MADISON, Wis. — There’s a silver lining to all the online shopping people are doing this year.

The National Retail Federation surveyed shoppers and found 60% of them planned to shop online, up from years before; 96% of retailers expected online sales at the holidays to increase.

A law the governor signed this last session translates some of the taxes from those purchases to tax cuts.

It requires that the amount the state collects on sales tax on online, out-of-state purchases (where the retailer does not have a tie to Wisconsin) needs to be taken out of income taxes, so more money spent online leads to bigger cuts.

The Wisconsin Policy Forum looked into this earlier this year.

“With the increase we’ve seen in online sales in 2020, it is now looking like that income tax cut is going to be quite a bit larger than we would have anticipated going into 2020,” said Mark Sommerhauser, the communications director for the nonpartisan organization.

As of April, the state had already met projections of $118 million for the year on these taxes, and researchers said that amount could top $200 million by September.

Giving that back to taxpayers is unique to Wisconsin.

“For a lot of states that just collect these revenues and just put them into their general coffers, online sales was kind of a silver lining in 2020,” Sommerhauser said. “At least that was one area where … tax revenues are actually up.”

This could have added relief coming up on what the forum thinks will be the most difficult budget year in a decade, but for taxpayers who also might have had a difficult budget year it could be a silver lining.

Since the state Department of Revenue stops these collections every September the increase in online shopping around the 2020 holidays won’t affect this year’s cut, but it would come into play in the future.


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