% long-term capital-gains exclusion to the capital-gain layer while taxing Section 1245 depreciation recapture as ordinary income, so a rental sale is modeled correctly.
- Bonus-depreciation tracking — flags the Wisconsin §168(k) add-back and keeps a separate Wisconsin basis so the annual Schedule I adjustment reconciles.
- AI Schedule E classification — sorts each expense to the right line so your Wisconsin income starts from an accurate federal return.
Maximize Your Wisconsin Rental Deductions
SheltrIQ's AI handles state-specific tax rules so you don't leave money on the table.
Get Started Free