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Introduced February 27, 2025 by Val Hoyle · Last progress February 27, 2025
Increases Social Security benefits for many beneficiaries by raising replacement percentages and creating a new minimum benefit for long-career low earners, changes the cost‑of‑living measure to the Consumer Price Index for the Elderly (CPI‑E), extends child/student benefit eligibility through age 22 in many cases, and merges the Old‑Age and Disability trust funds into a single Social Security Trust Fund. To help pay for these changes, it expands payroll and self‑employment tax exposure up to $250,000 of earnings when the taxable wage base is below that threshold and substantially raises and broadens the net investment income tax (NIIT). The bill requires the Social Security Administration and the Treasury to recompute benefits and transfers to implement the new rules and directs the BLS to publish CPI‑E monthly beginning the July after enactment.
The bill increases and better targets Social Security benefits and tightens tax rules to raise revenue and clarity, but it raises costs for taxpayers and employers and creates significant fiscal, administrative, and implementation challenges that could strain long‑term program financing and complicate beneficiary and taxpayer compliance.
Seniors and disabled beneficiaries (current and recent eligibles) will receive higher monthly Social Security benefits via increased bend‑point replacement and recomputed PIAs, including retroactive adjustments for those who first became eligible before 2026.
Social Security COLAs would use the CPI–E (with monthly BLS publication), so cost‑of‑living increases better reflect older adults' spending and improve transparency of future COLAs.
Low‑income workers with long attachment (e.g., 10+ years) and newly eligible cohorts get a higher minimum PIA and protections against very low computed benefits, reducing poverty risk in retirement and disability.
Higher benefit levels, expanded eligibility protections, and a CPI–E that may track higher inflation together increase Social Security outlays and long‑term financing pressure, risking future tax increases, benefit cuts, or trust‑fund strain.
Employees with earnings above the current wage base up to $250,000 (and their employers) will face higher payroll‑tax liabilities, reducing take‑home pay and raising labor costs for businesses.
The NIIT jump to 16.2% and a broader taxable base will substantially raise taxes on investment income for high‑income taxpayers and many active business owners, increasing their tax bills and complexity.