April 12, 2011
Walker Budget Repeals 2009 Change Indexing Homestead Tax Credit to Inflation
The Governor’s budget bill would repeal the 2009 change that indexed the Homestead Tax Credit to inflation.
This tax credit provides targeted tax relief to about 250,000 low-income households in Wisconsin. The Legislative Fiscal Bureau explains:
“The program is often referred to as a “circuit breaker” since it is intended to provide relief once property taxes exceed a taxpayer’s ability to pay them. Relief is provided as a credit reducing individual income tax liability or as a cash refund if the credit exceeds income tax due; the homestead credit is referred to as a refundable credit due to this characteristic.”
The 2009 change allows the maximum credit to increase each year as inflation increases. By repealing the annual adjustments, the credits will be cut by $2 million in 2011 and $6 million in 2012, costing low-income Wisconsin families $8 million over two years. Each year, the cost to each recipient will grow higher, from $8 per recipient in 2011, to $24 in 2012, and rising each year thereafter.
