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Raises and adjusts Social Security benefit rules and payroll tax treatment beginning after 2025: it increases special minimum benefits for long-term low earners, creates an automatic benefit boost for beneficiaries long after their initial eligibility, extends child’s Social Security benefits to full-time post‑secondary students up to age 26, changes how earnings above the Social Security wage base are counted and taxed using a new "applicable percentage," adds a new 3% AIME bend for higher AIME tiers, and excludes these new benefit increases from counting as income or resources for means‑tested programs. The bill also rewrites payroll and self‑employment tax language to apply rates from statutory tables (not reproduced here), so workers, employers, and the Social Security Trust Fund are directly affected.
The bill increases and indexes benefits for many future beneficiaries and clarifies payroll/coverage rules—boosting retirement security for some—but does so in ways that raise long‑term program costs, create cohort winners and losers, and shift complexity and potential tax burdens onto workers, employers, and administrators.
Low‑lifetime‑earners (low‑income workers who first become eligible after 2025) will receive higher minimum Social Security benefits and future beneficiaries get benefits indexed to a poverty‑based dollar amount, increasing retirement income for the most vulnerable seniors.
Qualified beneficiaries (including some long‑term retirees and disability beneficiaries) receive an automatic, wage‑linked monthly benefit increase in years beginning at least 16 years after eligibility, boosting long‑run retirement and disability income for those future cohorts.
People who first become eligible in 2026 or later get a higher Primary Insurance Amount for AIME above a new 3% bend and that bend point is indexed to national average wages, preserving purchasing power of that threshold over time.
Several benefit increases and expanded coverage raise long‑term Social Security outlays, increasing pressure on the trust fund and potentially requiring future offsets or higher payroll taxes paid by American workers and employers.
Most increases apply only to people who first become eligible after Dec 31, 2025 (or to applications filed in 2026+), creating cohort inequities that leave current and recently eligible beneficiaries without the new gains.
The new 'applicable percentage' table could raise payroll tax withholding for employees, increase employer OASDI costs, and raise net tax liability for the self‑employed—reducing take‑home pay and potentially affecting hiring and small‑business cash flow.
Introduced May 20, 2025 by Gwendolynne S. Moore · Last progress May 20, 2025