The federal government taxes pension, annuity and retirement income, in addition to (possibly) up to 85 percent of Social Security benefits, based on total household income. Illinois taxes none of these, yet we are struggling to pass pension reform to make up for Illinois being short in funding and paying benefits for these pensions.
As a tax preparer, I service many retired pensioners and often hear them complain about the pending reforms and what should be done. Taxing retirement income has been kicked around by our Illinois representatives but apparently is a "sacred cow."
I am not a politician, but a pragmatist, and I ask the following question to my clients: "Would you rather receive a reduced pension check or pay a tax on your retirement income?"
Owner, FLP Tax Service