H.R. 3517 — Social Security Enhancement and Protection Act of 2025

This section revises the special minimum primary insurance amount (PIA) for Social Security old-age and disability benefits. (As background, the special minimum PIA provides a floor benefit for individuals with long work histories but low lifetime earnings, currently computed as no less than $11.50 multiplied by years of coverage exceeding 10, indexed under subsection (i).) Effective for individuals who initially become eligible for such benefits (or die before becoming eligible) after 2025, the minimum PIA equals the applicable percentage—per the following table based on years of work—of one-twelfth of an annual dollar amount (initially the 2025 poverty guideline for a single individual, indexed thereafter to the national average wage index): | Number of years of work | Applicable percentage | |--------------------------|-----------------------| | 11 | 36.7% | | 12 | 40.0% | | ... | ... | | 29 | 96.7% | | 30 or more | 100.0% | Years of work equal one-fourth of the individual's total quarters of coverage (disregarding any fraction) plus the number of years (not exceeding 5) in which the individual provided care for a child under age 6 residing in the home. (Thus, a qualifying individual with 30 or more years of work receives a special minimum PIA equal to the full monthly poverty guideline amount.)

This section establishes a new monthly insurance benefit increase under Social Security for qualified beneficiaries (i.e., recipients of old-age, survivors, or disability insurance benefits under subsections 202(a)-(h) or 223) in calendar years after 2025, equal to an applicable percentage of a full increase amount based on the number of years after the worker's applicable eligibility date (i.e., when the worker first became eligible for old-age or disability benefits, or died before eligibility). (1) Applicable percentages: 20% after 16 years, 40% after 17 years, 60% after 18 years, 80% after 19 years, and 100% after 20 or more years. (2) Full increase amount: generally 5% of the primary insurance amount for a hypothetical average-wage earner (i.e., with average indexed monthly earnings equal to 1/12 of the national average wage index for the second preceding year) who is fully insured and at retirement age as of January of the calendar year; one-half that amount for spouse or husband benefits under 202(b) or (c); and prorated for mother's/father's benefits under 202(d), parent's benefits under 202(g), or surviving child's benefits under 202(h). (3) For beneficiaries entitled to multiple benefits, the increase applies only to one benefit using the earliest eligibility date; the increase is applied after other adjustments (e.g., under 202(w)) and paid from the Federal Old-Age and Survivors Insurance Trust Fund if concurrent with disability benefits. The section makes conforming amendments to reference new subsection 202(aa) throughout the old-age, survivors, and disability provisions.

This section extends eligibility for Social Security child's insurance benefits to unmarried full-time post-secondary school students under age 26 (previously limited to full-time elementary or secondary school students under age 19), effective for applications filed in calendar years after 2025. (As background, these benefits provide monthly payments to children of retired, disabled, or deceased workers entitled to old-age, survivors, or disability insurance benefits.) It defines a full-time post-secondary school student and a post-secondary educational institution by reference to the Higher Education Act definition of an institution of higher education (20 U.S.C. 1002(i.e., public or private nonprofit or proprietary postsecondary institutions offering two-year or longer programs of education beyond secondary school, including vocational institutions)); allows a transition period of up to four calendar months of nonattendance between full-time secondary school and post-secondary enrollment; and makes conforming amendments to benefit termination provisions throughout SSA section 202(d).

This section amends the definitions of wages in IRC §3121 and SSA §209 (42 U.S.C. 409) and of net earnings from self-employment in IRC §1402 and SSA §211 to phase down the excluded portion of remuneration and net earnings above the Social Security contribution and benefit base (CBB)—from 100% previously excluded to excluding only an applicable percentage (90% in 2025 for SSA wages or 2026 for other provisions, decreasing by 10% annually to 2034, and 0% after 2035)—for remuneration paid and taxable years beginning after 2025. As background, the CBB (set annually under SSA §230, e.g., $168,600 in 2024) caps earnings subject to the 12.4% OASDI payroll tax (6.2% employee portion, 6.2% employer portion, or 12.4% for self-employed after deduction) and included in average indexed monthly earnings for benefit calculations. (Thus, the provision expands the OASDI tax base and increases covered earnings for higher earners, raising trust fund revenues and future benefits.)

This section revises the primary insurance amount (PIA) formula for Social Security old-age, survivors, and disability insurance benefits by adding a fourth tier of 3% of an individual's average indexed monthly earnings (AIME) exceeding the third bend point (previously, 15% applied to all AIME above the second bend point), effective for individuals initially eligible for benefits or dying in 2026 or later. (The PIA determines the monthly benefit amount and applies progressive marginal rates—90% up to the first bend point, 32% between the first and second bend points, and 15% between the second and third bend points—to tiers of a worker's AIME.) It further sets the third bend point for 2026 eligibility equal to the contribution and benefit base (CBB)—the annual maximum taxable earnings subject to Social Security payroll taxes—for 2026 remuneration; indexes the third bend point for later years from the 2026 CBB using the national average wage index (NAWI) for 2024 as the base; and continues indexing the first two bend points under prior law (i.e., from 1979 levels using 1977 NAWI base). (Thus, this reduces PIAs for high earners with substantial AIME above the CBB, as only 3% credits those earnings.)

This section increases the Old-Age, Survivors, and Disability Insurance (OASDI) tax rate on employee wages from 6.2% to a phased schedule of 6.25% in 2026, 6.30% in 2027, 6.35% in 2028, 6.40% in 2029, 6.45% in 2030, and 6.50% in 2031 and thereafter; imposes the same phased employer excise tax schedule on wages; and increases the OASDI tax rate on self-employment income from 12.4% to 12.5% in 2026, 12.6% in 2027, 12.7% in 2028, 12.8% in 2029, 12.9% in 2030, and 13.0% in 2031 and thereafter. (As background, OASDI taxes fund Social Security benefits for retirees, survivors, and disabled workers.) The changes apply to remuneration received and taxable years beginning after December 31, 2025.

This section excludes any increase in monthly insurance benefits under title II of the Social Security Act (i.e., Old-Age, Survivors, and Disability Insurance) resulting from this Act from being counted as income or resources for any month after December 2025 when determining eligibility for, or the amount of, benefits under any federal means-tested program or any state or local program financed in whole or in part with federal funds. (Thus, such increases will not reduce benefits under programs such as SSI, SNAP, TANF, or Medicaid.)