Strengthening Social Security Act of 2026
- Sponsor
- Rep. Sánchez, Linda T. [D-CA-38]
- Committees
- Education and Workforce Committee (primary)
- Last action
- Jun 11, 2026
Bottom line
The bill aims to bolster Social Security's financial stability and enhance benefits, particularly for vulnerable populations, by increasing contributions from higher earners and adjusting benefit calculations to better reflect the cost of living for seniors.
What it actually does
This bill proposes significant changes to Social Security by increasing the amount of earnings subject to payroll taxes for high-income individuals, adjusting the benefit formula to enhance benefits for lower and middle earners, and changing the cost-of-living adjustment (COLA) calculation to use a Consumer Price Index for Elderly Consumers (CPI-E). It also improves benefits for surviving spouses in two-income households and includes a provision to protect Supplemental Security Income (SSI) beneficiaries from benefit reductions.
Proponents argue
Proponents argue that this bill is a crucial step towards ensuring the long-term solvency of Social Security, preventing benefit cuts, and improving the retirement security of millions of Americans. They contend that increasing contributions from high earners is a fair way to shore up the system, while adjusting the COLA to CPI-E will provide a more accurate reflection of seniors' actual expenses, particularly healthcare costs. Furthermore, they highlight the importance of enhancing benefits for lower and middle-income retirees and addressing inequities for surviving spouses.
Opponents contend
Opponents might argue that increasing the Social Security tax burden on high earners could negatively impact economic growth, discourage investment, and potentially lead to job losses. They may also raise concerns about the administrative complexity of the phased-in tax changes and the potential for increased program outlays from enhanced benefits and a higher COLA, which could exacerbate long-term solvency challenges if not fully offset by revenue increases.
The bill is relatively short and its core provisions are understandable with careful reading, but the technical details of Social Security calculations require focused attention.
Section 2
Taxable Wages and Self-Employment Income Above Contribution and Benefit Base
This section gradually phases in the taxation of earnings above the current Social Security contribution and benefit base (the annual cap on earnings subject to Social Security taxes). Starting in 2028, 80% of earnings above the cap will be subject to Social Security taxes. This percentage decreases by 20 percentage points each year until 2032, when 0% (meaning 100% of earnings above the cap) will be subject to tax. This creates a 'donut hole' where earnings between the current cap and the new taxable threshold are not taxed, but earnings above the new threshold are.
Supporters argue
Supporters argue that this provision is essential for strengthening Social Security's financial outlook by requiring those with the highest incomes to contribute more to the system, ensuring its ability to pay benefits for future generations.
Critics contend
Critics may contend that increasing the tax burden on high earners could disincentivize work, investment, and entrepreneurship, potentially harming economic growth. They might also highlight the complexity of the phased-in approach and the 'donut hole' effect.
Tradeoffs
This provision balances the need for increased Social Security revenue with concerns about the impact of higher taxes on high-income individuals. It also introduces a temporary 'donut hole' in taxable earnings, which is a common feature in proposals to lift the cap, creating a tension between simplicity and political feasibility.
Section 3
Adjustments to Primary Insurance Amount (PIA) Bend Points and Inclusion of Surplus Earnings
This section modifies how Social Security benefits are calculated. It increases the 'first bend point factor' from 90% to 95% for Primary Insurance Amount (PIA) computations, phased in from 2032 to 2035. Additionally, the first bend point itself (the income level at which the benefit formula changes) will increase by 1% annually from 2033 to 2046, reaching a total increase of 15% by 2047. The bill also introduces 'surplus average indexed monthly earnings' (AIME) for earnings above the contribution and benefit base, which will be factored into the PIA at a 5% rate, providing a small benefit increase for high earners.
Section 4 and Section 5
Establishment and Use of Consumer Price Index for Elderly Consumers (CPI-E) for COLAs
Section 4 mandates the Bureau of Labor Statistics (BLS) to prepare and publish a new index called the 'Consumer Price Index for Elderly Consumers' (CPI-E), which reflects the consumption patterns of individuals who have attained early retirement age. Section 5 then amends the Social Security Act to use this new CPI-E for calculating annual cost-of-living adjustments (COLAs) for Social Security benefits, effective for quarters ending on or after September 30, 2027. This change is intended to provide a more accurate measure of inflation experienced by seniors.
Section 6
Improving Social Security Benefits for Widows and Widowers in Two-Income Households
This section revises the calculation of widow's and widower's insurance benefits. It allows a surviving spouse from a two-income household to receive the greater of their deceased spouse's primary insurance amount (PIA) or 75% of the sum of their own old-age/disability benefit and their deceased spouse's PIA, subject to certain caps. This change aims to address an existing inequity where surviving spouses from two-earner couples might receive a lower combined benefit than if one spouse had earned significantly more and the other less.
Section 7
Holding SSI Beneficiaries Harmless
This section ensures that any increase in Social Security benefits an individual receives as a result of this Act will not negatively impact their eligibility for, or the amount of, benefits payable under the Supplemental Security Income (SSI) program. Specifically, for SSI determination purposes, an individual's Social Security benefit will be deemed not to exceed the amount they would have received under the law as it existed before this Act's enactment.
The bill creates a 'donut hole' in Social Security taxation for high earners. While earnings above the current contribution and benefit base will be subject to tax, the language specifies taxing 'the applicable percentage... of that part of remuneration which, after remuneration... equal to the contribution and benefit base... has been paid'. This means earnings between the existing cap and the new, higher taxable threshold will not be taxed, while earnings above the new threshold will be.
Section 2(a)(1)(A) and (B) (Internal Revenue Code) and Section 2(a)(2)(B) and (C) (Social Security Act)
Why it matters:This structure is a common legislative approach to gradually increasing the taxable wage base without immediately taxing all income above the current cap. It's standard legislative practice to use precise, technical language for tax and benefit calculations, which can inadvertently obscure the practical effect for a casual reader.
Case for: Proponents of this structure argue it provides a politically palatable way to increase Social Security revenue from high earners without immediately subjecting all their income to the payroll tax. It can be seen as a transitional mechanism.
Case against: Critics might argue that the 'donut hole' adds unnecessary complexity to the tax system and could be perceived as inequitable, as it exempts a specific band of income from taxation for high earners. They might advocate for a simpler approach of either fully lifting the cap or raising it to a specific higher amount.
Estimated impact: This 'donut hole' will temporarily reduce the revenue generated compared to a full elimination of the cap, but still significantly increase revenue compared to current law. Its impact diminishes as the 'applicable percentage' reaches 0% by 2032, effectively taxing all earnings above the original base.
The increases to the first bend point factor (from 90% to 95%) and the first bend point itself (up to 15%) are phased in over many years, from 2032 through 2047.
Section 3(a)(1)(B) and (a)(2)(B)
Why it matters:Phased implementation is standard legislative practice for significant changes to large-scale programs like Social Security. It allows for smoother administrative transitions and gives individuals time to adjust to new benefit structures. It's not evasive, but rather a practical approach to reform.
Case for: Proponents argue that a gradual phase-in allows the Social Security Administration to adapt its systems and communicate changes effectively, while also giving future beneficiaries time to understand how their benefits will be calculated. It mitigates sudden impacts on the budget.
Case against: Critics might argue that such a long phase-in delays the full impact of the intended benefit enhancements, potentially leaving current retirees or those nearing retirement without the full benefit of the proposed improvements for many years.
Estimated impact: The gradual implementation spreads the increased benefit outlays over a longer period, reducing the immediate fiscal impact but ensuring a cumulative increase in benefits for future generations of retirees.