Congress expands Social Security, taxes high earners and investment income to pay for it
H.R. 1700 — Social Security Expansion Act · Filed by Valerie Hoyle (D-OR) · 40 cosponsors · Introduced Feb 27, 2025 · Referred to committee
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What it does
This bill increases Social Security benefits across the board by raising the benefit formula from 90% to 95% of average indexed monthly earnings, extends student benefits to age 22 (from 19), raises the minimum benefit for low-wage workers, and funds these expansions by imposing new payroll taxes on earnings above $250,000 and a 16.2% tax on investment income (up from 3.8%). It also consolidates the two separate trust funds into a single Social Security Trust Fund.
Why we flagged it
The bill's core mechanism is a multi-part expansion of Social Security benefits funded by new taxes on high earners and investment income. It is substantively a progressive social insurance reform, not a narrow carve-out or commemorative measure.
What the text implies
- The 16.2% tax on investment income (Section 8) represents a significant increase from the current 3.8% Net Investment Income Tax and may affect capital gains realization behavior and investment portfolio decisions among high-net-worth individuals.
- Consolidation of the two separate trust funds (Section 9) simplifies administration but eliminates the historical distinction between Old-Age/Survivors and Disability insurance, potentially affecting future policy debates about benefit allocation.
The full analysis lists 5 implications of this text.
Who stands to gain
Social Security beneficiaries (retirees, disabled workers, survivors); Low-wage workers (enhanced minimum benefit); Families with full-time student children (extended eligibility)