Updated October 7, 2026. Quick answer: Not unless you ask. The Department of Revenue’s Publication 126 says “Wisconsin law does not require that state income tax be withheld” from qualified retirement benefits, but you may submit a written request to your employer or other payor to withhold.
Drawing a pension? Whether the state withholds tax from it, from its own documents: Wisconsin tax withholding on pension payments.
Wisconsin withholding at a glance
| Item | What the documents say |
|---|---|
| Is it required? | No; Wisconsin law does not require state income tax to be withheld from qualified retirement benefits |
| Rate or amount | No percentage stated; the amount withheld from each payment must be $5 or more |
| How to start or stop it | A written request to the employer or other payor; Wisconsin Retirement System annuities use Form ET-4310 |
| Direct rollover | Not stated in the documents read |
| Changed for 2026? | No change stated; the publication read is the 2025 edition |
What the Wisconsin documents say
Publication 126, How Your Retirement Benefits Are Taxed, has a section headed withholding and estimated tax. It says “Wisconsin law does not require that state income tax be withheld” from qualified retirement benefits. It continues that you “you may submit a written request to your employer or other payor” to withhold Wisconsin income tax.
The publication sets one limit: “The amount withheld from each payment must be $5 or more.” For retirement benefits paid by the Department of Employee Trust Funds, the publication points to Form ET-4310, the Substitute W-4P Tax Withholding Certificate for Pension or Annuity Payments; that form is for those benefits only.
A $50,000 withdrawal: cash in hand or a direct rollover
Take a $50,000 401(k) withdrawal paid to you. The IRS says a taxable eligible rollover distribution paid to you from an employer plan is subject to “mandatory income tax withholding (generally at a rate of 20%)”, which on $50,000 is $10,000 (computed as $50,000 times 20%) held back for federal tax. Wisconsin does not require withholding, so the Wisconsin amount withheld is $0 unless you give the payor a written request. The publication states no rate, only that any amount withheld from a payment must be $5 or more.
The other path is a direct rollover to an IRA or another plan. For federal tax the IRS says “The mandatory withholding doesn’t apply in a direct rollover”. The Wisconsin documents read do not say how a direct rollover is treated for state withholding, so confirm it with the payer before choosing.
What a mover should know
This page is about Wisconsin as a state of residence. An instruction line written for a nonresident or part-year filer is not the rule for a resident, and none of the documents read settles a part-year or two-state case, so check each state’s own rule. The federal side is the same everywhere; CMG’s federal 20% withholding on a pension lump sum page covers it, and state withholding on retirement withdrawals lists the other states checked.
What the documents do not say
- The publication names no Department of Revenue form for asking an IRA or 401(k) payor to withhold, states no rate, does not address a direct rollover, and cites no statute section. The edition read is 2025.
Common mistakes
- Assuming a payor will withhold Wisconsin tax because it withheld federal tax; the publication says Wisconsin does not require it.
- Using Form ET-4310 for an IRA or 401(k); the publication ties it to benefits from the Department of Employee Trust Funds.
- Assuming the answer for one state applies to another, or that state withholding settles the state tax owed at filing.
Related: state withholding on retirement withdrawals, how Wisconsin taxes 401(k) and IRA withdrawals, Wisconsin retirement taxes, and retirement withholding calculator.
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Answer againSources
- How Your Retirement Benefits Are Taxed, Publication 126: https://revenue.wi.gov/pubs/pb126.pdf
- IRS Tax Topic 413, Rollovers from retirement plans: https://www.irs.gov/taxtopics/tc413
Sources: the primary documents linked above, read on October 7, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.