Nearly 3 million individuals are poised to see their Social Security benefits increase, thanks to new changes signed into law by President Joe Biden this week. But with the higher checks could come additional tax burdens.

The Social Security Fairness Act — which passed by a bipartisan majority in both the House and Senate — ends reductions of Social Security benefits for certain individuals who also receive pension income from work in the public sector as firefighters, police officers, teachers and local, state and federal employees.

Those beneficiaries are set to see an increase to their monthly benefit checks. Because the legislation applies to benefits paid throughout 2024, they will also receive lump-sum payments to make up for that time.

The details of how those increases will be implemented are now being determined, according to the Social Security Administration.

In total, the benefit increases will cost $196 billion over a decade, according to the Congressional Budget Office. The additional outlay will move Social Security’s trust fund depletion dates six months closer. The program’s combined trust funds may pay full benefits until 2035, at which point just 83% of scheduled benefits may be payable, the program’s trustees projected last year.

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Additionally, about 380,000 spouses would see average benefit increases of $700 and 390,000 surviving spouses would see an average of $1,190 more, according to CBO’s estimates for December 2025.

Those beneficiaries were affected by the now-defunct Government Pension Offset, or GPO, which reduced Social Security benefits for spouses, widows and widowers who also receive their own pensions from public sector work.

The elimination of the provisions in many ways simplifies retirement income planning for affected beneficiaries, financial advisors say.

“For the people who are affected by this, you’re looking at a pretty significant increase, in many cases, of what their retirement income is going to be,” said Michael Daley, director of marketing at HealthView Services. “It’s good news for them.”

For financial planners and their clients, the challenge now is gauging how much of a benefit increase to expect and when to expect it, said Joe Elsasser, founder and president of Covisum, a Social Security claiming software company.

The extra income may also present some complications when it comes to affected beneficiaries’ taxes and Medicare premiums, experts say.

Those levies are determined based on a formula called combined income — the sum of adjusted gross income, nontaxable interest and half of Social Security benefits.

Individuals pay taxes on up to 50% of their benefits if their combined income is between $25,000 and $34,000, or for married couples with between $32,000 and $44,000.

Individuals may pay taxes on up to 85% of their benefits if their combined income is more than $34,000; or for married couples with more than $44,000.

“Because Social Security benefits are taxed differently than everything else, people are going to really want to pay attention to their other sources of income,” Elsasser said of the anticipated benefit increases and lump sum payments.

For example, if a retiree has both a taxable account and traditional individual retirement account, they may want to prioritize withdrawals from the taxable account because only the gains would be taxed rather than the entire withdrawal, Elsasser explained. In the event the lump-sum payment of retroactive Social Security benefits is not distributed, they may take an IRA withdrawal later in the year.

For now, the agency recommends verifying that direct deposit and mailing address it has on file is still accurate. To update that information, the Social Security recommends changing it online or calling or visiting a Social Security office in person.

Some individuals may now become eligible for Social Security benefits for the first time, now that the WEP and GPO provisions have been eliminated.

To file for benefits, the Social Security Administration recommends either filing online or scheduling an appointment with the agency.

As the IRS faces scrutiny from a Republican-controlled Congress, the agency’s internal watchdog has urged lawmakers to preserve taxpayer service and technology funding.

The National Taxpayer Advocate on Wednesday released its annual report to Congress, which criticized the “extreme imbalance in funding priorities” when comparing the billions of dollars allocated via the Inflation Reduction Act.

While the tens of billions earmarked for enforcement has “generated controversy,” there’s been “strong bipartisan support” for taxpayer services and technology modernization, wrote Erin Collins, national taxpayer advocate.

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Of the original $78.9 billion Inflation Reduction Act funding, the legislation earmarked 58% for enforcement and 32% for operations support, according to the report. By comparison, the budget allocated 4% for taxpayer service and 6% for technology modernization.  

With sufficient funding for services and technology, “taxpayer experiences will become fairer and more efficient, which likely will improve compliance and reduce the need for costly backend enforcement,” Collins wrote.

During fiscal year 2024, the IRS collected $98.7 billion through enforcement, which was less than 2% of all revenue, according to the agency’s 2024 financial report. The remaining 98% of federal taxes were “self-assessed” via annual tax returns and timely payments. 

If Congress reduces enforcement funding, it shouldn’t include commensurate cuts to taxpayer services and technology, which could “inadvertently throw the baby out with the bathwater,” Collins wrote. 

With added costs to “pull itself out of the pandemic” and yearly appropriations held steady amid rising costs over the past few years, the IRS has needed to spend part of its multi-year funding to maintain current operations, she added.  

Congress rescinded $20 billion in IRS funding as part of a 2023 budget deal, and Republicans have vowed to make further cuts. Another $20 billion was automatically clawed back when lawmakers in December extended the 2023 deal to avoid a government shutdown.  

Further IRS funding cuts could be possible in 2025 with Republican control of Congress and the White House.

Federal student loan borrowers affected by the wildfires ripping across Southern California have relief options if they’re worried about keeping up with their payments as they recover.

The same holds true for other people with education debt who find themselves grappling with extreme weather and climate disasters.

“Borrowers impacted by natural disasters may qualify for temporary relief from student loan payments,” said Carolina Rodriguez, director of the Education Debt Consumer Assistance Program, based in New York.

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It’s a good idea for borrowers to familiarize themselves with the relief available to them in case they should need it, experts said.

There was a record number — 28 — of billion-dollar disasters in the U.S. during 2023, including wildfires, droughts and tornados, according to the National Oceanic and Atmospheric Administration. By November of 2024, there were 24 confirmed weather and climate disaster events with losses also exceeding $1 billion each.

Here’s what federal student loan holders should know about their options during a natural disaster.

At Studentaid.gov, the Education Department says its federal student loan servicers check the Federal Emergency Management Agency website at least once each business day to identify all impacted areas connected to a disaster declaration.

In many cases, the U.S. Department of Education will automatically put qualifying borrowers into a natural disaster forbearance, Kantrowitz said.

“Borrowers generally do not need to apply for this,” he added. Still, borrowers who want to make sure their payments are paused might want to contact their loan servicer.

The natural disaster forbearance lasts for up to 90 days, according to the Education Department. In some cases, borrowers will be granted 30-day extensions. However, the forbearance can’t exceed 12 monthly billing cycles from the date of the disaster. (Loan interest continues to accrue during the payment pause.)

Meanwhile, those who want to decline the automatic natural disaster forbearance because they’re able to make their payments should contact the Education Department to do so.

Borrowers who are students at the time of a natural disaster may continue to qualify for an in-school deferment, Kantrowitz said, even if they’re not able to complete the school year.

If you’re in default on your student loans and impacted, you or a family member can contact the Education Department and request a three-month suspension of collection activity.

If you’ve lost any of your student loan records in a disaster, you can access the information through your Studentaid.gov account.

If the natural disaster is not federally-declared or borrowers aren’t deemed eligible for the forbearance for some reason, they can still request a temporary payment pause by applying for a general forbearance with their servicer, EDCAP’s Rodriguez said.

Borrowers should keep in mind that interest can continue to accrue on their debt during a forbearance, and that they might not get credit toward a debt forgiveness program while they’re not making payments, she added.

You’ll likely have fewer disaster relief options with your private student loans, Rodriguez said.

Still, she said, “it is essential to reach out to private lenders as soon as possible to explore available relief and prevent delinquency or default.”