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New Act Aims to Tax-Exempt Social Security Restorations

2/12/2026

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Summary

Story summary

The Social Security Fairness Act was enacted in 2025 to repeal provisions reducing benefits for more than 2.8 million people with non-covered pensions.
This repeal produced retroactive lump-sum payments that are taxable in the year they are received.
Rep. Lance Gooden introduced the No Tax on Restored Benefits Act to exclude retroactive payments from taxable income.
Beneficiaries should consider a lump-sum election to reduce 2025 taxable income.

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Story summary

The Social Security Fairness Act was enacted in 2025 to repeal provisions reducing benefits for more than 2.8 million people with non-covered pensions.
This repeal produced retroactive lump-sum payments that are taxable in the year they are received.
Rep. Lance Gooden introduced the No Tax on Restored Benefits Act to exclude retroactive payments from taxable income.
Beneficiaries should consider a lump-sum election to reduce 2025 taxable income.