Quick answer: Wisconsin taxes only 70% of long-term gain (held over a year) at its regular graduated state rates — a 30% exclusion removes the rest. On top of that, the federal stepped-up basis, and possibly Wisconsin's own marital property rules, may have already shrunk the gain considerably. See the full cost picture in the Wisconsin probate real estate sale calculator.
The 30% exclusion, straight from the Department of Revenue
Marital property can double the step-up
Wisconsin's marital property system is built on community-property principles. For jointly-owned marital property, that can mean both halves — not just the half the decedent owned — receive a full stepped-up basis to fair market value at the first spouse's death, a real advantage over the single-half step-up common-law states apply.
A worked example
| Amount | |
|---|---|
| Federally taxable gain, after stepped-up basis | $20,000 |
| Wisconsin 30% exclusion | − $6,000 |
| Wisconsin taxable gain | $14,000 |
Illustrative. The $14,000 is then taxed at Wisconsin's regular graduated rates, not a special capital gains rate.
The federal home-sale exclusion still needs residency
An heir doesn't automatically inherit the living homeowner's $250,000 (single) or $500,000 (married) federal home-sale exclusion — only the stepped-up basis. Claiming that exclusion would require the heir to move in and meet the federal two-of-five-year ownership-and-use test themselves.
No estate or inheritance tax either
Wisconsin has no state estate tax and no inheritance tax, so between the stepped-up basis, the potential marital-property double step-up, and the 30% exclusion, this is one of the lighter tax pictures in this cluster.
A local probate attorney can review your estate — many offer a free consultation.
The 30% exclusion and regular brackets apply the same way whether the sale closes in Milwaukee, Dane, Waukesha, or Brown County.