Sponsors (2)
The bill increases benefits and better aligns COLAs with older adults' costs (helping many retirees) while cutting payroll taxes for higher earners in ways that substantially raise long‑term program costs, strain trust fund receipts, and add administrative and legal uncertainty that could prompt future offsets.
Millions of current and future Social Security beneficiaries (seniors and Medicare beneficiaries) will receive larger monthly benefits because the bill raises initial PIA calculations, adds a 5% credit on surplus indexed earnings, and ties COLAs to an elderly-weighted CPI that better reflects older adults' spending (including healthcare).
High‑earning workers and self‑employed people will pay less payroll tax on earnings above the contribution base during 2026–2029 and no payroll tax on that excess earnings from 2030 onward, raising their after‑tax income and likely boosting short‑term consumer spending among those workers.
Retroactive recomputation rules protect many beneficiaries from immediate reductions by preserving higher original PIAs when a recomputation would lower benefits, reducing the risk of sudden benefit losses for current retirees.
Higher initial PIA boosts and more generous, elderly‑weighted COLAs will increase long‑term Social Security spending and put sizable upward pressure on the program’s finances, raising the likelihood of larger federal deficits or the need for offsetting revenue or benefit changes.
Cutting payroll tax liability on earnings above the contribution base reduces Social Security trust fund receipts, increasing the risk that solvency problems will require benefit reductions, transfers from general revenues, or higher payroll taxes later.
Some retirees and future beneficiaries could receive smaller lifetime benefits if benefits are ultimately calculated from lower taxable earnings above the contribution base (the same change that reduces payroll taxes for high earners).
Based on analysis of 6 sections of legislative text.
Phases out Social Security payroll tax on earnings above the taxable maximum (2026–2030), revises PIA bend points and adds a surplus AIME factor, and switches COLAs to a CPI-E index.
Official title: Improve the retirement security of American families by increasing Social Security benefits for current and future beneficiaries while making Social Security stronger for future generations.
Introduced December 11, 2025 by Brian Emanuel Schatz · Last progress December 11, 2025
Phases out the portion of earnings above the Social Security contribution-and-benefit base that are subject to Social Security payroll taxes from 2026 through 2030; revises the Social Security benefit formula to add a new small factor for "surplus" earnings, adjusts bend points and indexing rules, and requires recomputation for some existing PIAs. It also requires the Bureau of Labor Statistics to produce a Consumer Price Index for Elderly Consumers and switches Social Security COLA calculations to that CPI-E for benefit adjustments beginning in applicable 2026 computation quarters. Together the changes reduce payroll taxation of very high earners over a multi-year transition, alter how primary insurance amounts (PIAs) are calculated for people first eligible after 2030, and change the inflation measure used to compute cost-of-living adjustments for Social Security benefits. Several provisions phase in or become effective at different dates between 2026 and 2045 and include an appropriation authorization for creation of the new CPI series.