Wisconsin Targets Financial Exploitation

Financial scams and exploitation can leave victims facing devastating losses with little hope of recovering what was taken. A new proposal authored by Wisconsin Senate President Mary Felzkowski aims to ease that burden by offering victims a measure of financial relief through the state’s tax code.

The legislation would allow individuals who have suffered certain theft losses due to financial exploitation to subtract those losses from their taxable income when filing state taxes. Supporters say the change could help victims regain financial footing after falling prey to fraud, scams, or other forms of financial abuse.

The measure has already passed the Wisconsin Assembly and is now awaiting scheduling for a vote in the state Senate.

Helping Victims Recover Financially

Financial exploitation often leaves victims with more than emotional distress—it can also create long-term financial hardship. In many cases, victims lose retirement savings or funds they rely on for daily living.

The proposal authored by Felzkowski would create a new subtraction in Wisconsin’s tax law allowing eligible theft losses to be deducted when calculating individual income taxes. The policy is designed to mirror existing federal tax rules that allow similar deductions under certain circumstances.

Beginning with the 2024 tax year, eligible taxpayers would be able to subtract qualifying theft losses even if they did not claim the corresponding federal deduction. Lawmakers say this approach ensures victims can still benefit from the relief when filing their Wisconsin returns.

Aligning State Policy with Federal Law

Federal tax law already allows deductions for certain theft losses, though those deductions are limited. Losses generally must be tied to profit-seeking activities or connected to disasters declared at the federal or state level.

Additional conditions also apply. For example, the taxpayer must have little or no reasonable chance of recovering the stolen money or property, and the loss is typically claimed in the year it is discovered.

Felzkowski’s proposal incorporates those same federal standards into Wisconsin’s tax system, ensuring consistency while expanding access to relief for taxpayers who have experienced financial exploitation.

Moving Through the Legislature

Since its introduction in late 2025, the measure has steadily advanced through the legislative process.

After being introduced by Felzkowski with support from lawmakers in both chambers, the proposal was referred to the Senate Committee on Agriculture and Revenue. The committee held a public hearing earlier this year before recommending passage of an amended version.

Members of the committee voted unanimously to advance the legislation, signaling strong support for the concept.

The Joint Survey Committee on Tax Exemptions also reviewed the proposal, voting 9–0 to approve its fiscal report. Along the way, additional lawmakers from both parties joined as coauthors and cosponsors.

With those steps completed, the measure is now eligible to be scheduled for a vote before the full Senate.

Safeguards in the Tax Code

While the proposal offers relief for victims, it also includes provisions to prevent taxpayers from claiming the same loss twice.

Individuals who subtract theft losses under the new provision would not be allowed to include those losses when calculating Wisconsin’s itemized deductions tax credit. Lawmakers included that safeguard to maintain fairness within the state’s tax system.

If enacted, the change would apply to taxable years beginning after December 31, 2023.

Addressing a Growing Problem

Financial exploitation has become an increasing concern nationwide, particularly as scammers target seniors and vulnerable individuals. Lawmakers supporting the proposal say the tax relief is intended to provide a small but meaningful measure of recovery for those affected.

By aligning Wisconsin’s tax policies with federal standards while expanding accessibility, Felzkowski’s legislation aims to help victims move forward after experiencing financial loss.

As the legislative session continues, the proposal now awaits a vote that could bring the measure one step closer to becoming law.