GSC recovery target: Wisconsin-specific Roth conversion tax answer
Wisconsin Roth Conversion Tax 2026
A traditional IRA-to-Roth IRA conversion is generally taxable for federal purposes to the extent the traditional IRA distribution is taxable. For a full-year Wisconsin resident, Wisconsin generally taxes the same pension and annuity amount that is federally taxable, but Wisconsin also has retirement-income subtraction checks that can matter for older taxpayers. In the Wisconsin DOR 2025 Fall Tax Updates, the department said traditional-IRA-to-Roth-IRA conversion income may be eligible for the newer retirement income subtraction if the taxpayer is at least age 67 at the end of the tax year.
Federal starting point
Traditional IRA distributions are fully or partly taxable when converted
Wisconsin resident rule
Generally follows federally taxable pension/annuity amount
Age 67 subtraction check
Conversion income may qualify if the taxpayer is age 67+ at year-end
Core forms
Form 1099-R, Form 8606 when basis exists, Wisconsin return schedules
What matters for 2026
- Do not treat a Roth conversion as a deduction. It is usually a taxable ordinary-income event now in exchange for potential Roth treatment later.
- Wisconsin residents should model federal taxable conversion income first, then check Wisconsin retirement-income subtraction eligibility and state estimated-tax exposure.
- Age, federal AGI, filing status, credit tradeoffs, and whether the account has nondeductible basis can change the final state result.
Next step
Use the main deduction guide for calculator inputs, eligibility checks, related forms, and broader federal rules.
Open the full guidePlanning workflow
- 1Estimate taxable income before conversion, then size the conversion to the intended federal bracket instead of converting an arbitrary amount.
- 2Check Wisconsin residency status and whether the conversion is included in federal adjusted gross income.
- 3If the taxpayer is at least age 67 at year-end, test Wisconsin retirement-income subtraction eligibility before estimating state tax.
- 4Set aside federal and Wisconsin estimated-tax payments or withholding if the conversion materially increases current-year tax.
- 5Keep Form 1099-R, Form 8606 basis records, brokerage conversion confirmation, and the Wisconsin retirement subtraction worksheet together.
Records to keep
- IRA conversion confirmation and Form 1099-R
- Form 8606 if the IRA includes nondeductible basis
- Federal bracket and taxable-income worksheet before and after conversion
- Wisconsin residency, age, FAGI, and retirement-income subtraction workpapers
- Estimated-tax or withholding confirmation for federal and Wisconsin payments
Primary sources
2026 savings example for Wisconsin
Planning estimate for a single filer earning $67,125 (Wisconsin median household income in LevyIO's state dataset) who removes $5,000 from taxable income. Federal tax uses the 2026 IRS brackets after the $16,100 standard deduction; WI tax uses the state brackets in LevyIO's dataset and assumes the state follows the federal treatment.
Estimated total savings
$894
Federal savings
$663
$5,938 → $5,275 · 22% bracket
WI state savings
$231
$2,214 → $1,983 · 5.3% marginal
Combined marginal rate
27.3%
≈ $273 saved per $1,000 deducted
Federal × Wisconsin marginal rates (2026, single)
Gross-income ranges include the federal standard deduction. The WI column is the state marginal rate at the midpoint of each range. The last column is the tax saved per $1,000 deducted at that combined rate.
| Federal bracket | Gross income (single) | WI marginal | Combined | Per $1,000 |
|---|---|---|---|---|
| 10% | $16,100 - $28,500 | 3.5% | 13.5% | $135 |
| 12% | $28,500 - $66,500 | 4.4% | 16.4% | $164 |
| 22% | $66,500 - $121,800 | 5.3% | 27.3% | $273 |
| 24% | $121,800 - $217,875 | 5.3% | 29.3% | $293 |
| 32% | $217,875 - $272,325 | 5.3% | 37.3% | $373 |
| 35% | $272,325 - $656,700 | 7.65% | 42.65% | $427 |
| 37% | Over $656,700 | 7.65% | 44.65% | $447 |
Eligibility & forms
Anyone with Traditional IRA or 401(k) balance
- Pay tax on converted amount
- No income limits
- 5-year holding rule
Federal forms: Form 8606, Form 1040
Wisconsin filing notes
Standard deduction phases out at higher incomes. Use capital gains exclusions on WI farm and business assets. Social Security exempt. Homestead credit helps offset property taxes.
Common mistakes: Converting too much in one year; Not planning for tax bill.
Frequently asked questions
How much can the Roth IRA Conversion Strategy save a Wisconsin taxpayer in 2026?
In LevyIO's example, a single filer with $67,125 of income (the Wisconsin median household income in our state dataset) who removes $5,000 from taxable income saves about $663 in 2026 federal tax (22% marginal bracket) plus about $231 in Wisconsin tax (5.3% state marginal rate), roughly $894 combined. It is a planning estimate computed from the 2026 IRS brackets and LevyIO's WI bracket data, not a survey figure.
What is the Wisconsin income tax rate for 2026?
Wisconsin has a progressive income tax with a top rate of 7.65%. The WI standard deduction in LevyIO's dataset is $13,960 single / $25,840 married. Four brackets 3.5%-7.65%. High property taxes (1.61%). Standard deduction phases out. Farm capital gains exclusion. Social Security exempt.
Who qualifies for the Roth IRA Conversion Strategy in Wisconsin?
Anyone with Traditional IRA or 401(k) balance. The federal rules are the same in every state; the requirements are: Pay tax on converted amount; No income limits; 5-year holding rule. Wisconsin filers should confirm on the WI return whether the state follows the federal treatment.
Which forms do I file to claim the Roth IRA Conversion Strategy?
Federal: Form 8606, Form 1040. Wisconsin: check the Wisconsin Department of Revenue instructions for the matching state schedule. Common mistakes: Converting too much in one year; Not planning for tax bill.
Roth IRA Conversion Strategy in other states
Sources
Reviewed 2026-09-17. Estimates are educational planning figures computed from the IRS 2026 inflation adjustments and LevyIO's state bracket dataset; they are not tax advice.