By the end of 2025, nearly half of all Wisconsinites will be required to pay a fee to their municipality or county to register their vehicle. Some communities implemented these fees a few years ago and already are considering raising them further. Such fees are one of only a few revenue-raising options that state law permits for local governments. But in some places, they are adding significant costs for motorists.

Statewide revenues from local option vehicle registration fees – commonly called wheel taxes — totaled more than $70 million in fiscal year 2025. This marks a dramatic increase from a decade ago, when such fees raised less than $10 million for local governments throughout Wisconsin.

These revenues underwent a very rapid period of growth across the state from 2015 through 2021, during which time the number of municipalities, towns, and counties with wheel taxes more than tripled. After 2021, total statewide revenue growth from wheel taxes began to slow considerably.

But then in fiscal year 2025, total statewide wheel tax revenues increased 12%, their largest annual increase since 2019. This is due in part to the fact that more communities have adopted them, as shown in Figure 1. Large cities that recently adopted wheel taxes include Eau Claire, Fitchburg, Oshkosh, Sun Prairie, and Wauwatosa.
https://public.tableau.com/views/Focus_25_16WheelTaxVisuals/Fig1?:showVizHome=no&:embed=true

In this report, we use data from the Wisconsin Departments of Transportation and Administration to better understand where these fees are in place, why they have propagated across the state, and why some communities are considering fee increases to cover growing local transportation costs.

Local Option Wheel Taxes

Wisconsin local governments have the authority to charge a registration fee on nearly any vehicle kept in their jurisdiction. Heavy trucks over 8,000 pounds are generally excluded from local registration fees. The fees can be imposed by a simple vote of the local governing body, and rates are not limited. Funds from wheel taxes must, however, be spent to pay for transportation-related services such as road construction or transit operations. Fees are collected by the Department of Transportation, with a small portion of the total revenue kept by the agency for administrative costs.

These fees have been an option for municipalities in some form since 1967, and for counties since 1979. However, until 2010, relatively few governments utilized the option. In more recent years however, a confluence of factors — including stagnant state aid, strict levy limits, plus the limited number of revenue alternatives — has caused an increasing number of communities to consider this fee. More recently, since 2021, high rates of inflation imposed an additional fiscal pressure on local governments.

Local Wheel Taxes Spread Rapidly

Since 2010 – when just four local governments in Wisconsin collected wheel taxes — the number of communities doing so has skyrocketed, as detailed in our 2021 report. It found that as of February 2022, 44 local governments in Wisconsin had a vehicle registration fee.

Since then, the list of communities has continued to grow. As of Nov. 1, 2025, 63 Wisconsin municipalities, towns and counties were collecting wheel taxes, WisDOT data show. Five more had adopted them and were set to begin collecting wheel taxes in 2026. The combined total of 68 communities includes 14 counties, 37 cities, 15 villages, and two towns.

While growth has been rapid, it’s important to note that of the state’s 72 counties, less than one in five collected this fee as of Nov. 1. For cities, the share was about the same, at 18.9% of the state’s 190 cities. However, only 3.6% of the state’s 418 villages and just 0.2% of the state’s towns had instituted this type of fee.

Municipal fees range from $40 on the high end, in communities like Shawano in northeastern Wisconsin, Madison, and Janesville, to $10 on the low end in Boscobel and River Falls, among other municipalities. County fees range from $30, charged by Eau Claire, Milwaukee, and Portage counties, to $15 in Langlade County.

https://public.tableau.com/views/Focus_25_16WheelTaxVisuals/Fig2?:showVizHome=no&:embed=trueAs Figure 2 shows, most communities that have enacted wheel taxes are in the southeastern quadrant of the state. The map illustrates that in most places, either a municipality or county has imposed a wheel tax, but not both.

https://public.tableau.com/views/Focus_25_16WheelTaxVisuals/Fig3?:showVizHome=no&:embed=trueThere are notable exceptions to this, including in three of the state’s 10 most populous cities, Milwaukee, Madison, and Eau Claire, where both the city and county collect a wheel tax. As shown in Figure 3, this means motorists in Madison and some of its suburbs pay a combined total of nearly $70 annually in local vehicle registration fees, in addition to the state registration fee, which currently is $85 per year for automobiles, sport utility vehicles, or vans, or $100 per year for light trucks. Additional state fees also apply to hybrid and electric vehicles. These flat fees are applied to all vehicles of their type regardless of their value or weight. That is because, unlike some neighboring states, the law in Wisconsin does not allow the state or local governments to take these factors into account for vehicles under 8,000 pounds.

Inflation erodes buying power of wheel tax Revenue

State law currently imposes a tight cap on local governments’ ability to increase their main local revenue source, their property tax levy, as it limits such increases to the annual percentage increase in equalized value from net new construction within their jurisdiction. For most Wisconsin communities in recent years, this has significantly lagged the pace of inflation.

State law provides local governments with few other options for generating added revenue. Communities can go to referendum to ask their voters to increase their tax levy above what state limits would otherwise permit, and as Forum research has found, a growing number have begun to do so. Meanwhile, a few communities around the state have tried to implement transportation utility fees, which would be charged to properties based on the amount of traffic they generate. However, a recent unanimous Wisconsin Supreme Court decision struck these fees down.

Wheel taxes remain a viable option, and their revenues can help provide funds for transportation and plug budget holes. Without a rate increase, however, the revenue from these fees typically lags the rate of inflation, since the number of vehicles in a community tends not to increase significantly beyond the rate of population growth.

https://public.tableau.com/views/Focus_25_16WheelTaxVisuals/Fig4?:showVizHome=no&:embed=trueFigure 4, which shows total statewide wheel tax revenues adjusted for inflation, illustrates how such revenues soared in the 2010s, when many communities were adopting them and inflation rates were low. Since 2021, when inflation rates surged to record highs, that dynamic has changed. Total inflation-adjusted wheel tax revenues declined for three straight years from 2022 through 2024. By 2025, they were still slightly lower than four years earlier, despite more communities having adopted them during this period. Further, nearly two-thirds of communities saw a decrease in inflation-adjusted revenue relative to their first full year of wheel tax collections.

A look at how Milwaukee’s wheel tax revenue has changed relative to inflation illustrates how the buying power of these dollars recently has eroded. In fiscal year 2022, just after increasing its wheel tax, Milwaukee collected a total of $10.2 million in inflation-adjusted revenues. By 2025, those revenues had eroded to $9.2 million on an inflation-adjusted basis.

With this dynamic at play — and other local revenue options tightly constrained under state law — some communities that previously adopted wheel taxes are now considering raising them further. The city of Milwaukee first imposed its wheel tax in 2008, at $20, then increased it to $30 in 2021. Mayor Cavalier Johnson proposed increasing it in the 2026 budget, and the city’s Common Council ultimately adopted an $11 increase, bringing it to a total of $41.

Cost of ownership still compares favorably

While vehicle registration fee costs may be significant – particularly in places with both municipal and county fees, and particularly for those on limited incomes – they are just one small part of the overall cost of vehicle ownership.

The Wisconsin DOT provides a cost-to-own calculator that allows users to estimate the total cost of ownership of a vehicle in Wisconsin compared to other Midwest states. This calculator also takes into account the vehicle make, model, and year, as well as the number of miles driven each year.

As noted in a 2024 Forum report, it shows that in most circumstances, the cost for Wisconsin motorists to own and drive a vehicle falls below that of our neighboring states. That is true even in Madison, one of the state’s most expensive places to own a vehicle.

In the case of Iowa and Illinois, the difference is largely attributable to the higher gas tax in those states. For Minnesota and Michigan, the difference comes from greater registration fees that increase with the value and weight of the vehicle – unlike the flat fee in Wisconsin.

Conclusion

The increases in both the number of communities with wheel taxes and their rates are being driven by constraints on local government revenues, inflation, and other factors. The costs of road construction in particular have grown more quickly than consumer prices, as we noted in our 2024 transportation finance report. These trends seem likely to drive further increases in these fees absent changes in state law.

In the state Capitol, there are indications of wheel tax fatigue among some legislators. Lawmakers recently proposed a bill to constrain local governments’ ability to impose wheel taxes by requiring them to be approved by voter referendum – including those fees that are already in place.

As we have noted, these flat fees may represent a challenge for some low-income motorists with relatively inexpensive vehicles. At the same time, a comparison of Wisconsin’s total cost of vehicle ownership suggests that – even with the inclusion of local registration fees – the costs here compare favorably with other states.

From the perspective of local officials, registration fees are an imperfect solution, since without a rate increase, their revenues don’t rise with inflation. This is also the case with the other main state revenue source for transportation: the fuel tax, an excise tax of 30.9 cents per gallon.

Combined, these factors make our state’s transportation funding model vulnerable to periods of high inflation, as the nation experienced in the early 2020s. This has been an ongoing issue in Wisconsin for two decades, after state leaders opted in 2005 to stop indexing the state gas tax rate to inflation.

Since then, state transportation revenues have lagged while project costs have soared. Meanwhile during this period, conditions on Wisconsin’s local roads have modestly declined, our research found.

On a parallel – but sometimes intersecting — track, Wisconsin policymakers also have wrestled with how to fund local governments. A landmark 2023 law provided a significant boost in state aid for municipalities and counties, but distributed the aid unevenly.

In many communities, leaders of local governments such as the city of Milwaukee and Milwaukee County will have to make difficult decisions about whether to make the kinds of investments needed to repair aging streets and maintain transit services despite rising costs. Local wheel taxes could help meet these needs, but policymakers and voters will have to weigh the benefits against the costs.