Key figures
Wisconsin advisory
2026, with sources
A partly refundable research credit
Wisconsin’s research credit used to be fully nonrefundable. It became 10% refundable for tax years beginning after 2017, 15% from 2021, and 25% for tax years beginning after December 31, 2023. The refundable quarter is paid even when the company owes no Wisconsin tax; the remaining three quarters carry forward for up to 15 years against future franchise tax.
For a pre-revenue company with $1 million of qualifying Wisconsin research spending, that means part of the credit arrives as cash in the year the research is done and the rest becomes a long-lived deferred tax asset that needs a valuation allowance assessment.
Founders’ capital gains: Wisconsin’s own exclusion
Separately from federal QSBS, Wisconsin lets individuals exclude long-term capital gain from a qualified investment in a qualified Wisconsin business. The business must be registered with DOR (the program has run through DOR since 2014) and qualify in the year of investment and at least two of the next four; the investment must be made after 2010 and held five uninterrupted years. Registration is the step founders miss — it has to be done in the years the business qualifies, not at exit.
Where founders go wrong in Wisconsin
Wisconsin’s rules are well documented by DOR; mistakes come from assuming federal treatment carries over.
- Copying federal bonus depreciation onto the Wisconsin return.
- Not registering as a qualified Wisconsin business in the years it qualifies, losing the investors’ capital gain exclusion.
- Missing that Milwaukee has its own city sales tax on top of the county tax.
- Filing 1099s only federally; Wisconsin wants copies for payments to Wisconsin residents.
- Forgetting the foreign corporation annual report, due every first quarter.
The federal baseline
This page covers what Wisconsin adds. The federal rules underneath it apply here too.
Common questions
Does Wisconsin pay out its R&D credit?
Partly. For tax years beginning after December 31, 2023, 25% of the Wisconsin research credit is refundable — paid out even with no tax to offset. The other 75% is nonrefundable and carries forward up to 15 years, and it can’t become refundable later. Partnerships, LLCs and S corporations compute the credit but pass it to their owners to claim.
Is there a Wisconsin version of QSBS?
Wisconsin has its own exclusion. An individual can exclude long-term capital gain on an investment made after 2010 in a qualified Wisconsin business — one registered with the Department of Revenue (or certified by WEDC before 2014) — held for at least five uninterrupted years, if the business qualified in the year of investment and at least two of the next four years.
Advisory next door
- ILIllinois advisoryIllinois offers a nonrefundable 6.5% R&D credit, caps net loss deductions, and from 2026 taxes QSBS gain the IRS excludes; most founder mistakes come from Chicago’s extra layer.
- IAIowa advisoryIowa replaced its Research Activities Credit in 2026 with an IEDA-certified R&D credit of up to 3.5% of Iowa research spending, refundable and capped at $40 million a year. Individuals pay a flat 3.8%.
- MIMichigan advisoryMichigan’s refundable R&D credit, new for 2025, pays even pre-revenue companies; the rest of the advisory work is the Section 174 decoupling and 24 city income taxes.
- MNMinnesota advisoryMinnesota’s R&D credit is 10% on the first $2 million of research and, since 2025, partly refundable — 25% for 2026 — even for companies with no receipts.
Founder guides on this
- R&D taxThe R&D tax credit and Section 174A for startupsEngineering salaries can earn a federal R&D credit against payroll tax, and Section 174A lets you deduct US research again. What qualifies, what to track.
- SAFEsHow to account for SAFEs on your balance sheetA SAFE is cash today and shares later. Why it usually sits with liabilities, how the cap and discount set conversion, and what to book at the priced round.
- EquityStock options, 409A valuations and vesting for startupsHow option strike prices are set by a 409A valuation, how vesting and the cliff work, and why ASC 718 makes every grant an expense on your P&L.
More of the Wisconsin guide
- AccountingAccounting and state tax in WisconsinCorporate tax, conformity to federal rules, apportionment and what it does to your books
- ReceivablesReceivables and sales tax in WisconsinSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayablesPayables and contractors in WisconsinPaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- PayrollPayroll taxes and employer rules in WisconsinWithholding, unemployment insurance, paid leave, minimum wage and the rules on paydays
- ComplianceCompliance and filings in WisconsinRegistering to do business, annual reports, franchise tax and the filing calendar
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.