Summary of Provisions That Would Change the Social Security Program

  Change from current law
[percent of payroll]
Shortfall eliminated
Long-range
actuarial
balance
Annual
balance in
75th year
Long-range
actuarial
balance
Annual
balance in
75th year
Current law shortfall in long-range actuarial balance is 3.42 percent of payroll and in annual balance for the 75th year is 4.25 percent of payroll.
E1.1 Increase the payroll tax rate (currently 12.4 percent) to 16.0 percent in 2023 and later.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board 2005)
3.51 3.61 103% 85%
E1.2 Increase the payroll tax rate (currently 12.4 percent) to 16.2 percent in 2035-2064, and to 20.0 percent in years 2065 and later.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board 2005)
4.30 7.51 126% 177%
E1.4 Increase the payroll tax rate (currently 12.4 percent) by 0.1 percentage point each year from 2028-2047, until the rate reaches 14.4 percent in 2047 and later.
graph | table | pdf-graph | pdf-table | memo (Larson 2014) | memo (National Academy of Social Insurance 2009)
1.50 2.02 44% 47%
E1.8 Increase the payroll tax rate (currently 12.4 percent) by 0.1 percentage point each year from 2025-2030, until the rate reaches 13.0 percent for 2030 and later.
graph | table | pdf-graph | pdf-table | memo (Moore 2022) | memo (Moore 2019) | memo (Moore 2013)
0.55 0.61 16% 14%
E1.9 Increase the payroll tax rate (currently 12.4 percent) by 0.1 percentage point each year from 2026-2049, until the rate reaches 14.8 percent in 2049 and later.
graph | table | pdf-graph | pdf-table | memo (Larson, Blumenthal, Van Hollen September 2019) | memo (Larson, Blumenthal, Van Hollen January 2019) | memo (Larson 2017)
1.80 2.42 53% 57%
E1.10 Increase the payroll tax rate by 0.1 percentage point per year for 2024 through 2033 so that it equals 13.4 percent for 2033 and later. The increase would be split evenly between the employer and employee share, and would be split between OASI and DI in proportion to currently scheduled payroll tax rates.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center October 2016) | memo (Bipartisan Policy Center June 2016)
0.90 1.01 26% 24%
E2.1 Eliminate the taxable maximum in years 2023 and later, and apply full 12.4 percent payroll tax rate to all earnings. Do not provide benefit credit for earnings above the current-law taxable maximum.
graph | table | pdf-graph | pdf-table | memo (DeFazio 2015) | memo (Social Security Advisory Board 2005)
2.57 2.61 75% 61%
E2.2 Eliminate the taxable maximum in years 2023 and later, and apply full 12.4 percent payroll tax rate to all earnings. Provide benefit credit for earnings above the current-law taxable maximum.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board 2005)
1.99 1.60 58% 38%
E2.4 Eliminate the taxable maximum for years 2029 and later (phased in 2023-2029), and apply full 12.4 percent payroll tax rate to all earnings. Provide benefit credit for earnings above the current-law taxable maximum that are subject to the payroll tax, using a secondary PIA formula. This secondary PIA formula involves: (1) an "AIME+" derived from annual earnings from each year after 2022 that were in excess of that year's current-law taxable maximum; (2) a new bend point equal to $8,933 in 2023, indexed by wages after 2023; and (3) formula factors of 3 percent and 0.25 percent below and above the new bend point, respectively.
graph | table | pdf-graph | pdf-table | memo (Deutch, Hirono 2022) | memo (Deutch, Hirono 2019) | memo (Deutch, Hirono 2017) | memo (Deutch 2015) | memo (Deutch 2010)
2.39 2.50 70% 59%
E2.5 Apply 12.4 percent payroll tax rate on earnings above $250,000 starting in 2023, and tax all earnings once the current-law taxable maximum exceeds $250,000. Do not provide benefit credit for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Sanders, DeFazio 2022) | memo (Sanders, DeFazio 2019) | memo (Sanders, DeFazio 2017) | memo (Sanders 2016) | memo (Sanders 2015) | memo (Sanders 2013) | memo (DeFazio 2011)
2.50 2.61 73% 61%
E2.11 Eliminate the taxable maximum in years 2028 and later. Phase in elimination by taxing all earnings above the current-law taxable maximum at: 2.48 percent in 2024, 4.96 percent in 2025, and so on, up to 12.40 percent in 2028. Provide benefit credit for earnings above the current-law taxable maximum that are subject to the payroll tax, using a secondary PIA formula. This secondary PIA formula involves: (1) an "AIME+" derived from annual earnings from each year after 2022 that were in excess of that year's current-law taxable maximum; and (2) a formula factor of 5 percent on this newly computed "AIME+".
graph | table | pdf-graph | pdf-table | memo (Sanchez 2016) | memo (Schatz 2015) | memo (Harkin 2013)
2.27 2.28 66% 54%
E2.12 Eliminate the taxable maximum in years 2034 and later. Phase in elimination by taxing all earnings above the current-law taxable maximum at: 1.24 percent in 2025, 2.48 percent in 2026, and so on, up to 12.40 percent in 2034. Provide benefit credit for earnings above the current-law taxable maximum. Create a new bend point at the current-law taxable maximum with a 3 percent formula factor applying above the new bend point.
graph | table | pdf-graph | pdf-table | memo (Moore 2022) | memo (Moore 2019) | memo (Moore 2013)
2.06 2.23 60% 52%
E2.13 Apply OASDI 12.4 percent payroll tax rate on earnings above $400,000 starting in 2024, and tax all earnings once the current-law taxable maximum exceeds $400,000. Provide benefit credit for earnings above the current-law taxable maximum that are subject to the payroll tax, using a secondary PIA formula. This secondary PIA formula involves: (1) an "AIME+" derived from annual earnings from each year after 2023 that were in excess of that year's current-law taxable maximum; and (2) a formula factor of 2 percent on this newly computed "AIME+".
graph | table | pdf-graph | pdf-table | memo (Larson, Blumenthal, Van Hollen September 2019) | memo (Larson, Blumenthal, Van Hollen January 2019) | memo (Larson 2017) | memo (Larson 2015) | memo (Larson 2014)
2.18 2.48 64% 58%
E2.14 Apply OASDI 12.4 percent payroll tax rate on earnings above $250,000 starting in 2024, and tax all earnings once the current-law taxable maximum exceeds $250,000. Provide benefit credit for earnings above the current-law taxable maximum that are subject to the payroll tax, using a secondary PIA formula. This secondary PIA formula involves: (1) an "AIME+" derived from annual earnings from each year after 2023 that were in excess of that year's current-law taxable maximum; and (2) a formula factor of 2 percent on this newly computed "AIME+".
graph | table | pdf-graph | pdf-table | memo (Lawson 2021) | memo (Lawson 2017)
2.39 2.48 70% 58%
E2.15 Apply OASDI 12.4 percent payroll tax rate on earnings above $300,000 starting in 2024, and tax all earnings once the current-law taxable maximum exceeds $300,000. Provide benefit credit for earnings above the current-law taxable maximum that are subject to the payroll tax, using a secondary PIA formula. This secondary PIA formula involves: (1) an "AIME+" derived from annual earnings from each year after 2023 that were in excess of that year's current-law taxable maximum; and (2) a formula factor of 3 percent on this newly computed "AIME+".
graph | table | pdf-graph | pdf-table | memo (Crist 2017)
2.28 2.41 67% 57%
E2.16 Apply OASDI 12.4 percent payroll tax rate on earnings above $250,000 starting in 2023, and tax all earnings once the current-law taxable maximum exceeds $250,000. Increase the computed level of the SSA average wage index for years after 2022 by amounts ranging from 0.7 percent for 2023 to 0.9 percent for 2035 and later. Provide benefit credit for earnings above the current-law taxable maximum that are subject to the payroll tax, using a secondary PIA formula. This secondary PIA formula involves: (1) an "AIME+" derived from annual earnings from each year after 2022 that were in excess of that year's current-law taxable maximum; and (2) a formula factor of 2 percent on this newly computed "AIME+".
graph | table | pdf-graph | pdf-table | memo (Craig 2022)
2.35 2.41 69% 57%
E3.1 Increase the taxable maximum such that 90 percent of earnings would be subject to the payroll tax (phased in 2023-2032). Provide benefit credit for earnings up to the revised taxable maximum.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board 2005)
0.69 0.41 20% 10%
E3.2 Increase the taxable maximum such that 90 percent of earnings would be subject to the payroll tax (phased in 2023-2032). Do not provide benefit credit for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Liebman, MacGuineas, Samwick 2005)
1.07 1.18 31% 28%
E3.5 Increase the taxable maximum each year by an additional 2 percent beginning in 2023 until taxable earnings equal 90 percent of covered earnings. Provide benefit credit for earnings up to the revised taxable maximum.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center 2010) | memo (National Academy of Social Insurance 2009)
0.59 0.46 17% 11%
E3.6 Increase the taxable maximum each year by an additional 2 percent beginning in 2025 until taxable earnings equal 90 percent of covered earnings. Do not provide benefit credit for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (NRC/NAPA 2010)
0.83 1.18 24% 28%
E3.7 Increase the taxable maximum by an additional 2 percent per year beginning in 2024 until taxable earnings equal 90 percent of covered earnings. Provide benefit credit for earnings up to the revised taxable maximum. Create a new bend point equal to the current-law taxable maximum with a 5 percent formula factor applying above the new bend point.
graph | table | pdf-graph | pdf-table | memo (Fiscal Commission 2010)
0.67 0.78 19% 18%
E3.8 Beginning in 2030, apply 2 percent payroll tax rate on earnings over the wage-indexed equivalent of $200,000 in 2017 (about $331,800 in 2030), with the threshold wage-indexed after 2030. Provide proportional benefit credit for additional earnings taxed, based on the payroll tax rate applied to the additional earnings divided by the full 12.4 percent payroll tax rate.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan 2010) (includes similar provisions with 3 percent and 4 percent payroll tax rates)
0.19 0.14 6% 3%
E3.9 Beginning in 2030, apply 2 percent payroll tax rate on earnings over the wage-indexed equivalent of $200,000 in 2017 (about $331,800 in 2030), with the threshold wage-indexed after 2030. Do not provide benefit credit for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan 2010) (includes similar provisions with 3 percent and 4 percent payroll tax rates)
0.26 0.30 8% 7%
E3.10 Beginning in 2030, apply 2 percent payroll tax rate on earnings over the wage-indexed equivalent of $300,000 in 2017 (about $497,400 in 2030), with the threshold wage-indexed after 2030. Provide proportional benefit credit for additional earnings taxed, based on the payroll tax rate applied to the additional earnings divided by the full 12.4 percent payroll tax rate.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan 2010) (includes similar provisions with 3 percent and 4 percent payroll tax rates)
0.14 0.10 4% 2%
E3.11 Beginning in 2030, apply 2 percent payroll tax rate on earnings over the wage-indexed equivalent of $300,000 in 2017 (about $497,400 in 2030), with the threshold wage-indexed after 2030. Do not provide benefit credit for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan 2010) (includes similar provisions with 3 percent and 4 percent payroll tax rates)
0.19 0.22 6% 5%
E3.12 Beginning in 2030, apply 2 percent payroll tax rate on earnings over the wage-indexed equivalent of $400,000 in 2017 (about $663,300 in 2030), with the threshold wage-indexed after 2030. Provide proportional benefit credit for additional earnings taxed, based on the payroll tax rate applied to the additional earnings divided by the full 12.4 percent payroll tax rate.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan 2010) (includes similar provisions with 3 percent and 4 percent payroll tax rates)
0.11 0.08 3% 2%
E3.13 Beginning in 2030, apply 2 percent payroll tax rate on earnings over the wage-indexed equivalent of $400,000 in 2017 (about $663,300 in 2030), with the threshold wage-indexed after 2030. Do not provide benefit credit for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan 2010) (includes similar provisions with 3 percent and 4 percent payroll tax rates)
0.16 0.18 5% 4%
E3.14 Eliminate the taxable maximum for the employer payroll tax (6.2 percent) beginning in 2023. For the employee payroll tax (6.2 percent) and for benefit credit purposes, beginning in 2023, increase the taxable maximum by an additional 2 percent per year until taxable earnings equal 90 percent of covered earnings.
graph | table | pdf-graph | pdf-table | memo (National Academy of Social Insurance 2009)
1.48 1.20 43% 28%
E3.15 Increase the taxable maximum such that 90 percent of earnings are subject to the payroll tax (phased in 2023-2032). In addition, apply a tax rate of 6.2 percent for earnings above the revised taxable maximum (phased in from 2023-2032). Provide benefit credit for earnings taxed up to the revised taxable maximum.
graph | table | pdf-graph | pdf-table | memo (Senate Special Committee on Aging 2010)
1.38 1.14 40% 27%
E3.16 Beginning in 2024, apply 4 percent payroll tax rate on earnings above the wage-indexed equivalent of $400,000 in 2015 (about $557,700 in 2024), with the threshold wage-indexed after 2024. Provide benefit credit for additional earnings taxed, using a secondary PIA formula. This secondary PIA formula involves: (1) an "AIME+" derived from annual earnings taxed only between 2015 wage-indexed equivalents of $400,000 and $500,000, or about $557,700 and $697,200 in 2024 (with thresholds wage-indexed after 2024); and (2) a formula factor of 2 percent on this newly computed "AIME+".
graph | table | pdf-graph | pdf-table | memo (Begich, Murray 2014)
0.33 0.34 10% 8%
E3.17 Beginning in 2024, increase the taxable maximum by twice the rate of increase in the national Average Wage Index, but never by less than 3 percent. Provide benefit credit for earnings up to the revised taxable maximum levels.
graph | table | pdf-graph | pdf-table | memo (Murphy 2016)
0.99 1.19 29% 28%
E3.18 Increase the taxable maximum linearly over 4 years to $267,900 for 2027. After 2027, index the taxable maximum to AWI plus 0.5 percentage point. Apply benefit credit on additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center October 2016) | memo (Bipartisan Policy Center June 2016)
0.55 0.49 16% 11%
E3.19 Increase the taxable maximum such that 90 percent of earnings would be subject to the payroll tax (phased in linearly from 2024-2029). Provide benefit credit for additional earnings taxed, using a secondary PIA formula. This secondary PIA formula involves: (1) an "AIME+" derived from additional annual earnings taxed over the current-law taxable maximum; and (2) a formula factor of 2.5 percent on this newly computed "AIME+".
graph | table | pdf-graph | pdf-table | memo (Ribble 2016)
1.04 1.09 31% 26%