In January 2025, both Republicans and Gov. Tony Evers drew clear lines in the sand on their non-negotiables for the 2025–27 Wisconsin state budget. Republicans prioritized income tax relief and firmly opposed increasing funding for schools. In contrast, Gov. Evers emphasized investments in childcare, the University of Wisconsin system and K-12 education, especially special education. At one point, a deal seemed unlikely. In a deeply divided political landscape, the tension underscored the broader challenge of governing a politically split, or “purple,” state.

A new federal rule affecting how much states can collect in hospital assessment fees created an unusual sense of urgency with the Wisconsin state budget. To secure access to the additional funding, Wisconsin lawmakers had to pass and sign the state budget into law quickly before the federal government finalized its own budget. 

Both sides acknowledged that the state budget didn’t give everyone everything they wanted but instead reflected the kind of compromise expected in a purple state. 

The result was a $111 billion package that delivered tax relief, including cuts for middle-income families and retirees, and eliminated the sales tax on residential electricity. Supporters also highlighted historic investments in K-12 schools, special education, childcare, the UW system and transportation. And beyond its policy impact, this budget added two notable footnotes to Wisconsin history.

Sprint to the finish 

• Gov. Evers and Republican lawmakers disclosed their negotiated compromise on July 1, 2025.
• The budget passed 59-39 in the Assembly with one Republican voting no and six Democrats voting yes. The Senate passed the budget, 19-14, with four Republicans opposed and five Democrats in support.
• For the first time in Wisconsin’s history, the Senate president from the majority party did not vote for the budget bill as it passed the Senate. Senate President Mary Felzkowski made history by voting against it, citing concerns about the hospital funding. 
• Both houses passed the budget in a single day, which has not occurred in more than 50 years. Minutes later, Gov. Evers signed it at 1:30 am on July 3, 2025. 

Below are a few highlights of the compromised agreement. 

Budget features

Historic middle-class income tax cut 

• Includes approximately $1.4 billion in tax cuts, focused on the middle class and retirees, by expanding the middle-class tax bracket and exempting a significant portion of retirement income from state taxes
• Eliminates the sales tax on residential electricity, which is said to save Wisconsinites $178 million over the next two years.

Record funding increases for public education

• Allocates nearly $1.4 billion in spendable revenue for K-12 schools, the largest ever increase under the current formula
• Increases the special education reimbursement rate to one of the highest levels Wisconsin has ever funded
• The UW system received its largest operational boost in nearly 20 years, plus nearly $1.2 billion in capital investments.

Childcare funding milestone

• Provides over $360 million invested in childcare. 
• Funds new initiatives like “Get Kids Ready” and infant/toddler care pilot programs.

Largest biennial investment in transportation in decades

• Allocates more than $1.1 billion for roadwork, local infrastructure and rural/agricultural routes.
• Includes new grant programs for local government facilities and services.

What does this 2025-27 budget mean for property taxes? 

In 2023, Gov. Evers vetoed a budget provision that would have increased K-12 school funding tied directly to property tax relief. As a result, a funding level of $325 per pupil was established, and if the legislature did not fully fund this amount, school districts could levy the difference, passing the cost onto property taxpayers.

The 2025–27 budget takes a different approach by significantly increasing state funding for K-12 education, adding nearly $1.4 billion in spendable revenue. As a result, school districts are likely to levy smaller property tax increases, if any, than they would have without the legislature’s $1.4 billion investment in education. At the time of publication, the Legislative Fiscal Bureau had not released any specific analysis of the impact on property taxes.