MADISON — Gov. Tony Evers, Wisconsin State Assembly Speaker Robin Vos (R-Rochester), and Wisconsin State Senate Majority Leader Devin LeMahieu (R-Oostburg) today, after months of bipartisan negotiations and work to reach consensus, announced they have reached agreement on a blockbuster bipartisan proposal to build upon the bipartisan investments and agreements approved in the 2025-27 Biennial Budget to use a portion of the state’s readily available state surplus to invest in Wisconsin’s kids and K-12 schools, provide property tax relief statewide, and help working families afford rising costs. The bipartisan package invests over $600 million in Wisconsin’s K-12 schools, including providing the largest increase to the state’s special education reimbursement rate in state history to attain 50 percent as well as investing over $300 million in general school aids; provides tens of millions of dollars in statewide property tax relief through Wisconsin Technical College System aid; makes direct payments to Wisconsin’s working families who are struggling to keep up with rising costs; and eliminates state income tax on tipped and overtime income.
The announcement today comes on the heels of a historic legislative session marked by bipartisan collaboration between the Democratic governor and the Republican-controlled Legislature, leading to the culmination of several major accomplishments under divided government. In the months since the governor and Republican leaders last summer negotiated the first bipartisan state budget deal Wisconsin has had in decades, the trio’s bipartisan efforts have continued in earnest, working to pass key legislation to extend postpartum coverage for new moms, require insurance coverage for certain breast cancer screenings for Wisconsin women, and release $125 million to fight PFAS contaminants statewide, among other key state priorities.
The blockbuster deal announced today will be paid for using a small portion of the state’s readily available state surplus, the balance of which also increased since the 2025-27 state budget was enacted last summer, leaving billions of dollars remaining and available in the state’s checking and savings coffers for the next biennial state budget and to respond to any pressing state challenges in the interim. Wisconsin closed the last fiscal year with $4.6 billion in the state’s general fund, which functions like the state’s checking account, and $2 billion in the ‘rainy day’ fund, which is effectively the state’s savings account. Earlier this year, the nonpartisan Legislative Fiscal Bureau estimated that the state would end the biennium with about $2.37 billion, a projection that is more than $1.5 billion above the projected net balance from the enacted 2025-27 biennial budget.
In a new memo today, jointly released by the Wisconsin Departments of Administration and Revenue, the departments indicated that revenue collections are even stronger than what was initially anticipated by the Legislative Fiscal Bureau in January. For the current fiscal year, the state tax collections through April are tracking approximately $300 million to $350 million above the Legislative Fiscal Bureau’s January estimates.
In recent months, after hearing from local leaders, parents, and families, Gov. Evers, Speaker Vos, and Majority Leader LeMahieu agreed to work together on a proposal to respond to these pressing challenges that could both earn bipartisan support in and pass the Wisconsin State Legislature. Today’s joint announcement of the bipartisan deal, outlined in further detail below, reflects months of conversations and negotiations to reach an agreement.
The blockbuster deal negotiated and agreed upon by Gov. Evers, Speaker Vos, and Majority Leader LeMahieu:
- Includes the largest increase to the state’s special education reimbursement rate in state history to attain 50 percent, investing over $600 million in Wisconsin’s K-12 schools, on top of the already historic nearly $1.4 billion provided in the 2025-27 Biennial Budget, including $300 million in property tax relief through general school aids;
- Provides an additional $50 million in property tax relief for Wisconsinites statewide in addition to the above over $300 million in general school aids;
- Eliminates the income tax on cash tips and overtime income for Wisconsin taxpayers; and
- Returns over $850 million of the surplus to Wisconsinites, providing direct support to over 3 million Wisconsinites to respond to rising costs.
“We’ve proven time and again that, here in Wisconsin, we’re capable of finding common ground and working together to get good things done for the people of our state, and the bipartisan compromise we’re announcing today is yet another example,” said Gov. Evers. “I’ve always said that what’s best for our kids is what’s best for our state—it’s why it’s been important to me throughout this process that we make sure our kids and our schools have the resources they need while also lowering property taxes and giving working families a little breathing room in their household budgets. After months of hard work, I’m proud we were able to put politics aside on a plan to use a portion of our historic state surplus to do the right thing for Wisconsinites across our state.
“Through the bipartisan investments we’re announcing today, the special education reimbursement rate will be 50 percent—double what it was when I first took office—in addition to approving more than $350 million in statewide property tax relief while eliminating income taxes on cash tips and overtime and helping working families afford rising costs from the grocery store to the gas pump. It's a historic day for Wisconsin’s kids and our schools, and I’m jazzed we were able to get this done,” Gov. Evers continued. “I want to thank Speaker Vos and Majority Leader LeMahieu for their leadership and willingness to work across the aisle over the last several months. This is a blockbuster deal for Wisconsin, and I’m grateful for the bipartisan partnership that got us to today.”
“Republicans have fought hard to control spending, and now we have a sizable budget surplus,” Speaker Vos said. “We’re sending it back to help families with the pressure of increasing costs, reward hard work, and to continue investing in schools to help stabilize rising property taxes.”
“Our top priority in this process was to return the state’s surplus to those who created it: hardworking taxpayers across the state. This deal will provide immediate relief with $600 in surplus refund payments and provide permanent property and income tax relief for Wisconsin families,” said Majority Leader LeMahieu.
Under the agreement reached between Gov. Evers, Speaker Vos, and Majority Leader Devin LeMahieu, the bipartisan deal will be taken up by the Wisconsin State Legislature yet this week, ensuring the state has the maximum available time to get the negotiated investments out to schools as soon as possible, some even before the current fiscal year ends at the end of June.
The bipartisan deal is set to be taken up by the Wisconsin State Legislature’s state budget committee, the Joint Committee on Finance, on Tues., May 12, 2026. The Wisconsin State Assembly and the Wisconsin State Senate are expected to take up the proposal on Wed., May 13, 2026. Gov. Evers anticipates signing the proposal as early as next week.
DOING WHAT’S BEST FOR KIDS
Support K-12 Kids and Schools
Gov. Evers and Republican leaders last year negotiated and passed a bipartisan, pro-kid budget that made meaningful investments in Wisconsin’s kids at every age, from early childhood to K-12 to the state’s higher education institutions. This included over $360 million to help stabilize the state’s early education and child care industry, the largest increase for the UW System in nearly two decades, and an historic nearly $1.4 billion increase in spendable revenue for K-12 schools across the state, with a more than half-a-billion-dollar investment in special education.
The blockbuster bipartisan deal between Gov. Evers and GOP leaders announced today provides an additional $300 million for general school aids for K-12 schools beginning in 2026-27, in addition to another over $300 million for special education funding. All told, the package provides over $600 million for Wisconsin K-12 schools on top of the already historic nearly $1.4 billion Gov. Evers and GOP leaders agreed upon and approved through the bipartisan, pro-kid 2025-27 Biennial Budget.
Increase state reimbursement for special education
In the 2025-27 Biennial Budget, Gov. Evers and GOP leaders worked together to secure the largest single increase in special education reimbursement rates in state history—larger than the increase in the previous three state budgets combined—increasing the reimbursement rate to 42 percent in the first year of the biennium and 45 percent in the second. Unfortunately, the funding approved in the state budget was not enough to reach the agreed-upon percentages.
In order to not only provide the necessary funding to reach the percentages agreed upon in the state budget, but also continue building on base-level investments in the state’s K-12 kids and schools, a key priority for Gov. Evers, the bipartisan package announced today includes an additional more than $300 million for special education aid. Under the bipartisan proposal, the state will go well beyond the promised special education reimbursement rate approved in the 2025-27 Biennial Budget, reaching 50 percent in 2026-27, ultimately doubling the state’s promised special education reimbursement rate since Gov. Evers took office in 2019. The blockbuster bipartisan deal, once approved, will mark the largest increase in special education reimbursement in state history.
With this additional funding, the governor and Republican leaders have worked together to ensure Wisconsin’s kids and schools will have the resources they were promised and that they need to succeed. As a result of the increase in special education aid, funding will also increase by $16 million for pupils participating in the choice, charter, special needs scholarship, and open enrollment programs over the biennium.
INFLATION AND PROPERTY TAX RELIEF
As working families across the state and country continue to face rising costs at the grocery store and gas pump, it was a top priority for both Republican leaders and Gov. Evers to help working families make ends meet while delivering real, meaningful property tax relief to Wisconsinites across the state. The blockbuster bipartisan deal announced today not only provides tens of millions of dollars in statewide property tax relief but also eliminates income taxes on cash tips and overtime and provides direct support to Wisconsinites who need help now.
All told, taken together with all of the proposals passed by the Republican-led Legislature and enacted by Gov. Evers, this new package will increase total tax relief approved by Gov. Evers in the 2025-27 biennium to over $2 billion. On top of this tax relief, the inflation relief payments detailed below will bring total relief in this biennium to nearly $3 billion.
Provide inflation relief for working families
The agreed-upon package negotiated by Gov. Evers and GOP leaders provides over $850 million in direct support to more than 3 million Wisconsinites to help respond to rising costs and help Wisconsin households make ends meet. Each individual who filed an individual income tax return for tax year 2024 and for which at least 90 percent of their income is Wisconsin income will be eligible to receive a $300 refund, while married couples who file jointly will receive $600, or their net tax liability, whichever is less.
Invest in reducing property taxes
The agreement will also provide $350 million in property tax relief, including the aforementioned $300 million in school aids, and an additional $50 million for property tax relief aid for the Wisconsin Technical College System beginning in 2026-27. This aid is counted under each district’s revenue limit and, as a result, reduces each district’s operational levy by an equal amount, ensuring the district doesn’t have to raise its local levy and reducing the tax burden on local property taxpayers.
No income tax on cash tips
As proposed in Gov. Evers’ 2025-27 Executive Budget, the agreement eliminates the individual income tax on cash tips. The agreement mirrors federal law in eliminating the individual income tax on tipped income at the state level. This change will provide hardworking families with much-needed permanent tax relief. Unlike the federal enactment, this proposal would not expire in 2028 and will continue in perpetuity.
Overall, the proposal will cut income taxes by nearly $102 million over the next two years while continuing to provide tax relief each year in the future.
Eliminate the income tax on overtime
Finally, the agreement will mirror federal law in excluding overtime income from the state individual income tax beginning in 2026-27. Unlike the federal provision, this proposal, too, will not expire and will continue in perpetuity.
Eliminating state income tax on overtime will save families across the state $328 million over the next two years alone.
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