Planning Strategies CPAs Should Review Amid New Social Security Rules

The One Big Beautiful Bill Act (OBBBA) and the Social Security Fairness Act create significant new opportunities for CPAs to revisit and strengthen clients’ Social Security-related tax planning strategies. In 2025, these changes require a fresh look at income timing, retirement projections and multi-year planning, driven primarily by two major provisions: the introduction of the temporary senior deduction and the repeal of the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO).

New Senior Deduction

OBBBA introduces a temporary senior deduction beginning in 2025 for taxpayers age 65 and older who have a valid Social Security number. The deduction is $6,000 for single filers and $12,000 for married couples filing jointly when both spouses qualify. The deduction phases out starting at modified adjusted growth income (MAGI) of $75,000 for single filers and $150,000 for joint filers and ends at $175,000 and $250,000. The provision sunsets after 2028, creating a limited four-year planning window.

As a below-the-line deduction, the senior deduction applies regardless of whether a taxpayer itemizes, making it broadly accessible to most seniors. Because it can be used with other tax elections, the senior deduction broadens planning opportunities and can meaningfully reduce taxable income during the four-year window, particularly when paired with thoughtful income timing to stay within favorable tax brackets.

CPAs should evaluate whether clients can shift income into the years when the deduction is available. Seniors who remain below phaseout thresholds may consider accelerating certain income — such as Roth conversions, IRA withdrawals, long-term capital gains or required distributions — while preserving favorable tax treatment. Multi-year modeling is essential for determining optimal tax savings, especially for married couples eligible for the full deduction over four tax years.

The deduction can shift a client’s position relative to Medicare income-related monthly adjustment amount (IRMAA) thresholds. Although it does not reduce MAGI for IRMAA calculations, monitoring income during the four-year window may help clients remain within lower premium tiers. Continuous review of MAGI is essential to understanding its impact on tax planning.

Repeal of WEP and GPO

The Social Security Fairness Act repeals WEP and GPO beginning in 2024, restoring full benefit formulas for millions of people with non-covered pensions. According to Congressional Budget Office estimates, eligible recipients may see monthly payments rise by as much as $1,190, with retroactive lump-sum refunds issued in 2025. CPAs should update projections for affected clients with pensions from public school systems, law enforcement, fire services, the Civil Service Retirement System or foreign social security programs, as these higher benefits will change long-term retirement income planning.

Higher monthly and survivor benefits require updated claiming strategies. For many clients, the enhanced benefit structure may increase the value of delaying claiming Social Security benefits to age 70, while others may find earlier claiming more favorable based on revised breakeven points. The timing of lump-sum payments must also be considered for their tax impact.

Clients who previously avoided accumulating Social Security credits due to WEP or GPO may now benefit from earning the 40 quarters required for insured status. In 2025, each quarter requires $1,810 of earnings. CPAs should evaluate whether pursuing eligibility aligns with a client’s broader retirement plan, goals and desired lifestyle.

Planning Considerations

These changes require CPAs to refine how they model Social Security decisions and long-term tax planning. Updated benefit estimates at ages 62, 67 and 70 should anchor every scenario, particularly when coordinating the temporary senior deduction with income patterns that may affect Medicare IRMAA tiers. The repeal of WEP and GPO also necessitates rebuilding projections for clients with non-covered pensions, including revised spousal and survivor benefits. CPAs should integrate required minimum distributions (RMD) timing, Roth conversions and capital-gain strategies to manage tax brackets and long-term cash flow while stress-testing multiple claiming ages to identify the most durable approach.

Taken together, these legislative updates make 2025 a pivotal year for CPAs to reassess Social Security timing, retirement income strategies and multi-year tax planning. With thoughtful modeling and careful attention to IRMAA, the timing of Social Security claims and key income thresholds, CPAs can help clients maximize lifetime retirement income while minimizing tax burdens during this period of change.

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Salvatore M. Schibell Salvatore Schibell, CPA, CFP®, CGMA, MST, MBA, is the tax partner at Lawson, Rescinio, Schibell & Associates, P.C. He is a member of the NJCPA Federal Taxation and State Taxation interest groups. More content by Salvatore M. Schibell: Rethinking Retirement: Helping Clients Set Goals, Define Purpose and Plan with Precision 6 Ways to Position Your Small Accounting Firm as a Valued Merger Partner Authentic Kindness at Work: The Key to Building Trust and Avoiding Pitfalls How New Jersey Residents Can Avoid Double Taxation on New York and Pennsylvania Income