Manufacturing Investment Credit

The manufacturer's sales tax credit is no longer available for taxable years beginning after December 31, 2005. However, some taxpayers with unused manufacturer's sales tax credit carryforwards are eligible for the Manufacturing Investment Credit, which is available for taxable years beginning on or after January 1, 2008.

This article summarizes the tax benefits available to taxpayers who have unused manufacturer's sales tax credits from taxable years beginning before January 1, 2006. Note that businesses eligible for the Manufacturing Investment Credit must have submitted their applications to the Wisconsin Department of Commerce no later than September 30, 2008.

Carryforward Available for Taxpayers With $25,000 or Less in Unused Credit
If a taxpayer has $25,000 or less in unused manufacturer's sales tax credit, the unused credit may be claimed, but for each of the first two taxable years beginning after December 31, 2005, it is limited to 50 percent of its amount as of the beginning of the first such taxable year. If the credit cannot be used during this period, it may be carried forward for the remainder of its 20-year carryforward period until used.

For manufacturer's sales tax credits passed through a tax-option (S) corporation, partnership, or other type of pass-through entity, the $25,000 threshold is determined at the shareholder, partner, member, or beneficiary level. Any manufacturer's sales tax credit carryforwards used at the shareholder, partner, member, or beneficiary level cannot also be used in the computation of the Manufacturing Investment Credit.

Manufacturing Investment Credit
Taxpayers with over $25,000 in unused manufacturer's sales tax credit and who meet certain criteria are also eligible for the Manufacturing Investment Credit.

Pass-through entities may apply for the Manufacturing Investment Credit and pass it on to their shareholders, partners, members, or beneficiaries. Tax-option (S) corporations whose manufacturer's sales tax credit carryforwards were generated in taxable years beginning before January 1, 1998 may also apply for the Manufacturing Investment Credit and pass it on to their shareholders, even though they were not able to pass the manufacturer's sales tax credit on to their shareholders when they first computed the credit.

The Manufacturing Investment Credit is equal to the amount of unused manufacturer's sales tax credit amortized over a 15-year period.

Taxpayers and businesses who receive a Manufacturing Investment Credit will use Wisconsin Schedule MI to claim the credit on their Wisconsin income or franchise tax return. The amount of Manufacturing Investment Credit computed in each taxable year must be included in Wisconsin income.

Last updated July 15, 2013