WI AB1026

Replaces fixed interest rates (12% per year for unpaid taxes, 3% per year for refunds) with a variable rate determined annually by the Department of Revenue based on the effective federal funds rate published by the Federal Reserve Bank of New York on January 2 of each year

Applies to multiple tax types including individual and corporate income tax, franchise tax, withholding tax, sales and use tax, utility and insurer taxes, motor fuel excise taxes, alcohol beverage taxes, cigarette/tobacco/vapor product taxes, economic development surcharge, petroleum inspection fee, and metalliferous mining tax

Requires DOR to calculate the monthly interest rate by adding 1 to the federal funds rate, raising that sum to the power of one-twelfth, and subtracting 1, with the rate published on a DOR website

New interest rate structure becomes effective January 1, 2026, applying to assessments issued and refunds paid on or after January 3, 2026, regardless of the taxable periods involved

Delinquent taxes continue to accrue interest at 1.5% per month, though the secretary of revenue may reduce this rate to the new variable rate when deemed fair and equitable