Taxation of Public Utilities

Wisconsin imposes gross revenues or ad valorem taxes on utilities in lieu of local property taxes on these businesses. Carlines, electric cooperative associations, and municipal and private light, heat, and power companies pay taxes on their gross revenues. Airlines, conservation and regulation companies, municipal electric association projects, pipelines, railroads, and telephone companies pay an ad valorem tax.

1800s to 1930

Prior to the early 1900s, each municipality valued and taxed public utility property located within its borders. This tax system became less practical as utility service territories expanded to cover several municipalities.

In 1905, the state began valuing railroad property under the "unitary" concept whereby each railroad was valued as a whole, as opposed to separate values in each municipality. At the same time, the tax rate was switched from individual municipal tax rates to the statewide average tax rate. In 1908, street railway companies and their related light, heat, and power companies were brought under state taxation. In 1917, other light, heat, and power companies with property in more than one municipality were brought under this system; however, municipal tax rates continued to apply until replaced in 1929 with the state average rate.

1931 to 1980

This system of taxation was extended to 2 airlines in 1946 and to pipelines in 1950.

For some utility companies, the state tax is based on revenues instead of property values. Rural electric cooperatives, organized in the 1930s, were originally taxed on their property. However, in 1939, they were switched to a tax based on gross revenues.

1981 to Present Day

In 1985, private light, heat, and power companies were switched to a tax based on gross revenues. Telecommunications companies had been taxed based on their gross revenues since they began service in the state. However, in 1998, they began a switchover to being taxed on their property.

A utility serving retail customers whose customers and property are all located within a single municipality is assessed and taxed locally under the general property tax.

However, if such a utility's primary business is selling electricity at wholesale and its generating plant(s) has/have a generating capacity of 50 megawatts or more, the utility is taxed under the state gross revenues tax.