The Milwaukee Common Council voted to implement a new Milwaukee sales tax increase. Supporters say the tax increase will help fund essential workers and services. Without it, Milwaukee could face mass layoffs and a lack of necessary services for city residents.
“Without a major change in the structure of our finances, we will experience draconian cuts to our police, our fire department, and our libraries,” said Milwaukee Mayor Cavalier Johnson in a June State of the City Address.
Milwaukee Sales Tax Increase
The city of Milwaukee is set to impose its own sales tax rate of 2%. This means Milwaukee shoppers will pay $2.00 on every $100 purchase of taxable goods and services. City sales taxes aren’t uncommon. For example, Illinois has one of the highest sales tax rates in the U.S., partly due to Chicago’s local sales tax.
- New York City also has a separate sales tax.
- Kansas City imposes an additional sales tax.
- Tacoma, Washington has a local sales tax.
- Long Beach, California charges an additional sales tax.
Many other cities have local sales taxes, too. However, Milwaukee residents could be in for a double whammy next year, since Milwaukee County might also raise its tax rate from 0.5% to 0.9%. No other county in Wisconsin is permitted to raise the county sales tax rate above 0.5%.
So, what does this mean? Milwaukee could become the highest-taxed city in Wisconsin (at least when it comes to sales taxes).
What is the Sales Tax in Milwaukee?
Currently, Milwaukee shoppers pay a 5.5% sales tax rate, which includes the state sales tax rate of 5% and the county sales tax rate of 0.5%. When the new Milwaukee sales tax goes into effect, shoppers will pay 7.5% (7.9% if the county sales tax is approved).
Although Milwaukee’s new sales tax will only cost residents $0.02 on every dollar, the Wisconsin Department of Revenue projects the 2% sales tax will make the city more than $193 million in the first year alone. And if the Milwaukee County sales tax increase is implemented, the county would rake in an additional $82.2 million.
Milwaukee Fiscal Crisis
The Milwaukee sales tax increase comes as lawmakers try to solve a budget crisis. Without additional revenue, the city may need to lay off essential workers, such as police officers and public healthcare workers. The nearly $194 million generated from the new city sales tax will help these workers keep their jobs, and in turn, will allow Milwaukee residents continued access to essential services.
What is the Milwaukee Pension Crisis?
Increasing pension payments have been an issue since at least 2021. Milwaukee received some financial relief from pandemic funding, but that funding was only a short-term solution. The additional sales taxes residents will soon pay will help fund pensions for city and county workers. So, while each individual resident isn’t likely to see a large jump in expenses due to Milwaukee’s sales tax (aside from large purchases), many residents will benefit tremendously.
When Will Milwaukee’s Sales Tax Go Into Effect?
Milwaukee residents won’t face a city sales tax until January 1, 2024. And a Milwaukee County sales tax increase isn’t a sure thing. The Milwaukee County Board of Supervisors will vote on the county tax increase on July 27.
If the proposed tax increase does happen, the county sales tax rate won’t increase to 0.9% until 2024. So, shoppers still have some time to make large purchases without paying more in taxes. For example, if you purchase a $20,000 vehicle in Milwaukee in 2024, you could spend $1,580 in sales taxes. But purchasing a $20,000 vehicle in 2023 would result in only $1,100 in sales tax.
