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The bill increases retirees' benefits and cost-of-living protections (and gives temporary tax relief to high earners) while improving measurement for elderly inflation, but does so at the cost of near-term revenue loss, increased Social Security outlays, delayed coverage benefits for many, and added administrative burdens that together heighten long-term solvency and fiscal risks.
Seniors and current Social Security beneficiaries will see larger COLAs because benefits will be indexed to an elderly-specific CPI (BLS will produce and be funded to create this index), preserving retirees' purchasing power.
Current and future retirees (especially higher earners) will receive higher Social Security benefits over time because the benefit formula raises the lowest PIA factor from 90% to 95% and creates a surplus AIME component, with recomputation safeguards that protect already higher PIAs.
Workers with earnings or self-employment income above the Social Security wage base will keep more take-home pay during 2026–2029 because a portion of those earnings becomes untaxed for payroll-tax purposes, improving cash flow for affected taxpayers and small-business owners.
Taxpayers and future beneficiaries face higher fiscal pressure because the bill both reduces near-term payroll-tax receipts (by excluding some earnings from the base) and increases benefit outlays (higher PIAs and larger COLAs), which together worsen Social Security trust-fund solvency and could require future tax increases, benefit cuts, or deficit financing.
Workers with earnings above the wage base will have smaller amounts counted toward Social Security coverage during 2026–2029, which can reduce the growth of their future benefits for those years.
Many people will not see meaningful benefit changes for years because the bill phases in coverage and most of the benefit increases primarily affect individuals who become eligible after 2030, delaying help for near-term claimants.
Based on analysis of 6 sections of legislative text.
Phases out taxation/coverage of earnings above the Social Security wage base by 2030, raises parts of the benefit formula, adds a surplus-earnings benefit, and switches COLAs to a CPI-E index.
Introduced December 11, 2025 by Brian Emanuel Schatz · Last progress December 11, 2025
Phases down the portion of earnings above the Social Security wage base that count as taxable earnings and as covered earnings for payroll tax purposes beginning in 2026, and at the same time changes how Social Security benefits are calculated and how cost-of-living adjustments (COLAs) are measured. The bill raises the lowest benefit formula percentage, adds a new small benefit component for earnings above the wage base (called “surplus AIME”), requires recalculation of earlier benefit amounts for some beneficiaries, and directs the Bureau of Labor Statistics to create and publish a Consumer Price Index for Elderly Consumers (CPI-E) to be used for future COLAs. Most tax and coverage changes take effect for calendar years after 2025 (i.e., beginning in 2026). The CPI-E and new COLA method are phased in for COLA quarters ending on or after September 30, 2026, and the larger benefit formula elements apply to people becoming newly eligible after 2030, with some recomputations effective January 2026 for previously computed benefits.