Summary

Phases out Social Security payroll and self-employment taxes on earnings above the taxable base for remuneration and self-employment income paid after 2025, while changing how Social Security benefits are calculated and how cost‑of‑living adjustments (COLAs) are measured. It raises the lowest replacement factor in the benefit formula, creates a low‑rate benefit bracket for earnings above the taxable base (with a long phased increase in the rate), requires recalculation of some existing benefit amounts beginning January 2026, and switches COLAs to a Consumer Price Index for Elderly Consumers (CPI‑E) starting with quarters ending on or after September 30, 2026.

Key Points

• Phases out Social Security payroll and self‑employment tax on earnings above the contribution/benefit base between 2026 and 2030, reaching 0% in 2030 and after.
• Raises the first PIA bend‑point factor from 90% to 95%, increasing the replacement rate on the lowest portion of indexed earnings.
• Creates a new low‑rate benefit bracket for surplus earnings above the taxable base and specifies a long phased increase in the factor applied to that surplus for future cohorts.
• Requires recomputation of existing PIAs effective January 2026 with a rule that preserves any higher original benefit.
• Switches Social Security COLAs to a Consumer Price Index for Elderly Consumers (CPI‑E), with BLS required to publish the new index and COLA use beginning for quarters ending on/after Sept 30, 2026.
• Amends both the Internal Revenue Code (wage and self‑employment tax rules) and the Social Security Act (benefit computation and indexing rules).
• Likely reduces payroll tax revenue from high earnings while increasing certain benefits over time (via PIA changes, recomputation protections, and CPI‑E COLAs).
• Imposes new administrative tasks on the BLS, SSA, and IRS to implement new indexing, computation rules, and benefit recalculations.

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