Social Security Insolvency: Tax Proposals & Funding Options
The 2026 Trustees Report projects Social Security's retirement trust fund will run out of reserves in late 2032. Here's what insolvency means, how payroll tax and earnings-cap proposals would help according to SSA's actuaries, and which ideas are law, pending in Congress, or analysis only.
Quick Answer
- No tax increase or benefit cut has been enacted to address the shortfall. The bills below are introduced and sitting in committee.
- The 75-year shortfall is 4.42% of taxable payroll. For scale, the combined payroll tax is 12.4%.
- According to SSA's actuaries, removing the earnings cap alone would close roughly half the gap; closing all of it with the tax rate alone would take about a 17% combined rate.
- If Congress does nothing, retirement and survivor benefits would be limited to incoming revenue after the fourth quarter of 2032 — about 78% of scheduled amounts.
What Social Security Insolvency Means
Reserves run out, income continues
"Insolvency" means a trust fund's reserves are used up. Payroll taxes and taxes on benefits keep coming in, so Social Security could still pay most scheduled benefits.
Benefits would be limited to income
Social Security can't borrow. Under current law, once a fund's reserves are depleted it can pay only what its income covers, which would mean an automatic reduction.
It is a projection, not a scheduled event
The dates come from the Trustees' intermediate assumptions and change each year with new data and new laws. Congress can change the outcome at any time before depletion.
What the Latest Trustees Report Projects
2026 Trustees Report, intermediate assumptions.
| Fund | Reserves depleted | Payable afterward |
|---|---|---|
| Retirement & survivors (OASI) | Q4 2032 | 78%, falling to 62% by 2100 |
| Disability (DI) | Not through 2100 | 100% projected |
| OASI + DI combined (hypothetical) | Q3 2034 | 83%, falling to 65% by 2100 |
The funds are legally separate; combining them would require a law change. See the 2032 outlook and reduction scenario calculator.
Would Raising the Taxable Earnings Cap Help?
Social Security tax applies only to earnings up to the taxable maximum — $192,300 in 2027. The cap rises each year with average wages, but earnings at the top have grown faster. In 1983, 90.0% of all covered earnings fell under the cap; by 2024 it was 82.6%. About 6% of workers earn above it in a given year.
Cap proposals differ in two ways: how much extra earnings are taxed, and whether those earnings count toward benefits. Giving benefit credit raises future payouts, so it closes less of the gap.
| Option (if enacted alone) | Share of 75-year shortfall closed |
|---|---|
| Raise the taxable maximum so 90% of earnings are taxed (phased in 2027–2036), with benefit creditSSA provision E3.1 | 19% |
| Same 90% target, without benefit credit for the extra earningsSSA provision E3.2 | 24% |
| Apply the 12.4% tax to earnings above $400,000 starting in 2027 (no benefit credit)SSA provision E2.17 | 53% |
| Apply the 12.4% tax to earnings above $250,000 starting in 2027 (no benefit credit)SSA provision E2.5 | 57% |
| Eliminate the taxable maximum in 2027, with benefit credit for the extra earningsSSA provision E2.2 | 45% |
| Eliminate the taxable maximum in 2027, without benefit creditSSA provision E2.1 | 58% |
Would Changing the Payroll Tax Rate Help?
The combined rate is 12.4%: 6.2% from the worker and 6.2% from the employer (self-employed people pay both). It hasn't changed since 1990. A rate increase affects every worker with covered earnings, not just high earners.
| Option (if enacted alone) | Share of 75-year shortfall closed |
|---|---|
| Raise the combined rate 0.1 point a year from 2029 until it reaches 13.0% in 2034SSA provision E1.8 | 12% |
| Raise the combined rate 0.1 point a year from 2028 until it reaches 13.4% in 2037SSA provision E1.10 | 20% |
| Raise the combined rate 0.1 point a year from 2030 until it reaches 14.8% in 2053SSA provision E1.9 | 40% |
| Raise the combined rate to 17.0% in 2027SSA provision E1.1 | 101% |
Payroll Tax Proposal Calculator
Hypothetical illustrations — not enacted law
Simplified: Social Security tax only, 2027 cap, no phase-ins, and no self-employment earnings adjustment. Real bills set their own thresholds and start dates.
| Scenario | Your SS tax / yr | Change |
|---|---|---|
| Current law (2027)6.2% on wages up to $192,300 | $11,923 | — |
| Tax wages above $400,000"Donut hole" design scored by SSA (provision E2.17) | $11,923 | $0 |
| Tax wages above $250,000Similar to the S. 770 threshold | $15,023 | +$3,100 |
| Eliminate the capAll wages taxed, as in H.R. 9519 | $18,600 | +$6,677 |
| Combined rate 13.4%Rate option phased in by 2037; cap unchanged | $12,884 | +$962 |
For your actual 2027 payroll taxes, use the Social Security tax calculator.
Other Revenue and Benefit Proposals
Not every option is a payroll tax. Some add new revenue sources; others slow benefit growth. Benefit options are shown for comparison — they reduce future benefits rather than raise taxes.
Other revenue
| Option (if enacted alone) | Share of 75-year shortfall closed |
|---|---|
| 6.2% tax on investment income above the ACA thresholds ($200,000 single / $250,000 joint), starting 2028SSA provision F6 | 15% |
| 12.4% tax on investment income above the same thresholds, starting 2028SSA provision F9 | 30% |
| Cover newly hired state and local government employees, starting 2027SSA provision F1 | 3% |
Benefit-side options
| Option (if enacted alone) | Share of 75-year shortfall closed |
|---|---|
| Calculate COLAs with chained CPI-W starting December 2027 (about 0.3 point lower per year)SSA provision A3 | 15% |
| Reduce benefits 5% for people newly eligible in 2027 and laterSSA provision B7.2 | 15% |
| Reduce benefits for new retirees with income above $60,000 single / $120,000 joint (from 2031)SSA provision B7.7 | 16% |
| Slow benefit growth for earners above the median (progressive price indexing, from 2033)SSA provision B1.4 | 27% |
| Raise full retirement age gradually to 68, starting with people age 62 in 2027SSA provision C1.1 | 11% |
| Raise full retirement age to 69 by 2038, then index itSSA provision C1.4 | 32% |
| Calculate COLAs with CPI-E, the elderly price index, from December 2028 (about 0.15 point higher per year)SSA provision A6 | Worsens (-7%) |
Percentages are SSA actuaries' estimates for each option alone. Combining options doesn't simply add them up, because provisions interact.
Bills in the 119th Congress
Rep. John Larson (D-CT) · Introduced June 29, 2026
Repeals the wage cap so the 12.4% tax applies to all wages, adds Social Security tax on net investment income above $400,000, and raises benefits (across-the-board increase, CPI-E COLA, higher minimum benefit).
Status: Introduced; referred to Ways and Means and two other House committees
Sen. Richard Blumenthal (D-CT) · Introduced July 21, 2026
Senate version of the Social Security 2100 Act.
Status: Introduced; referred to the Senate Finance Committee
Sen. Bernie Sanders (I-VT) · Introduced February 27, 2025
Applies the payroll tax to earnings above $250,000, adds a tax on high investment income, and expands benefits.
Status: Introduced; referred to the Senate Finance Committee
Sen. Mazie Hirono (D-HI) · Introduced July 31, 2025
Applies Social Security tax to high earnings above the current taxable maximum and switches COLAs to CPI-E. The sponsor reports SSA's actuaries estimate full benefits would be payable until 2045 instead of 2034.
Status: Introduced; referred to the Senate Finance Committee
Enacted: One Big Beautiful Bill Act (Public Law 119-21), signed July 4, 2025
Not a Social Security bill, but its temporary extra tax deduction for people 65 and older reduces income tax collected on benefits, part of which goes to the trust funds. SSA's actuaries estimated:
- OASI depletion moved from Q1 2033 to Q4 2032
- Combined OASI and DI depletion moved from Q3 2034 to Q1 2034 (2025 report basis)
- Long-range actuarial balance worsened by 0.16% of taxable payroll
- About $168.6 billion more program cost for 2025–2034
The 2026 Trustees Report, which reflects this law and newer data, is the current baseline used above.
Who Would Be Affected?
Workers earning above the cap
Roughly 6% of covered workers earn more than the taxable maximum in a given year. Cap proposals would raise their payroll tax; some would also give them higher future benefits.
Employers
Employers pay a matching 6.2%. Raising the rate or the cap raises employer costs on affected wages.
Self-employed people
The self-employed pay both halves (12.4%) through SECA tax, so rate and cap changes hit them twice as hard as employees.
Most workers
Cap-only proposals don't change taxes for people earning under the cap. Rate increases apply to everyone with covered earnings.
Investors with high income
Investment-income proposals apply only above the ACA thresholds ($200,000 single, $250,000 joint).
Current and future retirees
Tax proposals don't cut benefits. Benefit-side options (COLA formula, retirement age, formula changes) usually apply to future retirees; COLA changes would affect current retirees too.
Enacted vs. Under Consideration vs. Analysis Only
Enacted
- Current payroll tax: 12.4% split between worker and employer, on wages up to $192,300 in 2027
- The cap rises automatically each year with national average wages
- One Big Beautiful Bill Act (2025): weakened solvency slightly; did not change payroll tax
Under consideration
- H.R. 9519 / S. 5042 (Social Security 2100 Act)
- S. 770 (Social Security Expansion Act)
- S. 2614 (Protecting and Preserving Social Security Act)
- None has had a committee vote or passed either chamber
Analysis only
- SSA actuaries' estimates of single provisions (rate increases, cap changes, retirement age, COLA formula)
- These show what an option would do if enacted alone; they are not bills
How to Check Official Updates
Annual Trustees Report
Published each year, usually spring or early summer. The summary gives the latest depletion dates and payable percentages.
ssa.gov/oact/trsumSSA actuaries' proposal estimates
Actuarial Services posts letters scoring specific bills and a table of single-provision estimates.
ssa.gov/oact/solvencyBill status on Congress.gov
Search the bill number to see its latest action, committee referral, and any votes.
congress.govEach year's taxable maximum
SSA announces the next year's wage cap with the COLA each October.
ssa.gov/oact/cola/cbb.htmlFrequently asked questions
Related guides & tools
Official Primary Data Sources
Provision estimates use the intermediate assumptions of the 2026 Trustees Report. Bill statuses checked on Congress.gov on October 16, 2026. Nothing on this page is a prediction of what Congress will do.
OASI depletion Q4 2032 (78% payable); combined OASDI Q3 2034 (83% payable); 75-year deficit 4.42% of payroll.
Long-range effects of individual payroll tax, cap, and benefit options (2026 Trustees Report basis).
Includes the August 2025 estimates of the One Big Beautiful Bill Act's trust fund effects.
Share of covered earnings below the taxable maximum: 90.0% in 1983, 82.6% in 2024.
About 6% of covered workers earn above the taxable maximum each year.
Taxable maximum history, including $192,300 for 2027.
Statuses checked October 16, 2026.