Green Bay, Wis. — A recent report from Forward Analytics, a nonpartisan research group, projects that ending Wisconsin’s state tax on tips and overtime would reduce state revenue by $2.76 billion over the next decade. The study, released ahead of the November 3 gubernatorial election, frames the proposal as a double‑edged sword: a fiscal hit for the state balanced by more cash in the pockets of Wisconsinites.
How the figure was calculated
Research analyst Jacob Anderson explained that the estimate was derived by modeling the income‑tax savings workers would enjoy if tip and overtime earnings were exempt from state tax for ten years. Anderson said, “This is a cost to state revenue, but at the same time is putting money back into the pockets of Wisconsinites to either spend or save as they see fit.”
Political backdrop
The idea of eliminating the tax on tips has floated in the Wisconsin Legislature for several years. Governor Tony Evers, a Democrat, initially backed the concept in 2025 but vetoed a Republican‑authored bill in April 2026, citing concerns about permanent tax relief and the need to protect essential services.
At the federal level, the policy became law on July 4, 2025, as part of President Donald Trump’s One Big Beautiful Bill, a landmark tax reform that aimed to give hard‑working Americans more control over their earnings.
Critics warn of service cuts
University of Wisconsin‑Madison emeritus professor of applied economics Andrew Reschovsky warned that the proposal could be “unfair” because it would benefit only those who earn tips or overtime, leaving salaried workers without a comparable break. He suggested that a broader tax‑rate reduction would better serve middle‑ and low‑income families and cautioned that reduced state revenue could force cuts to education, health care, Medicaid and other vital programs.
Voices from the front lines
Servers at local eateries, such as The Pancake Place in Green Bay, welcomed the prospect of keeping their full tips. Long‑time server Haleigh Dunks, who has worked there for about eight years, said, “It’s pretty important, it’s what we rely on to pay our bills, groceries, stuff like that. Anything that we get kind of to add on to our paycheck, even the minimum we appreciate. It helps a lot, especially having to pay less at the end of the year.”
Dunks and her coworkers hope a law change would give them greater financial stability, especially as the cost of living rises across the state.
What’s next?
With the 2026 governor’s race looming, the tax‑on‑tips question is expected to remain a hot topic. Candidates from both parties are likely to weigh in, balancing the desire to give families more disposable income against the need to fund public services.
For now, Wisconsin residents will watch the debate unfold, considering both the potential $2.76 billion revenue impact and the promise of more take‑home pay for workers who depend on tips and overtime.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
