Read about the 2025 Social Security Fairness Act in Bob Jenning’s article.
Article from TaxSpeaker
Social Security Fairness Act — signed into law January 5, 2025
The Social Security Fairness Act eliminated the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) from the Social Security Act retroactive to January 1, 2024. Retroactive 2024 reimbursement checks have already begun, and yes, they are taxed just like regular Social Security benefits.
Windfall Elimination Provision
This provision can affect you when you earn a pension from an employer who didn’t withhold Social Security taxes and you qualify for Social Security retirement or disability benefits from work in other jobs for which you did pay taxes. It reduced or eliminated the Social Security benefit.
For example, before Paul became an Indiana State Police officer he worked for a large retailer for 19 years. Because of his state pension, his SS benefit was subject to the alternate WEP calculation. What should have been a $1,500 SS benefit became a $1,100 benefit. Unfortunately, Paul died at 70. His wife fully expected to receive his $1,100 SS benefit as her widow’s benefit, but instead she found out that her benefit would be closer to $1,500. This was because the WEP penalty was removed when Paul died.
The WEP penalty is now removed for Paul retroactive to 1/1/2024.
Government Pension Offset
The government pension offset (GPO) did not affect retirees directly. Instead, it reduced Social Security benefits of the retiree’s spouse, widow, or widower who is receiving their own government pension.
If you receive a pension from a government job in which you did not pay Social Security taxes, some or all of your Social Security spouse’s, widow’s or widower’s benefit may be offset due to receipt of that pension. This offset is referred to as the Government Pension Offset, or GPO.
The GPO reduced the amount of your Social Security spouse’s, widow’s or widower’s benefits by two-thirds of the amount of your government pension. For example, if you receive a monthly civil service pension of $600, two-thirds of that, or $400, must be used to offset your Social Security spouse’s, widow’s or widower’s benefits. If you are eligible for a $500 spouse’s benefit, you will receive $100 per month from Social Security ($500 – $400 = $100). In 2021 the GPO reduced benefits for about 1% of all Social Security beneficiaries.
Example: Adrienne was a California schoolteacher, never paid into Social Security, and is receiving $1,000/month as her teacher’s pension. Before his death, her husband Rocky was getting $1,000 from Social Security. Since the GPO reduction is not dollar-for-dollar, Adrienne will receive a widow’s benefit of $340 from Social Security [$1,000- $660 (the 2/3 GPO reduction)]. Her total income will be $1,340 ($1,000 teacher’s pension + $340 Social Security widow benefit).
This reduction has been retroactively removed back to 1/1/2024.
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Blog by Kiran Sharma – Financial Advisor, Tax Accountant
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This is a hypothetical example and is not representative of any specific situation. Your results will vary. Storen Financial and LPL Financial are not endorsed by or affiliated with the United States Social Security Administration or any government agency.