Social Security Bill Boosts Low-Earner Benefits, Extends College Aid, and Hikes Payroll Taxes Starting 2026

This legislation, the Social Security Enhancement and Protection Act of 2025, is a major overhaul of the system, kicking off in 2026. It makes big promises on the benefits side—especially for those who’ve worked hard for low wages—but it demands a higher price tag from employees, employers, and high earners right out of the gate.

The Good News: A Bigger Safety Net

First, the enhancements. The bill creates a significantly higher Special Minimum Benefit for lifetime low earners who become eligible after 2025 (Sec. 2). If you’ve worked for decades but your wages were low, the new calculation guarantees a minimum benefit tied to the poverty line. Crucially, your "years of work" calculation now includes time spent taking care of a child under age six who lived in your home. This is a huge win for caregivers, mostly women, who often see their retirement benefits penalized for taking time out of the paid workforce.

Second, the bill introduces a Long-Term Eligibility Bonus (Sec. 3). If you’ve been on Social Security—either retirement or disability—for at least 16 years, you start getting a bonus payment. This is designed to help older beneficiaries whose fixed incomes are often eroded by inflation over time. The bonus calculation is complex, based on a percentage of a hypothetical high earner’s benefit, but the takeaway is a regular, increasing bump in your monthly check once you hit that 16-year eligibility mark.

Finally, the bill throws a lifeline to parents and students by extending Child’s Benefits for College until age 26 (Sec. 4). Currently, these benefits generally stop at age 18 or 19 if the child is still in high school. Starting with applications filed after 2025, if your child is unmarried and attending a recognized post-secondary school full-time, they can continue receiving benefits based on your record until they turn 26. This directly helps families manage the rising cost of college tuition and living expenses during those critical years.

The Trade-Off: How We Pay for It

These enhancements don't come free. The bill employs a two-pronged approach to shore up the system’s funding, and both prongs hit the payroll.

1. Higher Payroll Taxes for Everyone (Sec. 7): Starting in 2026, the bill mandates an increase in the OASDI (Old-Age, Survivors, and Disability Insurance) employment tax rate for employees, employers, and the self-employed. This means the percentage of your paycheck or self-employment income that goes toward Social Security will increase. For the average worker, this translates directly into a smaller take-home paycheck starting in January 2026, regardless of how much they earn.

2. Taxing Income Above the Cap (Sec. 5): Currently, Social Security taxes stop once your income hits the annual contribution and benefit base (the cap). This bill changes that. Starting in 2026, income above the cap will be subject to Social Security tax again, but only on an “applicable percentage” of that excess income. This is a major structural change: high earners will start paying into the system on income that was previously untaxed. The exact percentage is determined by a new table in the law, which adds a layer of complexity to the tax calculation.

The Adjustment for High Earners

For those who earn enough to hit the cap, there’s a second adjustment on the benefits side. The bill introduces a new, lower benefit calculation rate for high earners (Sec. 6). When Social Security calculates your Average Indexed Monthly Earnings (AIME) to determine your benefit, the portion of your earnings that exceeds a new, higher threshold will only be credited at a 3% rate, down from previous tiers. This means that while high earners will pay more into the system through the new partial tax on income above the cap, their resulting benefit increase for those top dollars will be minimal.

Protecting Means-Tested Benefits

Finally, the bill includes a crucial protection (Sec. 8). Any increase in your monthly Social Security benefit resulting from this Act will not count as income or resources when determining your eligibility for other federal, state, or local assistance programs (like SNAP or housing aid). This is smart policy, preventing the common "benefit cliff" where a small increase in one benefit causes a recipient to lose much larger, more critical aid.