India, Feb. 6 -- A new bipartisan proposal could alter how some retirees are taxed on their Social Security benefits, particularly public sector workers who recently received retroactive payments.

According to Newsweek, the No Tax on Restored Benefits Act seeks to exempt certain retroactive Social Security benefits from being counted as gross income for federal tax purposes. The bill is designed to address unintended tax consequences that followed earlier reforms to the Social Security system.

Roughly 70 million Americans rely on Social Security benefits each month, but the proposed change primarily affects retired public sector workers such as teachers, firefighters and police officers.

Many of these retirees had their benefits reduce...