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Nearly 3 million people will see their Social Security benefits increase due to new changes signed into law by chairman Joe Biden This week. But higher checks could come with additional taxes.
this Social Security Equity Act The bill, which passed with bipartisan majorities in the House and Senate, ends cuts to Social Security benefits for certain individuals who also receive public sector jobs such as firefighters, police officers, teachers and local, state and federal employees Pension income.
These beneficiaries will see an increase in their monthly benefit checks. Because the legislation applies to benefits paid throughout 2024, they will also receive a one-time payment to make up for the shortfall during that time.
Details of how these increases will be implemented are currently being determined, according to the Social Security Administration.
In total, the benefit increases will cost $196 billion over the next 10 years, according to the agency. Congressional Budget Office. The additional spending would bring forward the date the Social Security trust fund is depleted by six months. The plan’s joint trust funds may not fully pay benefits until 2035, when only 83% of scheduled benefits may be paid, The trustees of the plan are expected to last year.
How Social Security benefits may change
According to CBO estimates as of December 2025, approximately 2.1 million beneficiaries (those affected by the Windfall Elimination Provision (WEP)) could receive an average of $360 more in benefits per month. Benefits are available to workers who also receive pension or disability benefits in jobs that do not pay Social Security payroll taxes.
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In addition, about 380,000 spouses will see their average monthly benefit increase by $700 According to CBO estimates for December 2025, the average income of the 390,000 surviving spouses will increase by $1,190.
These beneficiaries were affected by the now-defunct Government Pension Offset (GPO), which reduced Social Security benefits for spouses, widows and widowers who also received their own pensions from public sector jobs.
Financial advisors say eliminating these provisions simplifies retirement income planning for affected beneficiaries in many ways.
“For people affected by this, in many cases their retirement income will be significantly increased,” said Michael Daley, director of marketing at HealthView Services. “That’s great news for them.”
The challenge now for financial planners and their clients is measuring how much to expect the benefit increase and when to expect it, said Joe Elsasser, founder and president of Covisum, a Social Security claims software company.
Experts say the additional revenue could also create some complications when it comes to taxes and Medicare premiums for affected beneficiaries.
Beneficiaries may face higher tax on benefits
Experts say Social Security recipients’ benefits could be taxed if their income falls below a certain threshold.
HealthView Services said the additional funding could also push some affected beneficiaries into higher tax brackets.
It is noteworthy that President-elect Donald Trump has said he wants to eliminate income taxes on Social Security benefits, but it remains to be seen whether that change will take effect. However, under current rules, up to 85% of Social Security benefit income may be taxable.
The income thresholds upon which these taxes are based are not adjusted annually for inflation. So, over time, more recipients will be required to pay taxes on these benefits, including middle-class families, Daly said.
These taxes are based on a system called Consolidated revenue — The sum of adjusted gross income, nontaxable interest, and half of Social Security benefits.
Individuals are taxed on benefits up to 50% if their total income is between $25,000 and $34,000, or between $32,000 and $44,000 for a married couple.
Individuals can pay tax on up to 85% of their benefits if their total income exceeds $34,000; or married couples with household assets in excess of $44,000.
“Because Social Security benefits are taxed differently than everything else, people are going to really want to focus on their other sources of income,” Elsasser said of the expected benefit increases and one-time payments.
For example, if a retiree has both a taxable account and a traditional IRA, they may want to prioritize withdrawals from the taxable account because only the earnings, not the entire withdrawal, are taxed, Elsasser explains. If retroactive Social Security benefits are not paid out as a lump sum, they may be withdrawn from the IRA later in the year.
Beneficiaries may face higher health insurance costs
Additional benefit income for individuals affected by the Social Security Equity Act may also result in increased income-based surcharges for Medicare Parts B and D.
Medicare beneficiaries with higher incomes must pay what is called an income-related monthly adjustment amount (IRMAA) for their Part B and Part D premiums.
“If you take a lump sum and don’t focus on other income, you could unknowingly be forced to pay higher health insurance premiums two years later,” Elsasser said.
He said this was primarily a concern for those at the income threshold.
Through 2025, Medicare Part B beneficiaries who file an individual tax return with a modified adjusted gross income of $106,000 or less, or married couples who file a joint tax return with a modified adjusted gross income of $212,000 or less, will receive the standard monthly payment. Premium is $185.
Under IRMAA, beneficiaries above these income thresholds pay higher Part B premiums. This year’s tax rate is based on income on tax returns filed in 2023.
In 2025, Part D beneficiaries with thresholds above $106,000 for individuals and $212,000 for married couples are subject to an income-related monthly adjustment amount in addition to the plan premium. These monthly premiums are also based on annual income reported on your 2023 tax return.
Steps to take now
HealthView Services Chairman and CEO Ron Mastrogiovanni said recipients affected by the Social Security Equity Act should consider consulting a financial advisor to assess the impact of the change on their personal financial situation.
Additionally, he said it can be helpful to sit down with a CPA when filing taxes to create a plan for 2025.
The Social Security Administration also plans to provide more guidance on the new law as more details become available.
at present, Institutional recommendation Verify that the direct deposit and its mailing address on file are still accurate. To update this information, Social Security recommends making changes online or in person by calling or visiting an agency office.
Because WEP and GPO provisions have been eliminated, some individuals may now be eligible for Social Security benefits for the first time.
To apply for benefits, the Social Security Administration recommends applying online or making an appointment with the agency.
