Retirement

The Social Security Fairness Act and Your Taxes: What You Need to Know

Written by TurboTaxBlogTeam
Published Mar 7, 2025 - [Updated Apr 14, 2026]
4 min read
Reviewed by Monika Krulic, EA

The Social Security Fairness Act offers relief for millions of Americans by eliminating two programs, the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO), that had previously reduced benefits for many public sector workers, ensuring that those who contributed to both their government pension funds and Social Security receive the benefits they deserve.

If you were a firefighter, police officer, teacher, or some other kind of public service provider, the Social Security Fairness Act may affect you. Here’s what you need to know about the law and how it could change your Social Security benefits.

What is the Social Security Fairness Act?Tax implications FAQs

What is the Social Security Fairness Act?

The signing of the Social Security Fairness Act on January 5, 2025 eliminated the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO). These programs prevented employees from collecting their full benefits if they also contributed to a public pension. It also reduced Social Security benefits for their surviving spouses and family members.Now, these retirees will receive increased monthly payments under the Social Security Fairness Act, as well as a lump sum payment retroactive to January 1, 2024, providing a much-needed financial boost to retired workers’ households.

WEP and GPO will only apply as far back as December 2023, which means that any benefits payable for December 2023 and earlier won’t be affected by those provisions.

Tax implications

The retroactive lump-sum payment

The taxable part of a lump-sum payment of benefits received in 2025 (reported to you on Form SSA-1099, Social Security Benefit Statement) needs to be included in your 2025year’s income, even though the benefit covers a prior year.

You have two options for calculating the taxable portion:

You can use your current year’s income to figure the taxable part of the total benefits received in the current year; or
You may make an election to figure the taxable part of a lump-sum payment made for an earlier year using your earlier year income for that payment amount.

Choosing the year you had a lower income might give you the best option so your Social Security would be taxed at a lower rate. Receiving the lump sum payment may cause more of your Social Security and income to be taxed since you’re required to pay taxes on up to 85% of your Social Security income when your combined income is over a certain threshold.

Monthly benefit increases

An increase in your monthly payment may make more of your Social Security taxable depending on your pension payments and other income streams because Social Security is taxed at your tax rate and determined by the total of your combined income.

Combined income is your Adjusted Gross Income plus nontaxable interest plus half of Social Security benefits.

If you’re filing single, and your combined income is between $25,000 up to $34,000, you may have to pay income tax on up to 50% of your benefits. If it’s more than $34,000, up to 85% of your benefits may be taxable.

If you’re filing jointly, and you and your spouse have a combined income between $32,000 up to $44,000, you may have to pay income tax on up to 50% of your benefits. If your combined income is more than $44,000, up to 85% of your benefits may be taxable.

Don’t worry about knowing updates and tax laws related to Social Security. TurboTax is here for you, providing done-for-you tax filing experiences whether you want to do your taxes yourself or have one of our TurboTax Expert Full Service tax experts do them for you.

FAQs

Some of the people who will be impacted by the Social Security Fairness Act include:

Teachers, firefighters, and police officers in numerous states
Federal employees who are covered by the Civil Service Retirement System
Individuals whose work was covered by a foreign Social Security system

But just because you’re a public servant doesn’t mean the Social Security Fairness Act update impacts you personally. The law only applies to public servants who were previously impacted by the WEP or GPO.

The removal of the WEP and GPO only affects about 28% of state and local public employees. The remaining 72% work in Social Security-covered employment, which means they pay Social Security taxes and receive full benefits.

The Social Security Administration (SSA) started issuing retroactive payments as early as February 2025 and higher monthly benefit amounts as early as April 2025.

The amount you receive depends on the type of Social Security benefits you receive and the amount of your pension.

For the most current information on benefits increases, payments, and answers to frequently asked questions, go to the SSA’s dedicated page on the Social Security Fairness Act.