Updated October 16, 2026. Quick answer: Wisconsin’s Department of Revenue says inherited IRAs are among the property that may be subject to income tax, and that a beneficiary reports estate-passed income from a Schedule K-1; its age-based retirement subtractions do not say whether a beneficiary qualifies.
Wisconsin at a glance
| Item | What the documents say |
|---|---|
| How the state taxes retirement-account income | Taxed as income, with retirement subtractions tied to the individual’s age |
| Do the state’s documents address beneficiaries? | Addressed: the estates FAQ lists IRAs among inherited property that may be subject to income tax |
| Retirement exclusion or credit | Up to $24,000 for an individual 67 or older ($48,000 on a joint return when both spouses are at least 67), or up to $5,000 at 65 or older if federal adjusted gross income is under $15,000 (single or head of household) or under $30,000 (joint return), for the individual’s own qualifying retirement income |
| Rate in the documents read | 3.50% to 7.65% |
| State inheritance or estate tax | No estate tax for decedents dying after December 31, 2007, and no inheritance tax since 1992 |
| Changed for 2026? | The age 67 subtraction starts with the 2025 taxable year; no 2026 change to inherited-IRA treatment is stated |
What the Wisconsin documents say
The Department’s estates FAQ says an inheritance is generally not subject to income tax, but “Examples of inherited property that may be subject to income tax” include individual retirement accounts (IRAs), dividends paid on stock and interest paid.
Publication 126 describes the retirement subtractions by the individual’s age: “Eligible individuals may subtract up to $5,000 of qualifying retirement income received”. The $24,000 subtraction is for an individual who is 67 or older, starting with the 2025 taxable year; the $48,000 amount applies to a married couple filing a joint return when both spouses are at least 67. The $5,000 subtraction at 65 or older also requires federal adjusted gross income under $15,000 for a single or head of household filer or under $30,000 for a joint return. The publication does not mention inherited IRAs.
The Department’s tax rate FAQ says “Wisconsin individual income tax rates vary from 3.50% to 7.65%”. It also says “There is no estate tax for decedents dying after December 31, 2007”.
The federal 10-year rule and your Wisconsin tax year
IRS Publication 590-B says a beneficiary may be required to take the entire account balance by the “end of the 10th year following the year of the owner’s death”, with exceptions for certain beneficiaries. Because the balance generally has to come out within that window, the timing of each withdrawal decides which tax year it lands in. See the 10-year rule and annual RMDs, lump sum versus spreading withdrawals and inherited IRA rules.
Withholding and other state taxes
Whether a state withholds from a withdrawal is a separate rule: see state withholding on retirement withdrawals. For Wisconsin’s own death taxes, see Wisconsin inheritance tax.
What the documents do not say
- Publication 126 has no inherited-IRA text, so whether a beneficiary can use the age-based subtractions is not established.
- No Wisconsin statute section was read.
- The documents read do not mention a deduction for federal estate tax on income in respect of a decedent.
Common mistakes
- Assuming Wisconsin’s rule for your own retirement income also covers an account you inherited: read whether its documents address beneficiaries, and confirm the point with a Wisconsin preparer.
Related: state tax on inherited IRA withdrawals, state by state, whether Wisconsin taxes 401(k) and IRA withdrawals, Wisconsin retirement taxes, Wisconsin inheritance tax, inherited IRA rules, spouse versus non-spouse beneficiary rules, and state withholding on retirement withdrawals.
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Answer againSources
- How Your Retirement Benefits Are Taxed, Publication 126 (1/26): https://www.revenue.wi.gov/DOR%20Publications/pb126.pdf
- Estates, Trusts, and Fiduciaries (FAQ): https://www.revenue.wi.gov/Pages/FAQS/ise-estate.aspx
- DOR Tax Rates (FAQ): https://www.revenue.wi.gov/Pages/FAQS/pcs-taxrates.aspx
- 2025 Form 2 Instructions, Wisconsin Fiduciary Income Tax Return: https://www.revenue.wi.gov/TaxForms2025/2025-Form2-Inst.pdf
- IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs): https://www.irs.gov/pub/irs-pdf/p590b.pdf
Sources: the primary documents linked above, read on October 16, 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.