{"id":449735,"date":"2026-02-05T03:23:10","date_gmt":"2026-02-05T03:23:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/449735\/"},"modified":"2026-02-05T03:23:10","modified_gmt":"2026-02-05T03:23:10","slug":"social-security-taxes-to-change-under-new-bill","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/449735\/","title":{"rendered":"Social Security taxes to change under new bill"},"content":{"rendered":"

Taxes on Social Security<\/a> could change in a major way under a new bill that reverses a tax bill for some public sector workers <\/a>when they reach retirement.<\/p>\n

The No Tax on Restored Benefits Act has bipartisan support and would offer a gross income tax exclusion for retroactive Social Security benefits<\/a> paid to those on pensions.<\/p>\n

Why It Matters<\/p>\n

This mostly applies to public sector retirees, although around 70 million Americans rely on Social Security benefits each month.<\/p>\n

Previously, many of these retirees on pensions had their benefits lowered or outright eliminated because they didn\u2019t pay Social Security taxes while working.<\/p>\n

\"\"What To Know<\/p>\n

After the Social Security Fairness Act went into effect last year, public sector workers who retired were able to get retroactive payments. This mainly included teachers, firefighters, and police officers who previously saw their benefits limited under past SSA guidelines.<\/p>\n

Democratic Representative of Maine, Chellie Pingree, who cosponsored the bill, said the Social Security Fairness Act “was truly transformative” for many Americans, but “it was never intended to saddle widows, low-income seniors and dedicated public servants with an unexpected tax bill.”<\/p>\n

“The No Tax on Restored Benefits Act addresses this problem in a fair, commonsense way by protecting people who were previously below the taxation threshold from being unfairly punished because of a one-time, retroactive increase in their earned benefits,” Pingree said.<\/p>\n

The new bill has garnered support from the National Association of Police Organizations, as some retirees who benefited from the Social Security Fairness Act now receive unexpected tax bills.<\/p>\n

Originally, the Social Security Fairness Act reversed the Windfall Elimination Provision and Government Pension Offset, but with unintended tax consequences.<\/p>\n

\u201cThe new bill appears to target beneficiaries who got hit with surprise tax bills because their restored Social Security benefits pushed them into higher taxable income brackets,\u201d Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com<\/a>, told Newsweek.<\/p>\n

\u201cThe real problem: Most of these beneficiaries didn’t withhold taxes from their Social Security payments. The SSA started issuing lump sums in February 2025. Tax day was April 2025. People who didn’t make estimated quarterly payments got hit with underpayment penalties on top of the tax bill.\u201d<\/p>\n

What People Are Saying<\/p>\n

Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: \u201cI think this is just another political talking point. How are you not going to tax benefits that weren\u2019t supposed to be provided in the first place? They should be taxed like everyone else who has received those very benefits. Again, where is this money coming from and who is going to pay for it?\u201d<\/p>\n

Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: \u201cWhile the proposal to exempt restored Social Security benefits from federal income tax may feel like attempting to level the playing field for some retirees, it also carries broader fiscal implications. Social Security is already facing solvency challenges in the coming years, and any reduction in tax revenue tied to benefit payments adds pressure to the system and to the federal budget.\u201d<\/p>\n

Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com<\/a>, told Newsweek: \u201cThis bill is damage control for a tax surprise Congress created when they retroactively restored benefits without telling people to withhold taxes upfront. The $6k OBBB deduction already covers most affected seniors. If this new bill passes, it’s extra cushion. If it doesn’t, the existing deduction still helps, but some high-income public retirees will owe taxes on their lump sums.\u201d<\/p>\n

What Happens Next<\/p>\n

As the SSA already faces a funding crisis set to hit as early as 2033, Beene cautioned Americans from seeing the new bill proposal as a viable option.<\/p>\n

\u201cEven if the short-term revenue loss appears smaller relative to total federal spending, policies that create additional tax exclusions can add up over time,\u201d Beene said. \u201cThis debate reflects a growing tension between providing immediate relief to retirees and addressing the funding gaps in Social Security\u2019s future.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Taxes on Social Security could change in a major way under a new bill that reverses a tax…\n","protected":false},"author":2,"featured_media":449736,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[28,147,530,1666,733,737,1548],"class_list":["post-449735","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-personal-finance","tag-personalfinance","tag-retirement","tag-social-security","tag-social-security-benefits","tag-taxes"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/449735","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=449735"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/449735\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/449736"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=449735"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=449735"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=449735"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}