‘‘(A) IN GENERAL.—For purposes of para-
graph (2), the cost-of-living adjustment for any 
calendar year is the product of—
‘‘(i) the CPI fraction for calendar 
years before 2006, multiplied by 
‘‘(ii) the Chained CPI fraction for cal-
endar years after 2005, 
reduced by 1. 
‘‘(B) 
CPI 
FRACTION
FOR
CALENDAR 
YEARS BEFORE 2006.—The CPI fraction for cal-
endar years before 2006 is the fraction—
‘‘(i) the numerator of which is the 
CPI for the calendar year 2004, and 
‘‘(ii) the denominator of which is the 
CPI for the calendar year 1992. 
‘‘(C) CHAINED
CPI
FRACTION
FOR
CAL-
ENDAR YEARS AFTER 2005.—The Chained CPI 
fraction for calendar years after 2005 is the 
fraction—
‘‘(i) the numerator of which is the 
Chained CPI for the preceding calendar 
year, and 
‘‘(ii) the denominator of which is the 
Chained CPI for the calendar year 2004.’’. 
(2) CONFORMING AMENDMENTS.—
(A) Paragraph (4) of section 1(f) of such 
Code is amended to read as follows: 
‘‘(4) CPI AND
CHAINED
CPI
FOR
ANY
CAL-
ENDAR YEAR.—For purposes of paragraph (3)—
‘‘(A) CPI.—The CPI for any calendar year 
is the average of the Consumer Price Index as 
of the close of the 12-month period ending on 
August 31 of such calendar year. 
‘‘(B) CHAINED CPI.—The Chained CPI for 
any calendar year is the average of the Chained 
Consumer Price Index as of the close of the 12-
month period ending on August 31 of such cal-
endar year.’’. 
(B) Paragraph (5) of section 1(f) of such 
Code is amended to read as follows: 
‘‘(5) CONSUMER PRICE INDEX AND CHAINED 
CONSUMER
PRICE
INDEX.—For purposes of para-
graph (4)—
‘‘(A) CONSUMER PRICE INDEX.—The term 
‘Consumer Price Index’ means the last Con-
sumer Price Index for all-urban consumers pub-
lished by the Department of Labor. For pur-
poses of the preceding sentence, the revision of 
the Consumer Price Index which is most con-
sistent with the Consumer Price Index for cal-
endar year 1986 shall be used. 
‘‘(B) CHAINED CONSUMER PRICE INDEX.—
The term ‘Chained Consumer Price Index’ 
means the initial Chained Consumer Price 
Index for all-urban consumers published by the 
Department of Labor.’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to taxable years begin-
ning after December 31, 2005. 
(c) COST-OF-LIVING ADJUSTMENTS UNDER OTHER 
PROVISIONS UTILIZING THE CONSUMER PRICE INDEX.—
(1) IN GENERAL.—Except as provided in para-
graph (2), for purposes of determining the amount 
of any cost-of-living increase which takes effect for 
benefits payable after December 31, 2005, with re-
spect to any benefit described in paragraph (4), any 
such increase for the period for which the percentage 
change is determined shall be deemed to be, in lieu 
of the increase otherwise determined under applica-
ble law in connection with such benefits, the increase 
determined under such applicable law by sub-
stituting the Chained CPI for any month for the 
CPI for such month.
(2) INCREASES
DETERMINED
FROM
A
CON-
STANT BASE YEAR.—
(A) IN GENERAL.—In any case in which 
the amount of the cost-of-living increase which 
takes effect for benefits payable after December 
31, 2005, with respect to any benefit described 
in paragraph (4) is determined under applicable 
law by reference to a change in the CPI over 
a period which is determined by reference to a 
base period which remains constant from year 
to year, any such increase for any period shall 
be deemed to be, in lieu of the increase other-
wise determined under applicable law in connec-
tion with such benefits, the increase, expressed 
as a percentage increase, equal to the product 
of—
(i) the CPI fraction prior to 2006, 
multiplied by 
(ii) the Chained CPI fraction after 
2005, 
reduced by 1. 
(B) CPI FRACTION PRIOR TO 2006.—The 
CPI fraction prior to 2006 is the fraction—
(i) the numerator of which is the CPI 
for the period, ending with or during 2004, 
which corresponds to the base period, and 
(ii) the denominator of which is the 
CPI for the base period. 
(C) CHAINED CPI FRACTION AFTER 2005.—
The Chained CPI fraction after 2005 is the 
fraction—
(i) the numerator of which is the 
Chained CPI for the period, ending with or 
during the year preceding the year in 
which the determination takes effect, which 
corresponds to the base period, and 
(ii) the denominator of which is the 
Chained CPI for the period, ending with or 
during 2004, which corresponds to the 
base period. 
(3) CPI AND CHAINED CPI.—For purposes of 
paragraph (1)—
(A) CPI.—The CPI for any period means, 
in connection with any benefit described in 
paragraph (4), the average monthly Consumer 
Price Index for such period, as determined 
under the applicable law in connection with 
such benefit (without regard to this subsection).