Starting January 1, 2024, both Milwaukee County and the City of Milwaukee will increase its sales taxes. Sales taxes in the City of Milwaukee will rise from 5.5% to 7.9%, while sales taxes outside the city, but still within Milwaukee County, will rise from 5.5% to 5.9%.
Rob Henken, president at the Wisconsin Policy Forum, explains that the city and county have been facing longstanding financial challenges. “One of the problems has been a revenue structure for both governments. That simply has not afforded these governments the opportunity to see annual increases in revenues that are going to at minimum mirror inflation, but also certainly are not capable of accounting for some of their unique expenditure needs," he says.
The taxes will climb because Wisconsin's Republican-led Legislature allowed it under a deal. Gov. Tony Evers, a Democrat, called the deal transformative, while opponents of the plan hoped to delay the increase and criticized the strings attached to the plan.
WUWM reported that the city plan includes limiting funding for diversity, equity and inclusion efforts and requires a minimum level of police and firefighter staffing. The county expects the sales tax increase to generate $82 million a year to the county in the first year.
Henken says the sales tax differs from the property tax because it applies to people that purchase items in those jurisdictions, which includes visitors to the area.
And, he adds that some items like groceries and medication are not taxable. “Most retail items that you would purchase are going to have that sales tax applied, even purchases at grocery stores. So, groceries are not subject to the sales tax, but if you are buying a food item at a grocery store, for example that you’re going to eat as a meal, that would be subject to the sales tax.”
Henken says one key exception is vehicle purchases. “In our state, the sales tax that’s applied to an automobile purchase is based on where you reside, not where you made the purchase.”
He says there is also a special sales tax that is implemented by the convention center district on food and beverage purchases that adds “another half cent for certain purchases.”
For those wondering whether to make big purchases before 2024, Henken says every consumer has a decision to make, but it’s important to remember that even with the increase it amounts to an extra $2.40 for a $100 purchase in the City of Milwaukee.
