Will the upcoming season of “Home Improvement” be the last?

Series star Tim Allen, sources say, is still “wrestling” with the decision of whether to sign on for an eighth year of the hit ABC sitcom, which begins its seventh season Sept. 23.

Sources say “Home Improvement” producers Walt Disney TV and Wind Dancer Prods. are courting Allen with a major salary hike, but sources close to the star say money isn’t the primary issue. Reps for Allen, Disney and ABC declined to comment on the matter, although Walt Disney TV prexy David Neuman said: “We think the show is great and we’d love to see it continue.”

Allen is said to be more concerned about creative issues and whether the sitcom can stay fresh and funny for an eighth season. He’s also said to be yearning for a lighter workload and more time to spend with his family. Allen has been working at a fast pace over the past few years, shooting movies (“The Santa Clause,” “Jungle 2 Jungle”) for Disney during production breaks on “Home Improvement.”

Disney has been pushing for Allen to reup for at least one more season for more than two years, sources say. However, there has been speculation around town that Allen is holding out for a paycheck in the range of the $1 million per episode Jerry Seinfeld rakes in for his NBC hit.

Sources say Allen presently earns about $350,000 per episode, and he also gets a percentage of the $300 million-plus windfall “Home Improvement” is generating in syndication. The studio is said to be offering to bump his per-episode salary to the high-six-figure range for the upcoming season if he inks for another year.

Allen signed an initial seven-year deal for “Home Improvement.” Sources say no deadline has been set for his decision on year eight, although presumably ABC would need to know the score before network programmers begin setting the 1998-99 schedule next spring.

Disney, the parent company of ABC, has a lot riding on Allen’s decision. “Home Improvement” ranks as ABC’s highest-rated sitcom at a time when the network is struggling and introducing a slew of new shows this fall in primetime .

As is the case with NBC’s “Seinfeld,” a proven hit like “Home Improvement” provides a valuable springboard for launching new shows. Indeed, the post-”Home Improvement” Tuesday 9:30 p.m. timeslot this fall went to the Disney-produced sitcom “Hiller & Diller.”

Complicating the “Home Improvement” situation further is a pending lawsuit between Wind Dancer and Disney. Wind Dancer claims Disney cut a sweetheart deal in renewing the sitcom on its ABC subsidiary earlier this year rather than seeking a higher license fee from a rival network. ABC pays a license fee of roughly $3 million per episode for the show.

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