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Bill > AB17

WI AB17

Creating an employee ownership conversion costs tax credit, a deduction for capital gains from the transfer of a business to employee ownership, and an employee ownership education and outreach program. (FE)

summary

Introduced
02/06/2025
In Committee
06/27/2025
Crossed Over
06/24/2025
Passed
Dead

Introduced Session

Potential new amendment
2025-2026 Regular Session

Bill Summary

This bill creates tax incentives related to businesses in this state converting to an employee ownership business structure and requires the Department of Revenue to establish an outreach and education program to promote employee ownership business structures. Employee ownership conversion costs tax credit Under the bill, DOR may certify a business to claim a nonrefundable income tax credit for an amount equal to 70 percent of costs related to converting the business to a worker-owned cooperative or 50 percent of the costs related to converting the business to an employee stock ownership plan. The credit is limited to a maximum amount of $100,000. A business is qualified to receive the credit if the business is subject to income and franchise taxes in this state and, at the time the business receives the credit, does not have an employee stock ownership plan and is not, in whole or in part, a worker-owned cooperative. Capital gain deduction The bill also creates an individual income tax subtraction and a corporate income and franchise tax deduction for the amount of the capital gain realized from the transfer of ownership of a business in this state to an employee stock ownership plan or worker-owned cooperative. Employee ownership outreach and education Finally, the bill directs DOR to establish an economic development program for the purpose of promoting employee ownership business structures, including the business structures of employee stock ownership plans and worker-owned cooperatives, through education, outreach, technical assistance, and training related to converting existing businesses to an employee ownership business structure or starting new businesses with an employee ownership business structure. The bill directs DOR to submit an application to the U.S. secretary of labor for a grant under 29 USC 3228 for use in administering the program created in the bill. Because this bill relates to an exemption from state or local taxes, it may be referred to the Joint Survey Committee on Tax Exemptions for a report to be printed as an appendix to the bill. For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

AI Summary

This bill creates a comprehensive set of tax incentives and support programs to encourage businesses in Wisconsin to transition to employee ownership models, such as employee stock ownership plans (ESOPs) and worker-owned cooperatives. Specifically, the bill establishes a tax credit for businesses converting to these ownership structures, allowing companies to claim up to 70% of conversion costs (up to $100,000) for worker-owned cooperatives and 50% of conversion costs (up to $100,000) for ESOPs. The bill also introduces a capital gains tax deduction for business owners who transfer ownership to an ESOP or worker-owned cooperative, providing a financial incentive for such transitions. Additionally, the bill directs the Department of Revenue to create an economic development program focused on educating and providing technical assistance to businesses and employees about employee ownership structures, including offering information on financial education, open-book management, and strategies for employee participation. The program aims to promote employee ownership by helping businesses explore ownership transitions and providing training and resources. The bill applies to taxable years beginning after December 31, 2024, and sets an annual total credit allocation of $5,000,000 for these employee ownership conversion credits.

Committee Categories

Budget and Finance

Sponsors (26)

Last Action

Read first time and referred to committee on Agriculture and Revenue (on 06/27/2025)

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