Wisconsin Sales & Use Tax Guide: Rates, Rules, and Taxable Goods & Services

Sales and Use Tax Basics in Wisconsin

Sales Tax

In Wisconsin, sales tax is applied to the sales price of goods sold by retailers when the items are intended for the buyer's use, not resale. The sales tax is applied to retail transactions such as a customer buying a dress from a clothing store, a car purchased for personal use from a dealer, or lumber sold to a carpenter for constructing a house.

Use Tax

The use tax applies when taxable goods or services are stored, used, or consumed in Wisconsin and no sales or use tax has already been paid. The primary purpose of the use tax is to ensure that purchases made outside the state or from sources that do not charge Wisconsin sales tax are taxed when brought there. Notably, not all cities and counties impose use tax.

Wisconsin Sales and Use Tax Rates

Wisconsin has a 5% statewide sales and use tax. Additionally, a 0.5% sales and use tax may apply if the county imposes the use tax. Notably, Milwaukee County imposes a 0.9% county sales tax, while the City of Milwaukee, which spans multiple counties, has a 2% sales tax. In Wisconsin, there is also a baseball stadium 0.1% sales and use tax.

Tax-Exempt Transactions

Generally, all retail sales and purchases of taxable goods and services are subject to Wisconsin sales or use tax, unless an exemption applies. Whether the transaction is exempt depends on whether products or services are tax-exempt, how they are used, and other specific criteria, as well as on whether the buyer or seller is tax-exempt.

Some exempt products include food and food ingredients, except for candy, soft drinks, dietary supplements, and prepared foods. Certain drugs, durable medical equipment, mobility-enhancing equipment, and prosthetic devices are also exempt from sales and use tax.

Nexus Rules in Wisconsin

Whether an individual or business is liable for Wisconsin tax purposes depends on whether it has established a nexus in the state. There are three types of nexus that taxable persons may establish: physical, economic, and marketplace nexus.

Physical Nexus

Individuals or businesses are considered to have a physical presence in Wisconsin, and must register and collect Wisconsin sales or use tax if they own real property in the state, lease taxable products, maintain offices, warehouses, or sales locations. Furthermore, having representatives or agents selling or delivering products or services, installing products, using company vehicles for deliveries, performing construction, or operating through related affiliates that facilitate or promote sales in Wisconsin is sufficient to create a physical nexus.

Economic Nexus

Since October 2018, Wisconsin has required remote or out-of-state sellers without a physical presence in the state to collect and remit sales or use tax on taxable products and services once they exceed the economic nexus threshold. The threshold was initially set at USD 100,000 or 200 or more separate transactions, and was amended in 2021 to remove the transaction threshold. 

Therefore, since February 2021, remote sellers whose gross sales into Wisconsin exceed USD 100,000 in the previous or current calendar year are liable for sales and use tax purposes. Notably, gross sales include all sales into Wisconsin, including sales for resale, taxable, and exempt sales.

Marketplace Nexus

Following the decision to implement economic nexus rules for remote sellers, Wisconsin enacted marketplace facilitator rules in 2020, requiring marketplace providers to collect and remit sales or use tax on all sales of taxable products and services they facilitate on behalf of marketplace sellers. The obligation to collect and remit sales tax arises when the marketplace's gross sales exceed USD 100,000 in the current or previous calendar year.

Taxable Goods and Services in Wisconsin

The sales and use tax in Wisconsin applies to retail sales of tangible personal property, such as clothing, computers, office equipment, electricity, gas, steam, water, and prewritten computer software, as well as U.S. coins and stamps sold or traded as collector’s items at a price above their face value.

When it comes to services, taxable services include admission and access privileges to amusement, athletic, entertainment, or recreational places or events, repair and service of tangible personal property, items, property, or goods, rooms or lodging for less than one month, and telecommunications services, among many others.

Bundled Transactions and the True Object Test

When a retailer sells two or more distinct and identifiable products or services together for a single non-itemized price, that is treated as a bundled transaction. Generally, the entire sales price of a bundled transaction is subject to sales or use tax. However, if the retailer can reasonably identify the portion of the price attributable to nontaxable products from its records, it may tax only the taxable portion, though this does not apply to items such as food, drugs, or medical equipment.

It is important to note that transactions with negotiable prices based on customer selection, sales in which a taxable product or service is essential to an exempt service or other service, transactions in which taxable products make up a small percentage of the total price, or transactions involving real property are not considered bundled.

E-Commerce Framework

Remote sellers that establish an economic nexus can register to begin collecting and remitting sales or use taxes by using Wisconsin's online registration system or the Streamlined Sales Tax. Notably, even if the remote seller sells only non-taxable items but exceeds the USD 100,000 threshold in gross sales, it must register for Wisconsin sales or use tax. 

Marketplace Rules

Remote sellers, who offer and sell their goods and services through online marketplaces, are commonly referred to as marketplace sellers. There are two typical cases of sales made by marketplace sellers. 

The first one is that these sellers offer and sell their goods and services through both marketplaces and other channels, such as their own websites or online shops. In such cases, all sales, regardless of the channel, are considered when determining whether the economic nexus threshold is exceeded. 

Sellers are generally not responsible for collecting tax on sales made through these providers, but they must register and collect tax on sales not conducted through a marketplace. Notably, a marketplace seller must report all sales, including those made through a marketplace provider, on its tax return and then deduct the sales made through the provider.

In cases where marketplace sellers sell goods and services solely through a marketplace provider, the provider or facilitators must collect and remit sales or use tax on all taxable sales they facilitate for marketplace sellers.

Digital Goods and Services

Wisconsin imposes a 5% sales and use tax on certain digital goods that are transferred electronically to the buyer, meaning access or receipt occurs by internet, streaming, email, or similar non‑physical delivery. However, not all digital products are taxable. Taxes apply to specified digital goods and additional digital goods, as well as related digital codes that give the right to obtain such goods.

Specified digital goods include digital audio works, digital audiovisual works, and digital books. In other words, the supply of streamed or downloaded music and spoken recordings, movies, videos, and similar content, ebooks, and other electronic textual works is taxable.

Additional digital goods include greeting cards, finished artwork, periodicals, video and electronic games, and news or information products delivered electronically. These digital goods are taxed whether used permanently or temporarily, and regardless of whether ongoing payments are required. 

However, digital goods are exempt if the same item would be exempt when sold in tangible form. For example, an online newspaper subscription is exempt because a printed newspaper is tax-exempt.

Digital Marketplace

To be considered a marketplace provider in Wisconsin, a person must facilitate a retail sale on behalf of another seller by listing or advertising, in any manner, the seller's taxable products or services for sale. Additionally, an individual or business must, directly or indirectly, process payments from buyers, regardless of whether the person receives compensation or other consideration for their services.

Digital Platform Operator

Once marketplace providers exceed the USD 100,000 threshold in gross own or facilitated sales, they must notify the marketplace seller that they are collecting and remitting Wisconsin sales or use tax on all taxable sales, including lodging services. Providers are not required to file separate sales tax returns for each marketplace seller. Instead, providers report their sales and the sales of all their marketplace sellers on a single sales tax return.

Providers can be audited and held responsible for Wisconsin sales or use tax on sales they facilitate for marketplace sellers. The only case in which providers are not liable is when it has been granted a waiver from collecting and remitting the tax, or when they can show that any error in tax collection or remittance resulted from incorrect or incomplete information provided by the marketplace seller.

The Department of Revenue grants a waiver to marketplace providers that apply to forgo collecting and remitting Wisconsin sales or use tax when sales are facilitated solely for marketplace sellers operating under a shared hotel, motel, or restaurant brand.

Filing and Payment Requirements in Wisconsin

Taxable persons liable for sales and use tax must file a return for every reporting period, even when no tax is owed. Typically, filing periods are monthly, quarterly, or annually, with quarterly being the default unless the Department of Revenue notifies taxable persons otherwise. For example, seasonal retailers must file monthly returns during the months they are open for business. Also, if the sales and use tax liability exceeds USD 3,600 per quarter, monthly filing and payment are required.

Penalties for Non-Compliance with Sales and Use Tax Requirements

Failure to file or pay Wisconsin sales or use tax by the due date results in several penalties and consequences. If the failure was caused by negligence, a 5% penalty of the tax due applies for each month or part of a month the return is late, up to a maximum of 25%, along with a USD 20 late filing fee. Additionally, an annual 18% interest on unpaid taxes is calculated, and any retailer’s discount is forfeited if taxes are paid late.

Filing incorrect returns or claims for refund carries additional penalties. In case of negligence in filing a return or refund claim, a 25% penalty is imposed on the additional taxes or overclaimed refund, while fraud can trigger penalties of 50% to 100%, depending on intent.