Safeguarding American Families and Expanding Social Security Act of 2025
- Sponsor
- Sen. Schatz, Brian [D-HI]
- Committees
- Finance Committee (primary)
- Last action
- Dec 11, 2025
Bottom line
The bill proposes to increase Social Security benefits for many Americans through formula changes and a new COLA index, funded by a temporary expansion of the tax base on high earners, which then reverts to current law.
What it actually does
This bill aims to enhance Social Security benefits for both current and future retirees by adjusting the benefit calculation formula and changing how cost-of-living adjustments are determined. It temporarily expands the Social Security tax base to include a portion of high earners' income above the current cap for a few years, but then phases out this additional taxation entirely by 2030. The bill also mandates the use of a Consumer Price Index for Elderly Consumers (CPI-E) for future COLA calculations, which is expected to result in larger annual benefit increases.
Proponents argue
Proponents argue this bill is a crucial step to improve the financial security of American families in retirement by providing more generous Social Security benefits, particularly for lower-income individuals and existing retirees. They contend that using the CPI-E will more accurately reflect the cost of living for seniors, ensuring benefits keep pace with their actual expenses. The temporary expansion of the tax base on high earners is presented as a mechanism to provide a short-term revenue boost to support these benefit enhancements.
Opponents contend
Opponents might argue that while benefit increases are desirable, the bill's funding mechanism is insufficient and potentially misleading. They could point out that the expansion of the tax base on high earners is only temporary, phasing out completely by 2030, which does not provide a long-term solution for Social Security's financial challenges. Critics might also raise concerns about the long-term solvency of the program if benefits are increased without a permanent, corresponding increase in dedicated revenue, potentially exacerbating future funding gaps.
The bill is moderately complex due to its technical amendments to the Internal Revenue Code and Social Security Act. An informed reader would need 15-20 minutes to understand its provisions, which is a reasonable time investment given its potential impact.
Section 2(a) and 2(b)
Temporary Inclusion of Above-Cap Earnings in Taxable Base
This provision modifies the Internal Revenue Code and Social Security Act to temporarily include a portion of earnings above the Social Security contribution and benefit base (the annual cap on taxable earnings) in the taxable wage base. For 2026, 80% of earnings above the cap will be subject to Social Security taxes. This percentage decreases by 20 points each year until 2029 (20% above the cap taxable). For 2030 and all subsequent years, 0% of earnings above the cap will be taxable, effectively reverting to the current law where earnings above the cap are not taxed for Social Security.
Supporters argue
Supporters would argue that this provision provides a temporary, targeted revenue boost to Social Security, helping to fund the proposed benefit increases in the short term. It asks those with the highest incomes to contribute more, even if for a limited period.
Critics contend
Critics would argue that this temporary measure does not provide a sustainable long-term solution for Social Security's financial health. They might contend that phasing out the additional taxation by 2030 undermines the goal of strengthening the program for future generations, as it removes a potential source of ongoing revenue.
Tradeoffs
This provision balances the desire for increased revenue from high earners with a limited duration. The tension lies in whether a temporary revenue measure can adequately support permanent benefit increases and contribute to long-term solvency.
Section 3(a)
Enhanced Benefit Factor for Low-Income Earners
This provision increases the first factor in the Social Security Primary Insurance Amount (PIA) formula from 90% to 95%. This factor applies to the lowest portion of an individual's average indexed monthly earnings (AIME). By increasing this percentage, individuals with lower lifetime earnings will receive a higher Social Security benefit.
Section 3(b)(1) and 3(c)(2)
Partial Credit for Earnings Above the Tax Cap
This provision introduces a new component to the PIA formula: 5% of an individual's 'surplus average indexed monthly earnings.' Surplus AIME refers to earnings above the Social Security contribution and benefit base (the tax cap) that are currently not considered for benefit calculations. This means that high earners will receive a small amount of benefit credit for a portion of their earnings that were previously untaxed and uncredited for benefits.
Section 3(b)(3)
One-Time Benefit Increase for Current Retirees
This provision mandates a recomputation of Primary Insurance Amounts (PIAs) for all individuals who became eligible for Social Security benefits before January 2026. Effective January 2026, their PIA will be recalculated using an adjusted bend point, specifically increasing the second bend point amount by a factor derived from 6,300/6,002. If this recomputation results in a lower benefit, the original higher benefit amount will continue to apply, ensuring no current beneficiary sees a reduction.
Section 4(a) and 4(b)
Use of Consumer Price Index for Elderly Consumers (CPI-E) for COLAs
This provision mandates that the Social Security Administration use a newly developed 'Consumer Price Index for Elderly Consumers' (CPI-E) to calculate annual cost-of-living adjustments (COLAs) for Social Security benefits. The Bureau of Labor Statistics is directed to create and publish this index, which will reflect the consumption patterns and expenditures typical for individuals aged 62 and older. This change is effective for COLA determinations made on or after September 30, 2026.
The bill explicitly states that the 'applicable percentage' for taxing earnings above the contribution and benefit base will be 0% for 2030 and each year thereafter. This means the temporary expansion of the tax base on high earners, which starts at 80% in 2026, completely disappears after 2029, reverting to the current law where earnings above the cap are not taxed for Social Security.
Section 2(a)(1)(C) and 2(b)(1)(C)
Why it matters:While the initial phase-in is clearly stated, the complete phase-out to 0% might be considered standard legislative drafting for a temporary measure. However, given the bill's stated goal of 'making Social Security stronger for future generations,' this complete phase-out is a significant detail that could be seen as undermining that long-term objective.
Case for: Proponents might argue that the temporary revenue boost is sufficient for the immediate benefit increases, and that a permanent tax on earnings above the cap was not politically feasible or desirable in this particular legislative package.
Case against: Opponents would argue that this temporary nature makes the bill fiscally irresponsible in the long run, as it increases benefits without a permanent, dedicated funding source, potentially worsening Social Security's long-term solvency issues.
Estimated impact: This provision means that any revenue gains from taxing high earners are temporary (2026-2029), and there will be no additional revenue from this source beyond 2029 compared to current law.
For individuals becoming eligible for benefits after 2030, the amount for the first bend point (the threshold for the 95% factor in the PIA formula) will gradually increase. It starts with a 1% increase in 2031, then increases by an additional 1 percentage point each year from 2032 through 2044, reaching a total increase of 15% in 2045 and thereafter.
Section 3(b)(2)(D) (new clause (iii) in 215(a)(1)(B))
Why it matters:This is a technical adjustment to a formula, common in Social Security legislation. The gradual nature might be intended to smooth the fiscal impact or make the benefit increase less abrupt.
Case for: Proponents would argue this ensures that the most generous benefit factor (95%) applies to a larger portion of earnings over time, progressively increasing benefits for a broader range of beneficiaries as wages rise, thereby enhancing retirement security for future generations.
Case against: Opponents might point to the cumulative cost of this gradual expansion, arguing that it represents a significant long-term increase in outlays without a clear, permanent funding source.
Estimated impact: This provision will lead to progressively higher benefits for future retirees, with the full effect realized by 2045, significantly increasing long-term Social Security outlays.