A new Social Security bill would change how annual cost-of-living adjustments are calculated, increase benefits for current recipients and collect additional taxes from people earning more than $400,000.
The Social Security 2100 Act was introduced in the House on June 29 and announced jointly by Rep. John Larson of Connecticut and Sen. Richard Blumenthal in July. It has not passed Congress, and none of its proposed benefit changes are currently in effect.
The most important COLA provision would require Social Security to compare two inflation measures each year and use the one producing the larger increase. That is different from proposals that would permanently replace the current formula with a single index for older Americans.
How the Social Security 2100 Act Would Change the COLA?
Social Security currently calculates its annual increase using the Consumer Price Index for Urban Wage Earners and Clerical Workers, known as CPI-W.
Under the new Social Security 2100 Act, the government would compare CPI-W with the Consumer Price Index for Elderly Consumers, known as CPI-E. The higher percentage would determine that year’s Social Security COLA.
| Current Rule | Proposed Rule |
|---|---|
| COLA is based only on CPI-W | COLA would use the higher result from CPI-W or CPI-E |
| Reflects spending by urban wage earners and clerical workers | Adds an index based on spending by people aged 62 and older |
| Applies under current law | Would apply only if Congress passes the bill |
The proposal is intended to protect retirees during years when medical care, housing and other costs faced by older households rise faster than the prices emphasized by CPI-W.
The Bureau of Labor Statistics currently publishes CPI-E as a research index. It uses the spending patterns of households with a reference person or spouse aged 62 or older, although BLS also notes technical limitations involving its sample and the goods used in the calculation.
The New Formula Would Not Change the 2027 COLA Immediately
The next Social Security increase will still be calculated under existing law unless Congress passes the legislation in time and the new provisions take effect.
Current law requires the Social Security Administration to compare the average CPI-W reading from July, August and September 2026 with the average from the same three months in 2025.
The latest 2027 Social Security COLA projection stands near 3.8%, but the final percentage will not be known until the September inflation report is released. Social Security normally announces the official increase in October.
The agency’s official explanation of the COLA formula confirms that CPI-W remains the only index used under current law.
The Social Security 2100 Act states that its alternative COLA system would apply to calculations for calendar years 2027 through 2036. Its practical start would still depend on passage, enactment and implementation.
The Bill Would Also Increase Monthly Benefits
The legislation goes further than changing the annual inflation adjustment.
It would temporarily modify the benefit formula to produce an across-the-board increase for current and future beneficiaries. That provision would apply to monthly benefits paid from 2027 through 2036.
The proposal also includes a stronger minimum benefit for long-term low earners. A person with at least 30 qualifying years of work could receive a minimum tied to 125% of the federal poverty guideline under the bill’s formula.
Additional provisions would:
- Increase benefits for some widows and widowers
- Add benefit credits for certain years spent caring for relatives
- Raise payments for people who have received benefits for at least 15 years
- Eliminate the five-month waiting period for Social Security Disability Insurance
- Extend certain student benefits to qualifying people under age 26
- Raise the income thresholds used to tax Social Security benefits
Beneficiaries should not add any of those increases to their current payment estimates. They remain proposals rather than approved Social Security changes.
How the Plan Would Raise More Money?
Workers and employers currently pay Social Security payroll tax only up to the annual taxable wage limit. That limit is $184,500 in 2026.
The bill would apply Social Security payroll tax again to earnings above $400,000. Earnings between the regular taxable maximum and $400,000 would initially remain outside the tax, creating a gap that would gradually close as the annual wage cap rises.
High-income taxpayers would receive limited additional Social Security credit for the extra taxed earnings. The bill would also apply a Social Security tax to certain net investment income for taxpayers above the $400,000 threshold.
Supporters say the additional revenue would strengthen the program while avoiding a higher tax rate for workers earning less than $400,000. Opponents are likely to challenge the tax increase and the fact that several benefit expansions are written to expire after 2036.
Why Congress Is Considering Another Social Security Plan
Social Security is paying more in annual benefits than it receives in total income. Its trust funds are using accumulated reserves to cover the difference.
Current projections indicate that the retirement and survivor fund could exhaust its reserves in the early 2030s. Payroll taxes would continue afterward, but incoming revenue would not be enough to pay every scheduled benefit in full.
Our report on the possible Social Security benefit shortfall after 2032 explains what reserve depletion would mean and why it would not cause the program to disappear.
Other lawmakers have proposed raising the retirement age, changing the taxable wage cap, reducing benefits for higher-income retirees or creating a bipartisan commission.
The debate over raising the Social Security retirement age shows how differently those options would affect current beneficiaries and younger workers.
The New COLA Proposal Is Different From the Flat-Rate Plan
Our team at NCHStats recently reported on a separate idea that would give beneficiaries the same dollar increase instead of applying one percentage to every monthly check.
That flat-rate Social Security COLA proposal is not part of the Social Security 2100 Act.
The difference is straightforward. A flat-rate plan would change how the annual increase is divided among recipients. The Social Security 2100 Act would keep a percentage adjustment but calculate it using whichever inflation index produces the larger result.
What Beneficiaries Need to Know Now
No immediate action is required from retirees, disabled workers, survivors or SSI recipients.
The Social Security 2100 Act has been introduced and referred to congressional committees. It must pass the House and Senate in identical form and receive the president’s signature before any provision becomes law.
The current 2.8% COLA remains in effect for 2026. The Social Security Administration will announce the 2027 adjustment, new earnings limits and the next taxable wage cap in October under the law that exists at that time.
Our guide to the Social Security changes expected for 2027 explains which figures will be announced automatically and which proposals still require action from Congress.
The bill gives lawmakers a detailed proposal for raising benefits and changing the COLA, but it does not guarantee a larger check. Until Congress acts, beneficiaries should treat every figure connected to the Social Security 2100 Act as a proposal rather than an approved payment increase.
