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TennesseeSB 0251114th General Assembly (2025-2026)SenateWALLET

AN ACT to amend Tennessee Code Annotated, Section 8-25-213 and Title 8, Chapter 36, Part 8, relative to reemployment after retirement.

Sponsored By: Ken Yager (Republican)

Became Law

Public Employees

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Bill Overview

Analyzed Economic Effects

4 provisions identified: 0 benefits, 1 costs, 3 mixed.

Retirees can work again, with limits

Beginning July 1, 2025, retired public employees can return to covered work and keep their pension. You must have a real break: no prearranged deal and at least 60 days off. You cannot work more than 120 days in any 12 months (or 24 quarter or 18 semester credit hours in higher education). Your total pay while rehired cannot exceed 60% of your last full‑time yearly salary, increased 5% for each year since you left (or another rate set by the treasurer and HR commissioner). Employers must certify your hire, report your days and pay, keep records, and are subject to audit. If you exceed the day or pay limits, your monthly pension is cut by the greater of 1/20 per extra day or a share based on excess pay, and overpayments can be taken back. Substitute public school teachers can exceed 120 days only at substitute pay and within pay limits. Disability retirees cannot use this option. You may join the state 401(k) or 457(b) while rehired, but you do not earn new pension credit.

Retirees rehired to hard-to-fill jobs

Starting July 1, 2025, retirees can be rehired into jobs the employer certifies are hard to fill, after a real 60‑day break and no prearranged return. While rehired, your pension is paid at 70% of the normal amount. Each term lasts up to one year and can be renewed if the need continues. The employer must pay the retirement system the normal employer contribution or 5% of your earnable pay, whichever is higher, and must certify the position and lack of other qualified candidates. You can join the state 401(k) or 457(b), but you do not earn new pension credit. Disability retirees are excluded.

Some recent retirees get in-service tax treatment

Beginning July 1, 2025, the retirement system treats some past retirees as having an in‑service distribution for tax reporting. This applies if your retirement took effect in fiscal years 2022–2023, 2023–2024, or 2024–2025 and the system finds you did not have a bona fide separation. The system updates prior tax forms as needed, which can change your taxes or withholding. After July 1, 2025, you may only be rehired after you first meet the bona fide separation rule.

Aligns and cleans up rehire rules

Starting July 1, 2025, people who return under certain listed return‑to‑work paths are not subject to one prior subsection’s rule. Also starting July 1, 2025, those covered by the deferred‑compensation return rule must follow the same 120‑day and pay caps in the new law. On January 1, 2026, the law removes two older rehire sections. These changes align limits across sections and retire overlapping rules.

Sponsors & Cosponsors

Sponsor

  • Ken Yager

    Republican • Senate

Cosponsors

  • Shane Reeves

    Republican • Senate

Roll Call Votes

All Roll Calls

Yes: 39 • No: 0

Senate vote • 3/10/2025

FLOOR VOTE: Motion to Adopt 3/10/2025

Yes: 30 • No: 0

Senate vote • 3/4/2025

SENATE STATE & LOCAL GOVERNMENT COMMITTEE

Yes: 9 • No: 0

Actions Timeline

  1. Pub. Ch. 159

    5/2/2025

  2. Effective date(s) 07/01/2025, 01/01/2026

    5/2/2025

  3. Signed by Governor.

    4/11/2025Senate

  4. Transmitted to Governor for action.

    4/3/2025Senate

  5. Signed by Senate Speaker

    4/2/2025Senate

  6. Signed by H. Speaker

    4/2/2025House

  7. Enrolled and ready for signatures

    4/1/2025Senate

  8. Subst. for comp. HB.

    3/31/2025House

  9. Passed H., Ayes 93, Nays 0, PNV 2

    3/31/2025House

  10. Rcvd. from S., held on H. desk.

    3/13/2025House

  11. Passed Senate, Ayes 30, Nays 0

    3/10/2025Senate

  12. Engrossed; ready for transmission to House

    3/10/2025Senate

  13. Placed on Senate Consent Calendar 2 for 3/10/2025

    3/7/2025Senate

  14. Recommended for passage, refer to Senate Calendar Committee

    3/4/2025Senate

  15. Placed on Senate State and Local Government Committee calendar for 3/4/2025

    2/25/2025Senate

  16. Sponsor change.

    2/18/2025Senate

  17. Sponsor(s) Added.

    2/18/2025Senate

  18. Passed on Second Consideration, refer to Senate State and Local Government Committee

    2/10/2025Senate

  19. Introduced, Passed on First Consideration

    1/27/2025Senate

  20. Filed for introduction

    1/22/2025Senate

Bill Text

  • Enrolled / Public Chapter

    PDF

  • Fiscal Note

    PDF

  • Introduced

    PDF

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