$2,400 Social Security Increase Proposed for Retirees: What to Know
Legislation proposed by Sen. Bernie Sanders would also change taxes on investment income and earnings.
The historic 2026 midterm elections aren't fully in the rearview mirror, but a proposal to increase Social Security benefits by at least $2,400 annually is already getting attention.
Sen. Bernie Sanders (I-Vt.) is pushing Congress to pass the Social Security Expansion Act, legislation he introduced in February of last year with Sen. Elizabeth Warren (D-Mass.) and other lawmakers.
The proposal would increase benefits, change how annual cost-of-living adjustments (COLAs) are calculated, and raise additional revenue by changing the taxes that fund Social Security.
The legislation comes as Social Security faces a growing funding shortfall. According to the 2026 Social Security Trustees Report, the retirement trust fund is projected to run out of reserves in 2032. At that point, incoming revenue would cover only 78% of scheduled retirement and survivor benefits unless Congress acts.
Sanders, who says the legislation would keep the Social Security trust funds solvent for 75 years, is expected to chair the Senate Finance subcommittee on Social Security starting in January 2027. That's when Democrats take control of both the U.S. House of Representatives and the U.S. Senate.
But how would the legislation work, who would pay more taxes to make it happen, and can it even pass? Here's what you need to know.
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Bernie Sanders calls for $2,400 Social Security increase
In a post on X, Sanders wrote the following.
"As the next chair of the Social Security Subcommittee, a top priority will be to expand Social Security benefits by at least $2,400 a year & extend Social Security’s solvency for generations. How? By scrapping the cap & demanding that the wealthy pay their fair share of taxes."
According to Social Security Administration data, the average retired worker currently receives about $2,092 per month in Social Security benefits. Under Sanders' proposal, an additional $200 a month would bring that amount to roughly $2,292, an increase of nearly 10%.
Note: The $2,400 figure is an estimate of the benefit increase over a year. The bill would change the Social Security benefit formula, but not necessarily guarantee every recipient a $200 monthly increase.
Sanders says the higher benefits would help retirees and other Social Security beneficiaries keep pace with rising living costs.
The legislation would change the formula used to calculate Social Security retirement and disability benefits. Specifically, it would increase the first percentage in the benefit formula from 90% to 95% and raise the first bend-point amount by 18%.
The bill would also require the SSA to recalculate benefits for people already receiving payments (not just future retirees) and extend benefits for some children of disabled or deceased workers.
New Social Security COLA calculations?
The Social Security Administration currently uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to calculate the annual Social Security COLA.
The proposed Social Security Expansion Act would replace the CPI-W with the Consumer Price Index for the Elderly (CPI-E), which is designed to better reflect older adults' spending patterns in the United States. (The CPI-E essentially adds more weight to categories like housing and healthcare.)
As a result, using the CPI-E could lead to larger annual benefit adjustments over time, although the actual COLA would still depend on inflation.
Higher taxes for high earners?
Under Sanders' proposal, the benefit increases would be funded in part by raising taxes on higher earners and investment income.
- Currently, Social Security payroll taxes apply to wages up to an annual limit, also known as the taxable limit or wage cap. For 2026, that limit is $184,500.
- As Kiplinger has reported, the tax limit will increase to $192,300 in 2027.
- Employees and employers each pay a 6.2% Social Security payroll tax, for a combined rate of 12.4%. Self-employed workers generally pay both portions.
The legislation would expand the earnings subject to Social Security payroll taxes so that earnings above the existing taxable maximum and up to $250,000 would also be subject to the tax. The bill includes a corresponding change for self-employment income.
The proposed legislation would also raise the net investment income tax (NIIT) from 3.8% to 16.2%.
- NIIT currently applies to certain investment income, including interest, dividends, capital gains, and rental income, for taxpayers whose modified adjusted gross income (MAGI) exceeds $200,000 for single filers or $250,000 for married couples filing jointly.
- Additionally, Sanders' bill would expand the definition of taxable income to include certain active trade or business income that is currently excluded.
That could mean higher taxes for some investors and business owners, along with the proposed payroll tax changes for higher earners.
Social Security Expansion Act: Bottom line
The Social Security Expansion Act could get more attention in the next Congress, beginning in January, when Democrats are set to control both the House and Senate.
Still, Democratic control of Congress doesn't guarantee a path to passage. President Donald Trump will remain in office through 2028 and has said he plans to veto legislation he opposes. The Senate's 60-vote threshold for most legislation also presents a hurdle.
The Sanders proposal is one of several that lawmakers have floated to shore up Social Security's finances. As Kiplinger has reported, other ideas include raising or eliminating the cap on wages subject to Social Security taxes, changing to a flat-rate COLA, and adjusting the retirement age.
For now, Sanders' bill remains with the Senate Finance Committee. Whether the 120th Congress takes up the proposal (and whether lawmakers can agree on how to address Social Security's long-term finances) remains to be seen. Stay tuned.
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