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November 21, 2023

Wisconsin updates Internal Revenue Code conformity

On October 25, 2023, Wisconsin Governor Tommy Evers signed 2023 Wis. Act 36 (Act 36) into law, updating Wisconsin's conformity to the Internal Revenue Code (IRC).1 Wisconsin's IRC conformity references underlying federal statutes, which can make understanding what provisions it couples and decouples from somewhat challenging. Act 36 updates certain references for 2023 and also clarifies what IRC updates enacted in 2020 and 2021 do or do not apply for Wisconsin purposes. These provisions are discussed below.

IRC references updated for 2023

For tax years beginning after December 31, 2022, Wisconsin conforms to the IRC as amended to December 31, 2022.2 Amendments to the IRC enacted after December 31, 2022, do not apply for Wisconsin purposes.

Under Act 36, the following federal Public Laws (PL) enacted after December 31, 2020, and before January 1, 2023, do not apply for Wisconsin purposes:

  • Certain provisions of PL 117-2 (American Rescue Plan Act (ARPA), 2021), including:
    • Additional restaurant revitalization grants funds (PL 117-2, Section 5003)
    • Extension of the excess business loss limitation, to December 31, 2026, for noncorporate taxpayers (PL 117-2, Section 9041)
    • Exclusion of restaurant revitalization grants from gross income and deductions allowed (PL 117-2, Section 9673)
    • Exclusion from income for most student loans discharged between January 1, 2021 and December 31, 2025 (PL 117-2, Section 9675)
    • Expanded definition of "covered employee" for publicly held corporations deducting excessive employee renumeration (PL 117-2, Section 9708)
  • Continued treatment of a plan as a high-deductible plan if it fails to have a deductible for telehealth and other remote care services (Section 307 of Division P of PL 117-103 (Consolidated Appropriations Act (CAA), 2021) and Section 4151 of Division FF of PL 117-328 (CAA, 2023))
  • Extension of excess business losses, through December 31, 2028, for noncorporate taxpayers (Section 13903(b) of PL 117-169 (Inflation Reduction Act (IRA), 2022))

Wisconsin treatment of IRC updates enacted in 2020 and 2021

Generally, federal law provisions that directly or indirectly affect adopted IRC provisions apply, for Wisconsin purposes, at the same time as for federal purposes. Under Act 36, however, the following provisions will first apply for tax years beginning after December 31, 2022:

  • Certain provisions of PL 117-2 (ARPA, 2021), including:
    • Adding certain nonprofit entities and internet publishing organizations to the list of eligible entities to receive a paycheck protection program (PPP) loan (PL 117-2, Section 5001)
    • Additional appropriations for targeted advances of economic injury disaster loans (PL 117-2, Section 5002)
    • Additional appropriations for shuttered venue operator grants and a reduction in the amount of a PPP loan received (PL 117-2, Section 5005)
    • Allowing married individuals who file as married filing separate and live apart from their spouse for the last six months of the year or have a divorce or separation instrument with that spouse by the end of the tax year to claim the earned income credit (EIC) (PL 117-2, Section 9623)
    • Permanently raising the investment income limit to $10,000, and allowing adjustments for inflation in subsequent years for purposes of claiming the EIC (PL 117-2, Section 9624)
    • Exclusion of targeted economic injury disaster loan advances received under Section 331 of Division N of PL 116-260 (CAA, 2021) from gross income, allowing deductions, not reducing tax attributes, and allowing basis increases
      • Treatment of a partnership's or S corporation's forgiven loan advances as tax-exempt for purposes of IRC Sections 705 and 1366 (PL 117-2, Section 9672)
  • Extension of PPP loan funding to June 30, 2021 (Section 2 of PL 117-6 (PPP Extension Act of 2021))
  • Certain provisions of Division H of PL 117-58 (Infrastructure Investments and Jobs Act (IIJA), 2021), including:
    • Adding qualified broadband projects and qualified carbon dioxide capture facilities to the list of exempt facility bonds (PL 117-58, Sections 80401 and 80402, respectively)
    • Adding certain contributions received by a regulated public utility that provides water or sewerage disposal services to the definition of a "contribution to the capital of the taxpayer" for purposes of excluding the contribution from a corporation's gross income (PL 117-58, Section 80601).

Under Act 36, the following changes to the IRC enacted in 2020 and 2021 apply for Wisconsin purposes at the same time as for federal purposes:

  • Certain provisions of PL 117-2 (ARPA, 2021), including:
    • Repealing the election to allocate interest on a worldwide basis (PL 117-2, Section 9671)
    • Temporarily delaying the designation of multi-employer pension plans as endangered, critical, or critical and declining status (PL 117-2, Section 9701)
    • Temporarily extending five-year funding improvement and rehabilitation periods for multi-employer pension plans in critical and endangered status for 2020 or 2021 (PL 117-2, Section 9702)
    • Adopting standard accounting rules for pensions (PL 117-2, Section 9703)
    • Providing special rules for multi-employer pension plans in endangered or critical status that receive financial assistance (PL 117-2, Section 9704)
    • Extending the 15-year amortization for single employer pension plan shortfalls (PL 117-2, Section 9705)
    • Extending the pension funding stabilization percentages for single employer plans (PL 117-2, Section 9706)
    • Modifying rules for minimum funding standards for community newspaper pension plans (PL 117-2, Section 9707)
  • The following sections of PL 117-58 (IIJA, 2021):
    • Treating multiple declarations of federally declared disasters as a separate incident period and allowing a 60-day extension for each incident period (PL 117-58, Section 80501)
    • Adding "significant fires" to the list of reasons certain deadlines may be postponed (PL 117-58, Section 80504)
    • Extending the decrease in the applicable minimum percentage and the increase in the applicable maximum percentage through 2034 for purposes of the segment rate stabilization for minimum funding standards for single employer defined benefit pension plans (PL 117-58, Section 80602)

Other provisions of Act 36

Act 36 also made some IRC conformity updates that may require amended Wisconsin returns:

  • Exclusion of gain on small business stock. Act 36 applies IRC Section 1202 to tax years beginning after December 31, 2018. Accordingly, 100% of the gain on small-business stock acquired after September 27, 2010, may be excluded from Wisconsin income. Amended returns would need to be filed to claim the exclusion for tax years 2019-22.
  • Health savings accounts. Act 36 applies IRC Section 223(c) to tax years beginning after December 31, 2021. This provision effectively continues treating a health plan as a high-deductible health plan if it fails to have a deductible for telehealth and other remote care services. This provision will apply for months beginning after March 31, 2022, and before January 1, 2023, and for plan years beginning on or before December 31, 2021, or after December 31, 2022, and before January 1, 2025. Under Act 36, this adoption applies retroactively to tax years beginning on or after January 1, 2022. Taxpayers filing a 2022 Wisconsin individual income tax return and reporting related income modifications on Wisconsin Schedule I should consider filing an amended return.


The Wisconsin Department of Revenue will likely update its conformity guidance to reflect these changes. Taxpayers should consider these changes, especially where amended returns may be required.


Contact Information
For additional information concerning this Alert, please contact:
State and Local Taxation Group
   • Bill Nolan (

Published by NTD’s Tax Technical Knowledge Services group; Jennifer A Brittenham, legal editor



1 Act 36 took effect on October 27, 2023.

2 For tax years beginning after December 31, 2020 and before January 1, 2023, the conformity date is generally December 31, 2020.