Credits and breaks for Wisconsin families: the EITC by family size, child care at 100%, the $480 couple credit

The federal child tax credit does nothing on a Wisconsin return. Form 1 starts from federal adjusted gross income, and a credit does not change AGI, so the $2,200 per child that cuts the federal bill never reaches the state. Each child does earn a $700 exemption on Form 1, worth about $31 to $37 of tax. Wisconsin’s real help for families runs through four credits and a set of subtractions. The earned income credit is refundable and is 4% of the federal credit with one child, 11% with two and 34% with three or more, and nothing for a worker without children. The child and dependent care credit is 100% of the federal credit. The married couple credit gives a two-earner couple up to $480. The school property tax credit returns up to $300 of property tax or rent. On the subtraction side, Edvest and Tomorrow’s Scholar 529 contributions come off at $5,280 per beneficiary, private school tuition at $4,000 per K-8 pupil and $10,000 per high school pupil, and Wisconsin college tuition at up to $7,649 per student (2025 figure). None of this appears on the federal return, which is why so much of it gets left off.

One rule runs underneath all of it. Every one of these credits is forfeited on a return that claims the retirement income subtraction for people 67 and older. That rarely matters to a young family. It matters a great deal to grandparents raising grandchildren, who may have an earned income credit, a dependent care credit and a pension in the same year. See Wisconsin for retirees.

The earned income credit

Wisconsin’s credit is a percentage of the federal earned income credit, and the percentage depends on how many qualifying children are on the federal return.

Claimed on Form 1 line 30. Refundable: it is paid even when no Wisconsin tax is owed. Full-year Wisconsin residents only; married couples must file jointly (a separate return gets nothing). The federal credit itself is covered in The earned income credit.

The shape of the schedule is the thing to know. A family with three children gets more than eight times the credit of a family with one child on the same federal amount, and the jump from two to three children triples the Wisconsin credit. Because the credit is tied to the federal one, every federal rule about who counts as a qualifying child, residency, and investment income carries over. There is no separate Wisconsin computation; the software multiplies.

The child and dependent care credit

Since 2024 the Wisconsin credit has been 100% of the federal child and dependent care credit, figured on Wisconsin’s own expense caps of $10,000 for one qualifying person and $20,000 for two or more (verify the 2026 schedule). Wisconsin follows the federal credit percentages automatically, so the higher federal rates for 2026, up to 50% of expenses at lower incomes, flow into the Wisconsin credit as well. The credit is nonrefundable: it reduces Wisconsin tax but cannot produce a refund by itself. The federal credit is explained in The child and dependent care credit.

The dependent care FSA is a smaller win here than federally. The federal exclusion for employer dependent care benefits rose to $7,500 for 2026; Wisconsin’s stays at $5,000 ($2,500 married filing separately), and the difference is added back on Schedule AD as Wisconsin wages. A family putting the full $7,500 into an FSA adds $2,500 to Wisconsin income, about $110 of tax in the 4.40% bracket. The credit is still usually the better route for the second child’s expenses.

The married couple credit

Wisconsin’s answer to the marriage penalty is on Schedule 2. On a joint return where both spouses have earned income, the credit is 3% of the lower earner’s qualified earned income, up to $480, which is reached at $16,000 of the lower earner’s wages. Qualified earned income is wages, salaries, tips and self-employment income, reduced by that spouse’s retirement plan contributions and other adjustments allocable to it. It is nonrefundable and is the credit most often computed wrong when one spouse has a small business, because the self-employment income has to be netted against that spouse’s own adjustments. Married filing separately gets nothing.

The school property tax credit

Owners and renters both qualify. The credit is 12% of property tax paid on the principal residence, or 12% of a rent equivalent: 20% of rent paid if heat was included, 25% if it was not (verify). The maximum is $300 ($150 married filing separately), reached at $2,500 of property tax, $12,500 of rent with heat, or $10,100 of rent without. Nearly every Wisconsin household reaches the cap. Renters need a rent certificate from the landlord showing the rent paid and whether heat was included, and the credit is on Form 1 lines 16a (renters) and 16b (owners).

The homestead credit

The homestead credit on Schedule H is the state’s property tax circuit breaker for low-income households, and it covers renters as well as owners. For 2025 the claimant had to be 18 or older with earned income, or disabled, or 62 or older, and household income had to be under $24,680; the maximum credit was $1,168, and household income is reduced by $500 for each dependent. The 2026 figures are to come; they have not been indexed in recent years. The credit is refundable and can be claimed on Schedule H alone, without a Form 1. For a young family the $500-per-dependent reduction is the point: a couple with three children and $25,500 of household income is under the limit once the $1,500 comes off.

Head of household

Wisconsin follows the federal filing status, so a single parent who qualifies as head of household federally is head of household on Form 1. The status matters here in a specific way. The head of household standard deduction starts higher than the single deduction ($17,520 against $13,560 for 2025; 2026 figures to come), and phases out faster, at 22.515% of Wisconsin income over the threshold until it meets the single schedule, after which it follows the single schedule down. The brackets are the single brackets. A head of household at $28,000 of income keeps about $15,600 of standard deduction (2025 figures) where a single filer keeps about $12,550. Who qualifies is a federal question, covered in Head of household.

Education: three subtractions

These are subtractions, not credits: each dollar saves tax at your bracket rate, 3.5 to 7.65 cents, plus the standard deduction it restores if you are in the phase-out range. The 529 subtraction is for Wisconsin’s own plans; an out-of-state plan earns nothing. Anyone who contributes gets it, grandparents included.

The 529 subtraction is the one most often missed, because the federal return never asks about 529 deposits. The private school subtraction has no income limit and covers tuition at any Wisconsin or out-of-state private school for a dependent, but tuition paid from a 529 account cannot also be claimed (verify). Wisconsin follows the federal expansion of 529 plans to K-12 expenses, so a family can fund Edvest, subtract the contribution, and pay private school tuition from the account.

What is new for 2026

A nonrefundable stillbirth credit of $2,000 on a joint return and $1,000 otherwise begins with 2026 returns. Employers get a Wisconsin credit matching the federal employer-provided child care credit. The Edvest subtraction indexed up from $5,130 to $5,280. Nothing changed the earned income credit percentages, and no state child tax credit was enacted. The full list is in What’s new in Wisconsin for 2026.