March 24, 2011

Should Illinois Tax Retirement Income?


Earlier this month, Illinois Senate President John Cullerton suggested that limiting the state’s generous income tax break for retirement income “would just be a matter of fairness.” Senator Cullerton’s suggestion gives Illinois policymakers a welcome opportunity to reflect on the appropriate design of senior-citizen income tax relief in Illinois. This paper summarizes the mechanisms used in Illinois and in other states to reduce senior citizens’ income tax liability, and provides a menu of options for reforming the current system.

Read the Full Report (PDF)