Protecting and Preserving Social Security Act

Key Points

• The bill changes how Social Security calculates yearly cost-of-living adjustments (COLAs) by switching to a new Consumer Price Index for Elderly Consumers (CPI-E). This index tracks spending patterns of people 62 and older, which tends to weight healthcare costs more heavily, likely resulting in bigger annual raises for retirees.
• The bill gradually eliminates the cap on earnings subject to Social Security payroll taxes. Currently, earnings above the cap (around $168,600 in 2025) are not taxed. Starting in 2026, the exemption shrinks by about 14 percentage points each year until all earnings above the cap are fully taxed after 2031.
• High earners who pay more in taxes under this bill would get a small boost to their future Social Security benefits through a new formula. The new benefit tiers add 3% and 0.25% credit rates for surplus earnings above the current cap, meaning the extra benefits are modest compared to what lower earners receive per dollar contributed.
• Any benefit increases from the CPI-E switch would not count as income or resources when determining eligibility for Supplemental Security Income (SSI) or Medicaid. This protects low-income seniors from losing other benefits just because their Social Security check goes up slightly.
• The bill also applies the same payroll tax changes to self-employment income, so high-earning freelancers, business owners, and independent contractors would also see their Social Security taxes increase on the same phase-in schedule as wage earners.

Votes

No votes have been recorded for this legislation yet.