Seniors who received a windfall deposit as a result of the Social Security Fairness Act are now finding that the consequences of that unexpected benefit can be costly, especially in Illinois.

As a reminder, early last year seniors who had been receiving reduced Social Security benefits because they also had public pension benefits suddenly received a boost in their Social Security to a full benefit check — in addition to a large one-time "catch-up" deposit because the legislation was made retroactive to all of 2024.

When the windfall make-up payments arrived in early 2025, they contained at least 12 months' worth of the differential, and in some cases even more. That, in addition to the full benefit being paid, has tax implications.

Some seniors may have set aside money for taxes on that extra income. However, subsequent tax legislation increased the standard deduction to $6,000 for most seniors (up to certain income levels), potentially offsetting some of the additional income tax.

But income taxes weren’t the only impact created by the Fairness Act windfall. Some seniors are finding the extra earnings (along with other significant income) moved them into an increase in their Medicare Part B and D premiums — the IRMAA adjustment that requires higher-income seniors to pay more for Medicare.

The low-income senior property tax freeze

There was one more hidden hit for many seniors who received the unexpected extra income last year: surpassing income limits for low-income senior property tax freeze provisions.

In recent years, Illinois seniors who were in a household that earned less than $65,000 could take advantage of the Low-Income Senior Citizens Assessment Freeze Exemption. This measure was designed to protect them from the rising property values that come with gentrification.

Windfall payments under the Fairness Act suddenly boosted many seniors above the freeze level of income. The adjusted gross income calculation used to qualify for the freeze differs from your taxable income. For example, it does not include a veteran’s pension, and you cannot use business losses to lower your income.

When I contacted the Cook County Assessor’s Office about this issue last spring, Assessor Fritz Kaegi said they were aware of problems with the income threshold for the freeze, which hadn’t increased in years. He assured me they were working on a fix with the Illinois General Assembly to raise the cap.

Last spring, bills were introduced in each house, but it wasn’t until the last week of the veto session, last October, that a bill was finally passed, under pressure from the assessor and community groups. It raised the cap to $75,000 for 2026 — with a $2,000 increase in the cap for the two succeeding years.

But — and this is a big but — the General Assembly did not make this law go into effect for 2025, the year in which many seniors received their increased income. David Morrison, who runs the Cook County Assessor’s government relations department, explained that many downstate assessors had requested more time to make the procedural changes.

Happening now

Seniors must apply for this freeze every year by proving their taxable income. Applications must be submitted to the assessor’s office, either online or on paper, before the county clerk calculates tax rates and the county treasurer sends out tax bills. Typically, that means the applications should be submitted by early April.

If you qualified for the freeze for 2024, and your household income for 2025 rose above the current $65,000 freeze cap level, you may find that your property tax increased substantially when you get your bill later this year. The difference could be thousands of dollars. When seniors start receiving those higher tax bills, you can be sure the increases will make headlines.

One bright spot

Losing the freeze for 2025 is frightening and will be expensive for many seniors. But Morrison reminds everyone that if incomes move below the new, higher cap for 2026, seniors will regain the freeze. And, critically, the freeze level will remain at their original freeze valuation. That is, if the home property value was originally frozen at, say, $325,000, even if current market valuations are significantly higher, the reinstated 2026 freeze will stay at that original, lower valuation.

The “gift” of higher Social Security benefits and the one-time catch-up payment clearly may have a downside for some — potentially a much higher property tax bill.

Illinois citizens who wish to reach their legislators, to urge them to follow the 29 other states that offer property tax relief for homeowners whose bills spike suddenly, can call the Illinois House Clerk at (217)782-8223. They can ask to speak to their state legislator and urge them to support a “circuit-breaker” bill for property tax relief.

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