This bill gradually phases out Social Security taxes on high earners while increasing benefit calculations, mandating the use of a new Consumer Price Index for the Elderly, and improving survivor benefits for two-income households.
Linda Sánchez
Representative
CA-38
The Strengthening Social Security Act of 2026 gradually phases out Social Security taxes on earnings above the contribution base starting in 2028. It also adjusts benefit calculations by increasing the first bend point rate and incorporating a portion of previously untaxed surplus earnings into the primary insurance amount formula starting in 2033. Furthermore, the bill mandates the creation of a new Consumer Price Index for Elderly Consumers (CPI-E) to be used for calculating future cost-of-living adjustments. Finally, it improves survivor benefits for widows and widowers in two-income households and protects current SSI recipients from benefit reductions.
Social Security Rewrite: New Tax Caps for High Earners and Boosted Survivor Benefits Set for 2028 Rollout
The Strengthening Social Security Act of 2026 is a major overhaul that fundamentally changes how the government collects Social Security taxes and pays out benefits. Starting in 2028, the bill begins a five-year phase-out of Social Security taxes on income earned above the annual 'contribution base' (currently $168,600), dropping the taxable percentage by 20 points each year until it hits zero in 2032. To balance this, the bill changes the benefit formula to include 'surplus earnings'—meaning for the first time, the money you earn above that cap will actually count toward your future monthly checks, though only at a 5% rate compared to the much higher rates for your base income.
A New Math for Retirement
Under Section 3, the bill shifts the goalposts for how your 'Primary Insurance Amount' is calculated. Starting in 2032, the replacement rate for your lowest tier of earnings will gradually climb from 90% to 95% by 2035. Think of this like a small raise for everyone’s baseline benefit. Additionally, the bill introduces a new Consumer Price Index for Elderly Consumers (CPI-E) to calculate annual cost-of-living adjustments (COLAs) starting in 2027. This is a big deal because the current index tracks general urban workers; the new CPI-E specifically tracks the spending habits of seniors—who usually spend more on healthcare and housing—potentially leading to more generous annual raises for retirees.
Better Safety Nets for Survivors
One of the most practical changes hits in December 2027, focusing on two-income households. Currently, when a spouse dies, the survivor often loses a massive chunk of the household’s total Social Security income. Section 6 fixes this by allowing a widow or widower to receive 75% of the combined total of both spouses' benefits, rather than just choosing the higher of the two. For a surviving spouse who worked their whole life, this could mean a significantly higher monthly check, though the bill caps this total at the level of a 'hypothetical average earner' to keep the highest-earning couples from over-collecting.
The Long-Term Trade-Off
While the bill offers immediate perks like better survivor benefits and a lower tax bill for high earners, it creates a massive math problem for the Social Security Trust Fund. By stopping taxes on high wages (Sec. 2) while simultaneously increasing benefit payouts (Sec. 3), the bill risks draining the fund faster than it’s replenished. For a 30-year-old worker today, this is the 'fine print' that matters: you might pay less in taxes now if you're a high earner, but the system's long-term solvency becomes a much bigger question mark. To protect the most vulnerable, Section 7 ensures that any Social Security increases won't accidentally disqualify people from Supplemental Security Income (SSI), keeping that safety net intact even as the broader system shifts.