S. 3462 — Safeguarding American Families and Expanding Social Security Act of 2025

This section designates the Act as the “Safeguarding American Families and Expanding Social Security Act of 2025” and sets forth the table of contents.

This section modifies the definitions of wages under the Social Security Act (SSA) and Internal Revenue Code (IRC) to include, for remuneration paid in calendar years after 2025, an applicable percentage of amounts above the contribution and benefit base (CBB)—80% in 2026, decreasing by 20 percentage points annually to 20% in 2029, and 0% in 2030 and thereafter—by amending IRC §3121(a)(1) and (c) and SSA §209(a)(1) (42 U.S.C. 409(a)(1)) to add subparagraph (J) and subsection (l), respectively, with conforming changes to prior subparagraphs. (The CBB, determined annually under SSA §230, is the maximum amount of an individual's earnings subject to the 12.4% Old-Age, Survivors, and Disability Insurance payroll tax (6.2% each on employees and employers); thus, this temporarily increases taxable wages above the CBB.) It makes parallel changes for self-employment income in taxable years beginning after 2025 by amending IRC §1402(b)(1) and (d) and SSA §211(b) (42 U.S.C. 411(b)) to apply the same applicable percentage to net earnings above the CBB (reduced by wages), adding SSA §211(l).

This section revises the Social Security primary insurance amount (PIA) formula, which determines monthly old-age, survivors, and disability benefits by applying progressive marginal rates to brackets of an individual's average indexed monthly earnings (AIME), as follows: (1) increases the rate for the lowest bracket of basic AIME (i.e., AIME from earnings up to the annual contribution and benefit base) to 95% (from 90%); (2) adds a new 5% rate applied to surplus AIME (i.e., AIME from earnings exceeding the contribution and benefit base); (3) sets the second bend point (upper limit of the second AIME bracket) at $6,300 for individuals initially eligible in 2026 (from $6,002), with post-2026 indexing based on the 2024 national average wage index (instead of the prior 1977 base); (4) increases the first bend point by 1% in 2031, 2% in 2032, rising by 1 percentage point annually through 15% in 2045 and later; and (5) requires the Social Security Administration to recompute PIAs effective January 2026 for individuals eligible prior to 2026 by applying the $6,300/$6,002 bend point ratio to their original computation base (retaining the higher of the original or recomputed amount).

This section revises the cost-of-living adjustment (COLA) provisions under section 215(i) of the Social Security Act to require use of the Consumer Price Index for Elderly Consumers (CPI-E)—rather than the Consumer Price Index for Urban Wage Earners and Clerical Workers—for adjustments to primary insurance amounts underlying monthly insurance benefits payable under title II (i.e., old-age, survivors, and disability insurance benefits), including benefits under sections 227 and 228. (As background, section 215(i) provides annual COLAs to Social Security benefits if consumer prices increase; CPI-E measures inflation in consumption expenditures typical for Americans at early retirement age (age 62) or older receiving old-age, wife's, or husband's benefits.) It directs the Bureau of Labor Statistics to develop and publish monthly CPI-E data, authorizes necessary appropriations, and applies the amendments to COLA determinations for computation quarters ending on or after September 30, 2026 (with CPI-E publication effective for months ending on or after June 30 of the calendar year of enactment).