Vol. 7 - October 2025: Abolish IRS Taxes on Retirement Income

Your Nest Egg Belongs to You, Not Washington

Welcome back to Straight Talk with Casey—your monthly source of direct, common-sense reform from someone who believes America’s best days are still ahead, not behind.

Over the past two months, we’ve taken on the two biggest tax burdens threatening Illinois families: property taxes that never end and the unfair federal tax on Social Security benefits. Now we turn to the third piece of the puzzle—the IRS tax on retirement income.

This is more than a policy issue. It’s about the kind of country we want to be. Should a lifetime of hard work and saving end with Washington reaching into your pocket one last time? Or should retirement mean peace of mind, the freedom to enjoy your family, and the security of knowing what you earned is yours to keep?

Everywhere I travel across Illinois—whether it’s Peoria, Rockford, Marion, or Naperville—I hear the same story: people did everything right. They saved. They contributed to pensions because the law required it. They put money into 401(k)s and IRAs because they were told that’s how to prepare for the future. Many even accepted lower wages in exchange for employer retirement benefits.

And yet, when retirement finally comes, they are hit again with an IRS bill—often unprepared for the unpredictable changes in tax rates that happen in Washington. They lived within strict savings caps, but the politicians never promised what the tax rate would be when the time came to withdraw. Families are left gambling with their futures, not knowing how much of their nest egg the government will take.

That’s not fairness. That’s Washington breaking its word.

The Problem: Washington’s Tax Roulette

Retirement should be a season of dignity and peace—not another season of taxation. Yet millions of Americans are left playing Washington’s version of “tax roulette,” never sure how much of their nest egg the government will seize.

Here’s how it happens:

• Pensions: In Illinois, most public employees—including teachers, police officers, firefighters, and state workers—are enrolled in one of the state’s public pension systems such as TRS (Teachers’ Retirement System), SURS (State Universities Retirement System), or IMRF (Illinois Municipal Retirement Fund). These contributions are mandatory, deducted from every paycheck. And because these workers do not pay into Social Security, they are often ineligible to receive Social Security benefits based on their government service. That means their pension is not just part of retirement—it is their retirement. Yet Washington taxes it again when they finally receive it.

• 401(k)s and IRAs: Contributions are tax-deferred, not tax-free. Workers still pay FICA payroll taxes on every dollar earned, and employer matches are part of negotiated total compensation—not gifts. Yet when withdrawals happen decades later, they are taxed as ordinary income. The catch? Retirees have no control over what tax rate Washington will impose.

• Uncertainty: Contribution caps are modest and stable, but tax rates shift constantly. Families who lived within the rules cannot plan with confidence, because the government changes the game after the fact.

This is not fairness. It’s broken promises—and it punishes seniors, veterans, and working families most of all.

Why This Plan Matters

This plan is not about protecting the wealthy. Contribution caps for retirement accounts are modest and stable. Wealthy Americans already shelter income through Roth accounts, municipal bonds, and trusts.

This plan is about protecting workers, families, and veterans who followed the rules. They paid payroll taxes, contributed within strict limits, and often accepted lower wages for the promise of pensions or employer matches. They were told: “Save now, and you’ll be secure later.”

But Washington keeps moving the goalposts. Contribution caps hardly budge, yet tax rates swing wildly. That means families who sacrificed to save responsibly are left guessing how much the government will take when they retire. That’s not stability. That’s uncertainty—and it’s wrong.

My plan ends that uncertainty. It guarantees that once you’ve reached retirement, your nest egg is yours to keep—safe from unpredictable tax hikes and Washington’s broken promises.

“No American should spend their golden years worrying about another IRS bill. It’s time to let workers keep what they’ve earned and retire in peace.” — Casey Chlebek

Casey’s Plan: The MAGNA Retirement Freedom Act

Phase 1: Make Pensions Tax-Free

Recognize pensions as deferred wages, often mandatory, and exempt them from federal taxation.

Phase 2: Eliminate Federal Taxes on 401(k)/IRA Withdrawals (Upon Retirement)

End IRS taxes on retirement savings once individuals reach retirement age or qualifying conditions. Early withdrawal penalties remain in place.

Phase 3: Keep Social Security Separate

Social Security taxation is repealed under Pillar Two. Combined, the two pillars create a full Tax-Free Retirement Plan.

Phase 4: Transitional Gains-Only Phase

For 2–3 years, retirees pay tax only on investment gains, not contributions. This eases the budget impact while protecting earned savings.

Phase 5: Full Exemption, Permanently

At the end of the transition, all retirement income—pensions, retirement accounts, and Social Security—becomes fully exempt from federal income tax.

Why This Plan Works for Every Generation

This reform is not just about today’s retirees—it’s about protecting every generation of Americans.

• For Seniors: It means finally keeping the full value of pensions and retirement accounts they spent decades building, without fearing a surprise IRS bill every April.

• For Generation X: Now entering retirement age, Gen X already faces deep uncertainty about whether Social Security will be solvent when they need it. Ending federal taxes on pensions and savings guarantees stability they can count on.

• For Younger Workers: Millennials and Gen Z are battling student loans, rising housing costs, and stagnant wages. They need strong incentives to save early and confidently for retirement. Knowing that Washington won’t raid those savings later makes it easier to invest in their own futures—and reduces the burden on federal safety nets down the road.

This plan delivers predictability, fairness, and peace of mind—for every generation of Americans.

“Every generation deserves the same promise: if you work hard, save responsibly, and play by the rules, Washington won’t move the goalposts on you. That’s what my plan guarantees.” — Casey Chlebek

The Stakes

Democrats talk about “protecting Social Security” while quietly taxing the benefits you already paid for. I’m offering a real, constitutional, fully-funded plan that ends the tax, protects the trust funds, and keeps the program strong for your children and grandchildren.

Because protecting Social Security isn’t just about today—it’s about the next generation of American workers.

Coming Next Month: Pillar Four – No Federal Taxes for Young Americans

In Straight Talk with Casey, Vol. VIII, we’ll focus on Pillar Four of the MAGNA Agenda: No Federal Taxes for Young Americans Under 23 (or 26 for full-time students and married couples). It’s time to give the next generation a strong start.

To read previous issues of Straight Talk with Casey, including those discussing both Pillar Four: Abolishing Taxes on Social Security and Pillar Three: Abolishing Property Taxes, visit www.CaseyForSenate.com. And as always, I want to hear your thoughts, stories and feedback – please reach out at info@caseyforsenate.com.

Together, we can protect your benefits, your dignity, and your future.

Yours in service,

Casey Chlebek for U.S. Senate, Illinois