In 2025, federal employees saw a lot of scary headlines: a “high-5” pension, the FERS supplement going away, higher retirement contributions. If you’re still worried about them, here’s the good news: none of those became law.
The 2025 budget law did change some things for feds, but mostly through your taxes. And one change shows up this Open Season. Here’s what actually passed, what didn’t, and how to tell the difference next time.
How we got here
- May 2025: The House passed its version of the bill (H.R. 1), which included several cuts to FERS.
- June 2025: The Senate’s version left those FERS cuts out.
- July 4, 2025: The final bill was signed into law as Public Law 119-21, often called the One Big Beautiful Bill Act.
- November 9, 2026: A new FEHB and PSHB family member verification rule from the law takes effect this Open Season.
Proposed in the House, then dropped
These four ideas made headlines, but they were left out of the final law:
| Proposal | What it would have done | Status |
|---|---|---|
| High-5 | Based your pension on your highest 5 years of pay instead of 3 | Dropped |
| FERS supplement | Eliminated it for future retirees | Dropped |
| Higher FERS contributions | Raised contributions to 4.4% for most employees | Dropped |
| “At-will” election | Made new hires pay 5% more to keep their job protections | Dropped |
What this means for you: your pension formula, the FERS supplement, your FERS contribution rate and your TSP match are all unchanged by this law.
What hits you this Open Season
One provision of the law (section 90101) does affect your health benefits directly: family member verification.
- Starting with this Open Season on November 9, you’ll need to provide proof to add a family member to your FEHB or PSHB plan.
- This applies to every new family member, such as a spouse or child. In the past, only a sample was checked.
- Have documents ready when you enroll, such as a marriage certificate, birth certificate or adoption papers. Your election won’t be finalized without them.
If you’re not adding anyone, this doesn’t change anything for you.
Where it reaches you now: taxes
Most of the law’s impact on feds is on your tax return. Here are the changes most likely to matter:
| Change | Amount | Who it helps |
|---|---|---|
| Senior deduction | Up to $6,000 per person age 65+, 2025 through 2028 | Retirees and older employees; it phases out above $75,000 of income (single) or $150,000 (joint) |
| Overtime deduction | Up to $12,500 ($25,000 joint), 2025 through 2028 | Feds who earn qualifying overtime under the Fair Labor Standards Act |
| Dependent care FSA | Limit rises to $7,500, starting in 2026 | Employees paying for child or dependent care |
A few other changes reach almost everyone:
- The 2017 tax brackets are now permanent. They were scheduled to expire after 2025.
- The SALT cap rose to $40,000 for most filers, up from $10,000. That matters if you itemize and pay high state, local or property taxes.
- The 2025 standard deduction is $31,500 for married couples filing jointly.
Whether these help you depends on your income, age and whether you itemize. It’s worth running the numbers with your tax preparer.
Rumors vs. reality
- Rumor: “No more tax on Social Security.” That never passed. Social Security is taxed the same way it was before. The senior deduction was passed instead, and it can lower your taxable income if you qualify.
- Rumor: “Current retirees are getting cut.” The law made no changes to federal annuities or COLAs.
How to check a rumor yourself
The next scary headline is always around the corner. Here’s how to tell if it’s real:
- Check Congress.gov. Look up the bill and see whether it says “Became Public Law.” If it doesn’t, it’s not law.
- Remember that a proposal isn’t a law. Budget proposals and bills often include ideas that never pass. They can also come back in future years, so a proposal is worth watching, not acting on.
- Look for OPM guidance. Real changes to your benefits come with official guidance from OPM explaining how and when they take effect.
The bottom line
The FERS cuts you heard about in 2025 didn’t pass. Your pension, supplement and contributions are unchanged. What did change is mostly on your tax return, plus new documentation rules if you’re adding a family member to your health plan this Open Season.
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Educational only, not tax, investment, or legal advice. Tax rules depend on your individual situation. Please consult your own tax, legal and financial advisors for personalized advice. Haws Federal Advisors | HawsFederalAdvisors.com