Social Security changes happen more often than most people realize. Since 1935, the program has gone through countless updates. Some fix problems in the system. Others respond to shifts in how Americans work and live.

Here’s the thing: The Government Pension Offset, or GPO, could slash your Social Security benefits to nothing. Congress finally eliminated it this January through the Social Security Fairness Act.

So what was this rule? And more importantly, who did it affect?

Who Got Hit by the GPO

Let’s start with the basics. Social Security offers spousal and survivor benefits because not everyone works a traditional job their whole life. Maybe you stayed home raising kids. Maybe you worked part-time or in lower-paying roles. When your spouse pays into Social Security through their job, you might qualify for benefits based on their work record.

According to SSA guidelines, spousal benefits max out at 50% of what your spouse gets at full retirement age. Survivor benefits can reach 100% of what your deceased spouse received. For many people, these payments make the difference between scraping by and living comfortably in retirement.

The GPO targeted a specific group: government workers whose pensions didn’t include Social Security taxes. By December 2023, about 1% of all Social Security beneficiaries saw their payments reduced because of this provision. Half were spouses. The other half were surviving spouses.

Then January 2025 rolled around. The GPO disappeared.

Why This Rule Even Existed

Think back to the 1930s for a minute. Women were entering the workforce in growing numbers, but most either didn’t work outside the home or earned far less than men. Society assumed husbands were the breadwinners.

Social Security rules reflected that mindset. Widows qualified for survivor benefits automatically. Widowers? They had to prove their deceased wives provided at least half their financial support.

That’s blatantly unfair.

The Supreme Court agreed. In 1977, they ruled in Califano v. Goldfarb that this sex-based distinction violated the Constitution. Men shouldn’t face a burden of proof that women didn’t.

When Fixing One Problem Creates Another

That court decision fixed one form of discrimination but created a new headache. Hundreds of thousands of retired government employees suddenly became eligible for spousal or survivor benefits. These folks had never paid into Social Security and were already collecting government pensions.

Critics had a point about fairness. The program’s costs jumped by hundreds of millions almost overnight.

Congress acted fast. They passed the Government Pension Offset as part of the Social Security Amendments of 1977. The goal was stopping what lawmakers saw as double-dipping. State and local government employees who hadn’t paid Social Security taxes became the main targets.

The original offset was brutal. Your entire government pension got subtracted from your Social Security spousal benefits. After major pushback, lawmakers softened the formula. That revised version stuck around until this January.

How the Math Actually Worked

The formula took two-thirds of your monthly government pension and subtracted it from your spousal benefit.

Here’s an example. Say you got $1,200 monthly from your government pension. Two-thirds of that is $800. If your spousal benefit was $1,000, you’d only receive $200 after the offset. Some people saw their Social Security benefits wiped out completely when two-thirds of their pension exceeded their payment.

The result? Zero dollars.

Breaking Down the Calculation

Based on SSA regulations, the GPO reduction followed these steps:

1. Take your monthly government pension amount
2. Multiply that figure by two-thirds (0.667)
3. Subtract the result from your Social Security spousal or survivor benefit
4. The remaining amount is what you actually received

If step 3 resulted in zero or a negative number, you received nothing from Social Security.

Not the Same as That Other Rule

People constantly confused the GPO with the Windfall Elimination Provision, or WEP. Both involved pensions and reduced Social Security payments, but they worked differently.

The WEP affected people getting both a government pension and their own Social Security retirement or disability benefits. The GPO hit those receiving a government pension plus spousal or survivor benefits. Another key difference? The WEP couldn’t zero out your benefits. The GPO absolutely could.

For more details on how these provisions worked, you can consult resources available at SSA.gov.

When Your Benefits Get Taxed

This catches people off guard. Social Security benefits are usually taxable income. Whether you’re collecting retirement, survivor, or disability payments, the IRS typically wants their cut.

You might dodge federal taxes entirely if your combined income stays below certain limits. Supplemental Security Income, or SSI, doesn’t get taxed since it goes to people with very limited resources. Disability payments from terrorist attacks get special tax treatment too.

Figuring Out Your Tax Bill

Determining whether your Social Security benefits face taxation starts with calculating provisional income. For most retirees, that’s 50% of your benefits, plus your modified adjusted gross income, plus any tax-exempt interest.

The formula looks like this: 50% of Social Security Benefits + Modified Adjusted Gross Income + Tax-Exempt Interest = Provisional Income.

If your provisional income stays below the thresholds, your benefits remain untaxed. But if you’re pulling money from a traditional IRA, collecting a pension, or earning income from other sources, you’ll probably cross that line.

Once you do, either up to 50% or up to 85% of your Social Security becomes taxable. The exact thresholds depend on how you file.

Income Thresholds for Taxation

Based on current IRS regulations, here’s when your benefits become taxable:

1. Single filers with provisional income between $25,000 and $34,000 may have up to 50% of benefits taxed
2. Single filers with provisional income above $34,000 may have up to 85% of benefits taxed
3. Joint filers with provisional income between $32,000 and $44,000 may have up to 50% of benefits taxed
4. Joint filers with provisional income above $44,000 may have up to 85% of benefits taxed

These thresholds haven’t changed since 1993, which means more people face taxation on their benefits each year as incomes rise with inflation.

Other Retirement Planning Basics

When it comes to retirement planning, the 4% rule remains a popular guideline. Withdraw 4% of your savings in year one, then adjust that amount for inflation each year after. The concept is simple. Its creator has tweaked the approach over time, but it’s still one of the easiest planning tools out there.

Individual Retirement Accounts, or IRAs, continue to be essential for retirement savings. The government adjusts contribution limits periodically, so staying current on those numbers matters for your long-term strategy.

What It All Means

The Government Pension Offset was just one of many Social Security updates since 1935. It came from efforts to fix unintended consequences of that 1977 Supreme Court ruling. The rule reduced or eliminated benefits for roughly 1% of people receiving both government pensions and spousal or survivor benefits.

That two-thirds reduction stayed in place until January 2025.

Why should you care? Because these provisions directly impact retirement security. Whether retirement is decades away or you’re already receiving Social Security benefits, understanding how these rules work helps you make smarter decisions about your financial future.

The repeal of the GPO represents a significant shift for affected beneficiaries. If you worked in government service without paying Social Security taxes and are now eligible for spousal or survivor benefits, your situation has changed. You may want to contact the Social Security Administration directly or visit SSA.gov to understand how the repeal affects your specific circumstances.

Keep in mind that Social Security rules continue to evolve. Staying informed about changes helps you plan effectively and maximize the benefits you’ve earned throughout your working years.