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Payroll for Wisconsin Businesses

From navigating a progressive income tax system to adhering to unique PTO laws, understanding Wisconsin-specific payroll regulations is crucial for ensuring compliance and efficient payroll management. Payroll Freedom offers tailored services that help your business meet all Wisconsin payroll tax requirements while optimizing payroll processing so you can focus on core tasks and business growth. Here, we’ll explore everything you need to know about Wisconsin payroll compliance and how to streamline key processes through an automated payroll solution.

Reviewing Federal Requirements

Before addressing your business’ Wisconsin payroll requirements, it’s important to review your federal tax obligations, including all of the following:

  • Calculating gross wages for salaried and hourly employees
  • Calculating pre-tax withholdings – from retirement, HSAs, FSAs, or otherwise
  • Deducting federal income tax, which varies in percentage based on a number of factors
  • Deducting FICA (Social Security and Medicare) taxes, which are ultimately paid by both employer and employee
  • Paying FUTA unemployment taxes (later, we’ll discuss a tax credit you can claim to reduce your tax burden)
  • Subtract post-tax deductions (usually from wage garnishment)
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Wisconsin-Specific Requirements

Employers in Wisconsin are required to pay and withhold for personal income tax, state unemployment insurance, and workers’ compensation while adhering to state-specific family leave and PTO laws. Wisconsin state taxes must be paid to the appropriate state agency, and typically on a quarterly basis. Here are the major requirements your business must fulfill to run payroll compliantly and efficiently in Wisconsin.

Personal Income Tax Withholding in Wisconsin

If one or more of your employees reside in Wisconsin, it is your responsibility to withhold state personal income tax from their wages and remit it to the state of Wisconsin. Uniquely, Wisconsin uses a progressive income tax system, which taxes at an incrementally higher rate for higher-earning employees. The lowest state income tax rate is 3.54%, but it rises as high as 7.65% for employees who earn over $202,480 annually.

Additional factors like filing status – single, married (filing separately or jointly), part-year residency, or nonresident status – impact the tax rate, as well. 

The Wisconsin Department of Revenue offers further information to assist with manually calculating these tax rates, but the most effective approach is to use an automated payroll solution that saves you time, money, and the prospect of costly penalties resulting from miscalculations.

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Wisconsin State Unemployment Insurance

Among other employer payroll taxes required in the state of Wisconsin, businesses must pay taxes on State Unemployment Insurance to provide financial support to individuals who are unemployed due to uncontrollable circumstances. 

Businesses in Wisconsin are required to pay unemployment insurance directly to the state at a rate that ranges from 0% to 12% on the first $14,000 in annual wages paid to an employee. Although all businesses are required to pay State Unemployment Tax Act (SUTA) taxes, rates-per-business vary based on whether an organization is newly established, operating in a particular industry, or processing payroll above or below $500,000 annually. Below is an outline of the key factors and rates for new businesses:

  • New Employer making less than $500,000 annually  – 3.05% tax rate
  • New Employer making more than $500,000 annually  – 3.25% tax rate
  • New Employer in the Construction industry making less than $500,000 annually  – 2.90% tax rate
  • New Employer in the Construction industry making more than $500,000 annually  – 3.10% tax rate

How to Qualify for a FUTA Tax Credit in Wisconsin

Employers in Wisconsin should be aware that if they pay their Wisconsin SUTA/SUI taxes on time and in full, they can claim a tax credit of up to 5.4% on their Federal Unemployment Tax Act (FUTA) taxes. This “FUTA Credit” can significantly reduce their overall unemployment-related tax burden.

Wisconsin Workers’ Compensation

Any business in Wisconsin with one or more employees is required to provide workers’ compensation insurance to protect employees in the event of a work-related injury or illness, typically providing coverage for medical expenses and a portion of lost wages. Wisconsin employers can choose from a number of qualified carriers within the state, but the carrier must meet state coverage requirements. On average, Wisconsin employers will pay approximately $1.60 (or 1.6%) for every $100 of payroll paid out.

Additional factors like filing status – single, married (filing separately or jointly), part-year residency, or nonresident status – impact the tax rate, as well. 

The Wisconsin Department of Revenue offers further information to assist with manually calculating these tax rates, but the most effective approach is to use an automated payroll solution that saves you time, money, and the prospect of costly penalties resulting from miscalculations.

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Family Leave Requirements in Wisconsin

Wisconsin adheres to the Family and Medical Leave Act (FMLA), which requires employers to provide 12 weeks of unpaid leave to employees affected by a covered disability (pregnancy, caring for a sick family member, etc.). Although this leave is unpaid, Wisconsin employers must provide employees with the same or a similar job upon their return to work.

Wisconsin also uses its own Wisconsin Family and Medical Leave Act (WFMLA) to determine family and medical leave eligibility, as well as how an employee’s 12 weeks of unpaid leave are used. For instance, in Wisconsin employers must provide family and medical leave to employees who have worked 1,000 hours in the previous 12 months (differing from the FMLA which is more stringent and requires at least 1,250 hours of previous work in a 12-month period).

Another key distinction in Wisconsin is that the WFMLA dictates how an employee can use their 12 weeks of unpaid leave. For example, Wisconsin’s state limitations permit two weeks of unpaid leave for an employee’s serious health condition, two weeks for caretaking for a family member (parent, child, or spouse), and up to six weeks for birth or adoption. It’s important for employers to understand that, in most cases, businesses will be subject to the Wisconsin state law (rather than purely FMLA) and should implement policies that align with WFMLA requirements.

Choosing the Right Payroll Services in Wisconsin 

With a wide range of regulations impacting your business’ payroll processing and compliance needs, it’s essential to choose a payroll provider specialized in supporting Wisconsin employers. It’s equally critical to collaborate with a provider that can seamlessly integrate your payroll with other key facets of HR and HCM. 


That’s why Payroll Freedom offers a comprehensive payroll solution that merges tailored payroll processing with benefits administration, time & attendance, hiring, onboarding, reporting & analytics, and other HR services. We take a personalized approach to supporting your business, addressing your local, state, and industry-based needs as well as your goals for long-term organizational growth.

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