6 Big Social Security Changes for 2026
COLA increase, higher Medicare costs and a new tax break will affect beneficiaries’ bottom lines in the year to come
By Deirdre Shesgreen, AARP Published October 28, 20225
From the highly anticipated cost-of-living adjustment (COLA) to a less-welcome hike in Medicare premiums, Social Security beneficiaries will see several big changes in 2026. The developments are driven by new federal policies and economic shifts, such as inflation and income trends, that affect the more than 70 million people receiving Social Security benefits, as well as the estimated 185 million workers (and future beneficiaries) paying into the system. Here’s what you need to know about Social Security in 2026:
- COLA
Inflation has ticked up in recent months, resulting in a 2.8 percent COLA for 2026 for people receiving Social Security and Supplemental Security Income (SSI) payments. That’s up from a 2.5 percent COLA in 2025.
The Social Security Administration (SSA) estimates that the average retirement benefit will rise by about $56 a month, from $2,015 to $2,071, starting with the payments going out in January 2026. (SSI recipients will get their first COLA-boosted payment Dec. 31.) In an AARP survey conducted in September, 77 percent of older adults said a 3 percent COLA for 2026 would not be enough to help them keep up with rising prices. The average COLA since 2000 has been about 2.6 percent, even factoring in the spike in consumer prices that produced benefit increases of 5.9 percent in 2022 and 8.7 percent in 2023.
The COLA is applied to survivor benefits, family benefits and Social Security Disability Insurance (SSDI) as well as retirement benefits, and to SSI, a monthly benefit administered by the SSA for people with low incomes and limited assets who are 65 or older, blind or have a disability.
Estimated Average Monthly Social Security Benefits Payable in January 2026
Beneficiary Before 2.8% COLA After 2.8% COLA Married couple, both receiving benefits $3,120 $3,208 Retired worker $2,015 $2,071 SSI maximum federal benefit, individual* $967 $994 SSI maximum federal benefit, married couple* $1,450 $1,491 Survivor benefit, older spouse $1,867 $1,919 Survivor benefits, widowed parent and two qualifying children $3,792 $3,898 Worker receiving disability benefits $1,586 $1,630 * SSI beneficiaries should receive their first COLA-boosted payment Dec. 31, 2025. SSI benefits are typically paid on the first of the month, but Jan. 1 is a federal holiday.
Source: Social Security Administration
- Medicare premiums
The standard monthly premium for Medicare Part B, which covers doctor visits and other outpatient treatment, is projected to climb 11.6 percent, from $185 to $206.50, in January. The final premium hike will be announced later this fall.
Most Medicare enrollees pay this standard rate, typically as a deduction from their Social Security payments, so the premium increase has the effect of partially offsetting the COLA by $21.50.
- Paying Social Security taxes
Social Security is primarily funded by a 12.4 percent tax on most workers’ earnings. If you earn wages, you pay 6.2 percent (through FICA withholding from your paycheck), and your employer pays 6.2 percent. Self-employed people pay the full 12.4 percent as part of their annual tax return.
The tax rate is not changing, but the amount of income subject to it is adjusted annually to reflect national wage trends. In 2026, you’ll pay the tax on work income up to $184,500 (up from $176,100 in 2025). Earnings above that threshold are not taxed for the purpose of funding Social Security, nor is income from non-work sources, such as investments, interest or withdrawals from retirement accounts.
- Paying taxes on benefits
A new tax break for people ages 65 and older could reduce or fully offset taxes on Social Security income for millions of older Americans in 2026.
The new deduction will reduce taxable income by up to $6,000 for eligible taxpayers. AARP backed making the provision part of the tax and spending legislation Congress passed in July, dubbed the “One Big Beautiful Bill.”
The provision applies to people who are at least 65 at the end of 2025. Individual filers with a modified adjusted gross income (MAGI) up to $75,000 or married couples filing jointly with a combined MAGI of up to $150,000 can claim the full $6,000. Individuals with incomes of up to $175,000 for single filers or $250,000 for married couples can claim a reduced deduction.
The temporary deduction, which runs through the 2028 tax year, will cost Social Security $168.6 billion in lost tax revenue over the next 10 years and hasten the depletion of the program’s trust funds by up to six months, according to an Aug. 5 analysis from Social Security’s chief actuary.
Federal income taxes on Social Security benefits go into the program’s two trust funds, one for retirement and survivor benefits and one for disability benefits. The actuary projects that with the new deduction, the retirement and survivor fund will run short in the fourth quarter of 2032 rather than the first quarter of 2033.
- Social Security earnings test
Social Security applies an earnings test to beneficiaries who have not yet reached full retirement age (FRA), which is currently between 66 and 67, depending on birth year. People who collect retirement, survivor or family benefits before reaching that milestone¬¬¬ – and who continue to work¬¬¬ – may temporarily lose a share of their Social Security payments if their earnings exceed a certain level.¬¬¬
That threshold changes annually, tracking wage trends. In 2026, beneficiaries who will not reach FRA until a later year have $1 withheld from their Social Security payment for every $2 in work income above $24,480 (up from $23,400 in 2025). For example, if you earn $40,000 from work in 2026, your benefits for the year would be reduced by $7,760 — half the difference between $24,480 and $40,000.
The earnings test eases in the year you reach your FRA: Social Security holds back $1 in benefits for every $3 in earnings above $65,160 (up from $62,160 in 2025) until the month when you hit the milestone. At that point, the test goes away: There’s no longer any benefit deduction, no matter how much you earn, and the SSA adjusts your monthly payment upward so that, over time, you recoup the prior withholding.
There are different income rules for people receiving Social Security Disability Insurance (SSDI). Because disability benefits are intended for people who are largely unable to work for an extended period due to a serious medical condition, you can lose them if your earnings reflect what the SSA calls “substantial gainful activity.”
In 2026, that threshold is $1,690 a month for most SSDI beneficiaries, a $70 increase from the 2025 level of $1,620. People receiving SSDI due to blindness are subject to a higher income limit: $2,830 in 2026, $130 more than in 2025.
- Qualifying for benefits
The first step in qualifying for Social Security retirement benefits is having at least 40 Social Security credits. You earn credits by doing work in which you pay Social Security taxes on your income. You can earn up to four credits a year, so most workers reach the eligibility threshold after 10 years in the labor force.
In 2026, you will earn one credit for earnings of $1,890, $80 more than the 2025 level, so you bank your maximum of four credits when your work income for the year reaches $7,560.
Andy Markowitz and Tony Pugh contributed to this story.
Deirdre Shesgreen is an AARP writer and editor covering Social Security. She previously worked as a state news editor for the AARP Bulletin and as a reporter and editor at USA Today, the St. Louis Post-Dispatch and other publications.
