Social Security Bill to Increase Monthly Payments by $200 in 2026
A new proposal aimed at enhancing Social Security payments has been introduced by Senate Democrats. The Social Security Expansion Act could potentially increase monthly payments by $200 for many Americans starting in 2026.
Key Features of the Social Security Expansion Act
This legislation, proposed in February, focuses on providing financial relief amid rising inflation. Major changes outlined in the bill include adjustments to benefit calculations and expanded eligibility for dependents.
Major Provisions
- COLA Reform: The bill suggests shifting the cost-of-living adjustment (COLA) formula from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to the Consumer Price Index for the Elderly (CPI-E). This change aims to better reflect the spending patterns of seniors, particularly in areas such as healthcare and housing.
- Minimum Benefit Increase: The legislation plans to raise minimum monthly benefits for low earners. This adjustment will benefit individuals with over 30 years of work experience, bringing their payments to 125% of the poverty line.
- Extended Benefits for Students: Eligibility for child benefits would be broadened to include full-time students up to age 22, especially those with disabled or deceased parents.
- Payroll Tax Expansion: The bill proposes applying payroll taxes to higher earners, specifically those making above $250,000, removing the current income cap.
- Self-Employment and Investment Tax Changes: Significant increases in taxes on net earnings from self-employment are suggested, alongside a rise in the investment income tax rate from 3.8% to 16.2% to support Social Security funding.
- Trust Fund Consolidation: The proposal includes merging the Old-Age and Survivors Insurance and Disability Insurance Trust Funds to streamline management.
The anticipated $200 increase will be in addition to a planned 2.8% cost-of-living adjustment set to take effect in January. This comprehensive approach aims to strengthen the Social Security program, ensuring its longevity and adaptability to the economic needs of retirees.
