Wisconsin has a progressive income tax system, which means the math for calculating payroll taxes won’t be as straightforward as it is with a flat tax system. In addition, it has special laws governing family and sick leave that employers must comply with and child labor regulations. Otherwise, Wisconsin payroll generally aligns with federal regulations.
You can make running payroll in Wisconsin easier by using an all-in-one payroll service like Gusto. From electronically onboarding new employees to calculating and filing Wisconsin payroll taxes, Gusto helps you make sure your payroll is accurate every time. Sign up today for a 30-day free trial.
Step-by-Step Guide to Running Payroll in Wisconsin
Here is a basic guide to running payroll in Wisconsin.
Step 1: Set up your business as an employer. New companies may need to access the federal Electronic Federal Tax Payment System (EFTPS) to create a new Federal Employer Identification Number (FEIN). Your FEIN is required to pay federal taxes.
Step 2: Register your business with the State of Wisconsin. If your business is new, you need to register on the Wisconsin One Stop Business Portal website. Any company that pays employees in Wisconsin must also register with the Wisconsin Department of Revenue.
Step 3: Create your payroll process. If you have a new business, you will need to figure out your payroll process. But a business that is already established probably has a process that you inherit. It’s important to decide how often, when, and how you will pay your employees. You can opt to process payroll by hand (not recommended), set up an Excel payroll template, or sign up for a payroll service to help you handle your Wisconsin payroll.
Step 4: Have employees fill out relevant forms. Your business must have every employee complete payroll forms during their onboarding process. Every employee must complete I-9 verification. New employees must also have a completed W-4 on file, as well as a Wisconsin Withholding Exemption Certification (WT-4).
Step 5: Review and approve time sheets. Running payroll accurately requires you to begin the process before the day your payroll is due by collecting time sheets. Reviewing the time sheets from your nonexempt employees gives you time to speak with anyone who might have made mistakes. There are many ways to track employee time—some of which are free.
Step 6: Calculate employee gross pay and taxes. When processing payroll, you’ll have to perform certain calculations, i.e., sum of hours worked (use our free timecard calculator to help), total employee pay, deductions, tax withholdings, etc.
Step 7: Pay employee wages, benefits, and taxes. The best way to pay your employees is through direct deposit. But cash and paper checks are also options. Wisconsin does not have a state minimum wage, so the federal minimum wage of $7.25 per hour applies. You can pay your federal and Wisconsin state taxes online. If you use a benefits provider, it should work with you to make deductions simple, automatic, and electronic.
Step 8: Save your payroll records. Keeping your company business records is good practice. Wisconsin requires businesses to keep record of all hours worked and wages paid to each employee, including their name, address, and date of birth, for at least three years. This mirrors the Fair Labor Standards Act (FLSA) recordkeeping requirements. You’ll also need to maintain payroll tax records for four years, maximum.
Step 9: File payroll taxes with the federal and state governments. All Wisconsin state taxes need to be paid to the applicable state agency on the schedule provided, usually quarterly, which you can do online at the Wisconsin Department of Revenue website. To pay federal taxes, you can make those payments online using the EFTPS on one of the following two schedules:
- Monthly: When the IRS assigns you a monthly schedule, you need to deposit employment taxes on payments made during a calendar month by the 15th of the following month.
- Semiweekly: When the IRS assigns you a semiweekly schedule, you must deposit employment taxes for payments made Wednesday, Thursday, and Friday by the following Wednesday, and for payments made Saturday, Sunday, Monday, and Tuesday, by the following Friday.
Step 10: Complete year-end payroll reports. Doing payroll in Wisconsin requires more than just paying employees on a regular schedule. Every year, you will need to complete payroll reports, including all W-2 Forms and 1099 Forms. You must provide these forms to employees no later than Jan. 31 of the following year. You’ll also need to send copies to the IRS along with a summary form that totals the data.
Learn more about doing payroll yourself in our guide on how to do payroll. It has a free checklist you can download to make sure you don’t miss any steps.
Wisconsin Payroll Laws, Taxes & Regulations
Wisconsin payroll laws generally follow federal guidelines, but there are still items that you need to pay close attention to so you can be sure your payroll is accurate. To help you maintain compliance with payroll regulations, review Wisconsin’s relevant regulations below.
With few exceptions, most employers in the U.S. must pay Federal Insurance Contributions Act (FICA) taxes. The current FICA tax rate for Social Security is 6.2% and 1.45% for Medicare. Both the employer and the employee will pay these taxes, each paying 7.65% for the combined Social Security and Medicare taxes.
As with most states, Wisconsin requires that you withhold certain taxes from employee paychecks, as well as make tax payments from your business. Wisconsin does not levy local taxes on employees.
Wisconsin has a fairly complex progressive income tax. The more an employee makes, the more you’ll need to withhold; this includes charging different rates on various ranges for each salary/wage amount. The Wisconsin Department of Revenue provides withholding tables for reference.
According to the 2021 Wisconsin budget, which has not yet passed, the third tax bracket will have a rate reduction from 6.27% to 5.3%. Pay close attention to whether this becomes law as you will need to adjust accordingly.
Employer Unemployment Taxes
All businesses in Wisconsin must pay State Unemployment Tax Act (SUTA) taxes. The current wage base is $14,000 and rates range from 0.0% to 12.0%. Most new employers in Wisconsin will pay a SUTA rate of 3.05%. New businesses with payroll exceeding $500,000 will pay 3.25%. New employers in construction will pay 2.9%. Businesses that pay SUTA in full and on time can claim a tax credit of up to 5.4% on their Federal Unemployment Tax Act (FUTA) taxes.
To learn more about FUTA requirements, check out our guide on FUTA and Form 940.
Wisconsin requires every employer with three or more employees to carry workers’ compensation insurance, unless your business qualifies for self-insured status. Workers’ compensation insurance provides benefits to employees who suffer on-the-job injuries and covers the cost of medical treatment and lost wages. For every $100 of annual payroll you pay out, you’ll be charged an average of $1.58.
Wisconsin Minimum Wage
Wisconsin follows the federal minimum wage of $7.25 per hour. For tipped employees, companies must pay at least $2.13 per hour, provided that their tips get them to the hourly minimum wage. If not, the company must make up the difference.
Wisconsin overtime rules follow the Fair Labor Standards Act requirements. Under the FLSA, all employers must pay employees 1.5 times their regular hourly wage for hours worked over 40 in a workweek. If you fail to pay overtime when it’s due, you’ll underpay taxes and face late fees and penalties.
To help ensure your overtime calculations are accurate, use our overtime calculator to verify.
You’re required to pay employees at least once per month. Each payment must be made within 31 days after the end of a pay period. You are free to pay employees more frequently but must choose a pay schedule and stick with it.
Wisconsin also requires employers to pay workers by one of the following methods:
You may pay employees by payroll card, but only if the employee agrees in writing.
If you need help keeping track of your payroll periods, use one of our free pay period calendars.
Pay Stub Laws
All Wisconsin employers are required to give employees a pay stub with every paycheck. There is no requirement that it be paper or electronic. However, the paystub must include the following information:
- Base rate of pay
- The number of hours worked
- Itemized deductions
- Total net pay to the employee
If you do not use a payroll service, download one of our free pay stub templates to help you create your own.
Wisconsin Paycheck Deductions
Wisconsin explicitly forbids you from deducting money from employee paychecks for damaged or stolen property, cash shortages, or poor work. You may make deductions for the following reasons:
- An employee provides written authorization to deduct wages for each occurrence
- The business and a union representative determine an employee was negligent and liable for damaged or stolen property
- Other lawful reasons
Terminated Employees’ Final Paychecks
You have to pay an employee’s final paycheck on the next regular payday when the employee quits, resigns, or is discharged or terminated. When a company closes or is sold or merged, an employee must be paid within 24 hours of the separation.
If you need to pay an employee right away and aren’t currently using a service, use one of our recommended ways to print a free payroll check.
Wisconsin HR Laws That Affect Payroll
Wisconsin mostly follows federal guidelines for HR laws. But make sure you pay close attention to ensure that your company is not violating any employment laws.
Wisconsin New Hire Reporting
Every employer in Wisconsin must report new hires and any rehired employees to the Wisconsin New Hire Reporting Center within 20 days of their hire date. This information is used to enforce child support orders and must include the employee’s name, address, and Social Security number.
Meals and Breaks
Wisconsin law mandates that every employer give employees under 18 at least one 30 minute break if they are scheduled to work more than six consecutive hours. There are no requirements to give breaks to any employee 18 years of age or older. Breaks of less than 20 minutes must be paid, but breaks or meal periods over 30 minutes generally do not need to be paid.
Wisconsin also has a “One Day of Rest in Seven” law. This law applies to employers operating factories or mercantile businesses. These employers must give employees at least one 24-hour period of rest every calendar week.
Wisconsin Child Labor Laws
Wisconsin does not restrict the working hours or days of children aged 16 and 17. However, minors aged 14 and 15 can only work up to three hours on school days and 18 hours in a school week. On non-school days and when school is not in session, they can work up to eight hours per day and 40 hours per week.
Check out our guide to hiring minors for more insight.
Time Off and Leave Requirements
Click through the tabs below to learn more about Wisconsin’s time off and leave requirements.
Wisconsin follows the Family and Medical Leave Act (FMLA), which requires that all eligible employers provide up to 12 weeks of unpaid leave for employees who fall under a covered disability. Pregnancy and taking care of a sick family member are examples. The FMLA doesn’t mandate that employers pay employees during this time away from work, but it does require that employers provide the employee with the same or a similar job once they return to work.
Wisconsin also has its own leave, called the Wisconsin Family and Medical Leave Act. The Wisconsin law and the FMLA are incredibly similar but more companies will be subject to the state law than the federal because the state law includes employees who have worked 1,000 hours in the previous 12 months. The federal law, however, requires employees to have worked 1,250 hours in the previous 12 months.
The biggest distinction between the laws is how an employee can use the time. The FMLA does not spell out how an employee uses their 12 weeks of time. The Wisconsin law puts the following limits:
- Six weeks for birth or adoption
- Two weeks for a serious health condition of a parent, child, or spouse
- Two weeks for the employee’s own serious health condition
Wisconsin does not require companies to give employees vacation and paid time off (PTO) benefits. Companies in Wisconsin are free to create PTO policies, including whether to pay out accrued and unused PTO when employees leave. Because there is no state requirement to pay out PTO, it’s a good practice to have this clearly defined in your company policy. The important thing is to follow the guidelines in your policy, or you can be held liable.
If you offer PTO and need help to calculate employees’ PTO accrual, use our free PTO calculator.
In Wisconsin, the law does not require private companies to pay employees for holidays or pay them a higher rate for working a holiday. Companies may choose to pay higher rates for holiday workers or require workers to work holidays, provided they adhere to the FLSA.
Wisconsin does not mandate that businesses give employees paid sick leave. Your company may create a policy if you wish and must adhere to that policy, paying attention to FMLA.
All employers are required to give an employee up to three hours of unpaid time off to vote. The employee must request this time off at least one day in advance and you may determine when the employee can vote.
There is no requirement that you pay employees who are out on jury duty. However, you must provide an employee an excused absence for jury duty. And remember, you may not terminate or threaten an employee for serving on a jury. Failure to comply could result in litigation.
Businesses in Wisconsin do not have to provide employees with bereavement leave. You are free to create policies if you choose.
Wisconsin has a state W-4, the Employee’s Wisconsin Withholding Exemption Certificate. Wisconsin has no other state payroll forms.
Federal Payroll Forms
Here is a complete list and location of all the federal payroll forms you should need.
- W-4 Form: Provides information on employee withholdings so you can properly calculate and withhold federal and state income taxes
- W-2 Form: Used to report total annual wages for each employee
- W-3 Form: Used to report total annual wages for all employees; summary form of W2
- Form 940: To calculate and report unemployment taxes due to the IRS
- Form 941: Used to file quarterly income tax
- Form 944: Used to file annual income tax
- 1099 Forms: Provides information for non-employee contract work
For a more detailed discussion of federal forms, check out our guide on the federal payroll forms you may need.
Wisconsin Payroll Tax Resources
- Wisconsin State Tax Commission provides many forms, information on the latest laws and regulations, and other employer-specific information.
- Wisconsin One Stop Business Portal has many great resources for new and existing businesses to help them navigate licensing, taxes, and employer requirements.
- Wisconsin Department of Workforce Development offers support and resources to help businesses ensure compliance with unemployment and workers’ compensation, plus other labor laws.
Wisconsin has a complex progressive income tax system. You’ll also need to stay abreast of family and sick leave laws. Otherwise, doing payroll in the state is fairly straightforward.
To ensure that you get your Wisconsin tax calculations right, use a payroll software like Gusto that walks you through Wisconsin payroll every time. Consider Gusto to help you file accurately and on time. It even pays employees with direct deposit for free. Sign up for its 30-day free trial.