Local Governments Turning to Wheel Taxes for Revenue Has Grown Exponentially

Friday, November 14th, 2025 -- 9:01 AM

(Rich Kremer, Wisconsin Public Radio) As inflationary costs have exceeded state transportation support over the past 15 years, a new study shows the number of local governments turning to wheel taxes for revenue has grown exponentially.

According to Rich Kremer with the Wisconsin Public Radio, the analysis by the nonpartisan Wisconsin Policy Forum shows nearly half of Wisconsin residents will have to pay local vehicle registration fees, or wheel taxes, by the end of the year.

While local governments have had the authority to unilaterally levy wheel taxes since the late 1960s and 1970s, the Policy Forum report shows how widespread the funding tool has become in recent times.

In 2010, just three cities and one county were using local registration fees. This year, 64 cities, counties, towns and villages had a wheel tax in place, which represents a 1,500 percent increase. The Policy Forum data shows nearly 50 percent of all Wisconsin residents will be ponying up added wheel tax fees by the end of 2025.

Mark Sommerhauser, researcher and communications director with the forum, told WPR the spike “boils down to mounting fiscal pressures on local governments” trying to keep up with rising road maintenance costs and strict state limits on when those governments can raise property taxes.

“The wheel tax is really on a pretty short list of options that local governments have if they’re having budget issues,” Sommerhauser said. “Over the 2010s and then now through the 2020s, we’re seeing more and more local governments take advantage of it.”

The bulk of state funding going to road projects comes from Wisconsin’s gas tax and vehicle registration fees. In 2005, state lawmakers eliminated a provision that indexed the gas tax to the rate of inflation.

The rate of around 31 cents per gallon hasn’t changed in 20 years and “has not come close to keeping up with inflation,” Sommerhauser said. “We’ve seen a real shift there,” he said. “And it’s really put more fiscal pressure on these local communities to find new ways to fund their transportation projects.”

As wheel taxes have rolled across Wisconsin, the revenue generated at the local level spiked to $75 million in 2021. But the analysis also found that when inflation is taken into account, the buying power of that money dipped until mostly recovering this year.

In 2023, there was a major, bipartisan overhaul to how the state shares tax revenues with local governments that increased local support by at least 20 percent. Still, Sommerhauser said, that didn’t match inflationary increases over the prior decade.

The surge in local wheel taxes has caught the attention of some Republicans in the Wisconsin Legislature who are looking to tamp it down. A GOP-backed bill would not only require local referendum votes before new wheel taxes could be enacted, it would also require voters to retroactively approve any wheel tax on the books, no matter how long they’ve been in place.

Supporters of the legislation argue it would be no different than the referendum process school districts go through before raising residents’ property taxes. Opponents, like local government advocacy groups, say wheel taxes may not be popular, but they’re a reliable source of revenue to respond to roadbuilding costs outpacing state support.

On Tuesday, the Eau Claire City Council became the latest local government to increase its wheel tax, voting to more than doubled its tax to $50. With the county’s existing $30 registration fee, residents in the city will pay the highest combined local registration fees in Wisconsin the next time they renew their vehicle registrations.

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