Social Security Expansion Act

Bill Number: S. 770
Origin Chamber: Senate
Congress: 119th Congress, Session 1
Policy Area: Social Welfare
Status: Introduced
Latest Action: 2025-02-27: Read twice and referred to the Committee on Finance.
Last Updated: 2026-04-14T19:11:02Z

AI-Generated Summary

Purpose

The Social Security Expansion Act aims to increase benefits for Social Security recipients, particularly low earners and families, while raising revenue through expanded taxation on high incomes and investments to achieve long-term financial stability for the program. It addresses benefit adequacy and solvency by adjusting calculations, eligibility, and funding sources.

Key Provisions

Benefit Increases (Section 2): Raises the first "bend point" in the benefit formula from 90% to 95% of average indexed monthly earnings and adds an 18% increase to the second bend point for eligibility after 2025, resulting in higher monthly payments for most retirees and disabled workers starting January 1, 2026.
Cost-of-Living Adjustments (Section 3): Switches from the general Consumer Price Index (CPI-W) to the Consumer Price Index for Elderly Consumers (CPI-E), which better reflects spending patterns of older adults (e.g., on healthcare), for annual benefit adjustments. The Bureau of Labor Statistics must publish CPI-E data starting the year after enactment, with changes applying to quarters ending after September 30 of the second year post-enactment.
Minimum Benefit for Low Earners (Section 4): Establishes a new minimum primary insurance amount for those with over 10 years of work (defined as years with four quarters of coverage from wages or self-employment). The minimum starts at 6.25% of the poverty guideline (for a single person) and scales up to 125% for 30+ years, adjusted annually by wage growth. Effective for eligibility after 2025, with recomputations for prior beneficiaries.
Extended Child Benefits (Section 5): Extends survivor's and dependent benefits for full-time students up to age 22 (previously up to 19 for high school or 19/22 in limited cases), covering elementary, secondary, or higher education. Benefits end when schooling stops or age limits are reached, excluding those paid by employers for work-related training or incarcerated for felonies. Applies to months after January 1, 2026, and aligns with Railroad Retirement Act changes.
Expanded Payroll Taxes (Section 6): Applies Social Security payroll taxes (6.2% each for employees and employers) to wages between the current contribution base (e.g., $168,600 in 2024) and $250,000 if the base is below that threshold, capturing more income from high earners. Effective for remuneration after enactment.
Self-Employment Taxes (Section 7): Mirrors payroll tax expansion for self-employment income (12.4% total rate), taxing amounts above the base up to $250,000 after offsets for any wages. Effective after enactment.
Tax on Investment Income (Section 8): Increases the Net Investment Income Tax from 3.8% to 16.2%, applying it to a broader base including active business income (with exceptions for self-employment or wage-taxed items) and denying net operating loss deductions. Renames the tax to reflect its role in funding Social Security. Effective for tax years after enactment.
Unified Trust Fund (Section 9): Merges the Federal Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) Trust Funds into a single Social Security Trust Fund. Allocates 100% of payroll and self-employment taxes (excluding Medicare portions) plus 62% of the investment income tax to the fund. Includes provisions for loans, investments, and annual actuarial reports. All references to the old funds are updated across laws, effective January 1 after enactment.

Significant Changes to Existing Law

Benefit Formula and Adjustments: Alters the primary insurance amount calculation (under Social Security Act Section 215) by boosting bend points and minimums, and replaces CPI-W with CPI-E for cost-of-living adjustments (COLAs), potentially leading to higher annual increases (CPI-E often rises faster due to elderly-specific costs).
Eligibility Expansion: Broadens child benefits under Section 202(d) to age 22 for students, removing prior limits tied to high school only, and adds anti-incarceration rules.
Tax Base Expansion: Amends Internal Revenue Code Sections 3121, 1402, and 1411 to tax higher wage/self-employment thresholds and more investment income, shifting from the current cap (adjusted annually but below $250,000) and limited 3.8% unearned income tax.
Fund Structure: Consolidates two trust funds into one (Section 201), eliminating separate OASI/DI accounts, repealing inter-fund loan provisions, and redirecting revenues, while updating references in the Social Security Act, Internal Revenue Code, and other laws like the Railroad Retirement Act and Budget Act.

Potential Impacts

On Government Agencies: The Social Security Administration (SSA) will handle recomputations, expanded eligibility verifications (e.g., student status), and benefit payments from a unified fund, increasing administrative workload. The IRS will collect broader taxes, and the Treasury will manage fund transfers and investments. Long-term solvency is projected to improve by merging funds and adding revenue, potentially averting projected shortfalls (e.g., DI fund depletion by 2035 under current law).
On Citizens: Retirees, disabled individuals, survivors, and low-wage workers (especially those with 10+ years of coverage) gain higher benefits and minimums, reducing poverty risks. Families with student children up to 22 receive extended support. High earners (wages/self-employment over ~$168,600) and investors face higher taxes, increasing costs for those with incomes above $250,000 or significant unearned income.
On International Relations: Minimal direct impact, though enhanced U.S. social safety nets could indirectly influence perceptions of economic stability in trade or aid discussions.

Main Stakeholders Affected

Beneficiaries: Elderly retirees, disabled workers, survivors (including children), and low lifetime earners, who benefit from increased payments and eligibility.
Workers and Taxpayers: High-income employees, self-employed individuals, and investors, who face expanded taxation on earnings and gains.
Employers: Businesses paying payroll taxes on more employee compensation up to $250,000.
Government Entities: SSA (benefit administration), IRS (tax collection), Treasury (fund management), and Bureau of Labor Statistics (CPI-E publication).
Advocacy Groups: Seniors' organizations (e.g., AARP), labor unions, and progressive policy advocates supporting expansion, versus fiscal conservative groups concerned about tax hikes.

Notable Legal, Constitutional, or Political Implications

Legal: Amends core Social Security Act provisions (Titles II, VII, XI, XVIII) and Internal Revenue Code, requiring regulatory updates (e.g., SSA rules for student verification). Ensures continuity by deeming old fund references to the new unified fund, avoiding disruptions. No challenges to benefit recomputations under existing SSA authority (Section 215(f)).
Constitutional: Aligns with Congress's taxing and spending powers (Article I, Section 8); no apparent free speech, due process, or equal protection issues, as changes apply uniformly post-enactment.
Political: Represents a progressive shift by funding expansions through taxes on the wealthy, potentially polarizing debates on income inequality and entitlement reform. Could influence midterm elections or budget negotiations, emphasizing solvency without benefit cuts or privatization, but faces opposition over tax increases and long-term cost projections.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Sen. Sanders, Bernard [I-VT]

Cosponsors (10)

Sen. Warren, Elizabeth [D-MA], Sen. Merkley, Jeff [D-OR], Sen. Welch, Peter [D-VT], Sen. Padilla, Alex [D-CA], Sen. Smith, Tina [D-MN], Sen. Van Hollen, Chris [D-MD], Sen. Markey, Edward J. [D-MA], Sen. Booker, Cory A. [D-NJ], Sen. Gillibrand, Kirsten E. [D-NY], Sen. Whitehouse, Sheldon [D-RI]