A provision buried in Wisconsin's budget bill permanently lowers income taxes on business income for most child care owners—starting this year.
Most Wisconsin child care owners don't realize that a tax cut aimed at small business owners is already in effect for 2025. It's hidden in SB45, the state's executive budget act, and it directly affects how much you owe in state income tax on your business income.
Section 223 of SB45 (page 155) permanently reduces Wisconsin's individual income tax rates across all tax brackets. The cut applies retroactively to taxable years beginning after December 31, 2024—meaning it covers tax year 2025 and all years going forward.
Why does this matter to you? Most child care businesses are structured as sole proprietorships, S-corporations, or partnerships. In these structures, business income "passes through" to the owner's personal tax return. You don't pay tax at the business level; instead, your business profit is taxed as personal income at your individual rate.
Because the law lowers individual income tax rates, it directly reduces the tax you owe on your business income.
If you own a child care center or family child care home and file business income on your personal tax return, this applies to you. The lower rates apply to all income brackets, so the benefit scales with your income level.
If your business is structured as a C-corporation (less common in child care), this provision does not directly reduce your tax burden, since C-corporations pay tax at the corporate level, not the individual level.
When you file your 2025 tax return, you'll use the new, lower rates. If you use a tax professional or accountant, they should already be aware of this change. If you prepare your own taxes, make sure you're using the updated 2025 tax tables from the Wisconsin Department of Revenue, which will reflect the new rates.
If you make quarterly estimated tax payments, you may want to review your payment schedule. Lower tax rates mean you may owe less in estimated taxes going forward. Your accountant can help you recalculate if needed.
This is a permanent change, not a temporary one. The rates stay in effect for 2026, 2027, and beyond unless the legislature changes the law again.
SB45's income tax rate cuts represent real money back in your pocket on your business income, effective immediately for the 2025 tax year. It's not a deduction or a credit you have to claim—it's built into the tax rates themselves. Make sure your tax planning and estimated payments account for the lower liability going forward.
Source: Wisconsin SB45, Section 223, page 155; effective for taxable years beginning after December 31, 2024.