A new bill in Congress, the No Tax on Restored Benefits Act, is poised to provide crucial tax relief to public sector retirees who have faced challenges with retroactive Social Security payments. The bill aims to ensure that these retirees are no longer taxed on benefits they have earned through years of public service. If passed, it could have significant financial implications for many American workers who have dedicated their careers to serving the public.
No Tax on Restored Benefits Act Seeks To Protect Public Sector Retirees
The No Tax on Restored Benefits Act is a newly introduced bill designed to provide financial relief to public sector retirees who have recently received retroactive Social Security payments. According to the US Sun, these payments were issued following changes made by the Social Security Fairness Act of 2025, which sought to address inequities in the system. Unfortunately, the retroactive payments, which were a long-overdue correction for workers whose benefits were reduced due to the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO), are now being taxed. This has left many retirees facing unexpected tax bills.
Introduced by Republican Representative Lance Gooden of Texas, the bill aims to exempt these payments from being taxed, allowing retirees to keep the full amount of the benefits they were owed. Public sector employees such as teachers, firefighters, and law enforcement officers, who had their benefits reduced due to these outdated policies, stand to benefit significantly from this legislation.
Representative Gooden emphasized the importance of protecting the financial security of these workers. “Our public-sector retirees worked their whole lives to serve and improve our communities. The No Tax on Restored Benefits Act guarantees that they keep every dollar of the benefits they have rightfully earned,” Gooden said in a statement. His words reflect a broader frustration with the way the system has treated individuals who have devoted their careers to public service.
Why the Tax Relief Is Necessary
The tax burden created by the retroactive Social Security payments has left many retirees struggling to understand why they are now being taxed on funds they were previously denied. These individuals did not receive their full benefits earlier in life, primarily because they were not covered by Social Security during their public sector employment. The Social Security Fairness Act, which eliminated WEP and GPO, was intended to correct these discrepancies and ensure public sector retirees received the benefits they had earned. However, the retroactive payments are still considered taxable income for the 2025 tax year, which many retirees find unfair.
“The bill addresses a long-standing issue,” Gooden continued. “It’s a slap in the face to teachers, firefighters, law enforcement officers and more who devoted their careers to serving our communities.” This frustration has fueled the bipartisan support for the No Tax on Restored Benefits Act. Democratic Representative Chellie Pingree of Maine also co-sponsored the bill, emphasizing the need for tax fairness, particularly for retirees who were affected by past legislation that penalized them for their public service.
The bill would make these retroactive payments exempt from taxation, providing relief to retirees who were unintentionally burdened with a tax liability due to the recent changes. It seeks to right the wrongs of previous policies and ensure that retirees receive the full benefits they are entitled to without the threat of additional taxes.
The Political Landscape and Legislative Support
The No Tax on Restored Benefits Act has gained significant bipartisan support, with lawmakers from both parties recognizing the importance of addressing the financial strain placed on public sector retirees. The bill was introduced in response to a growing awareness of the difficulties many of these workers face after years of dedicated service.
The Social Security Fairness Act was an important step forward in eliminating discriminatory policies that impacted public sector retirees, but it inadvertently created a new challenge with the retroactive payments being taxed. The No Tax on Restored Benefits Act seeks to rectify this by ensuring that the corrections made under the SSFA do not result in a financial setback for retirees.
As the bill moves through Congress, it faces the usual challenges of gaining approval in both the House of Representatives and the Senate. However, the strong bipartisan backing, along with the clear financial benefits to retirees, could give the bill a strong chance of passing.
