Repeals federal income taxation of Social Security benefits for taxable years after enactment and directs the Treasury to appropriate funds each fiscal year to make up any resulting reductions in transfers to Social Security trust funds and Railroad Retirement accounts. It also changes how wages and self-employment income are counted for Social Security payroll taxes and updates the Social Security benefit formula for very high earners by adding a new calculation for earnings above $250,000, with most substantive changes taking effect after 2025.

The law updates definitions (wages, self-employment income), adds special rules for people with multiple employers, adjusts the national average wage index after 2025, and requires that SSI, Medicaid, and CHIP eligibility treat any affected Social Security benefit as no greater than pre-enactment amounts so beneficiaries’ means-tested benefits aren’t reduced by the reform.