Social Security is approaching its 10th anniversary, having been established in 1935 with the signing of the Social Security Act by President Franklin D. Roosevelt. Over the years, significant changes have been introduced, like the gradual increase in the full retirement age from 65 to 67.
Looking ahead, there are several notable updates expected for Social Security in 2026.
1. Cost of Living Adjustment (COLA)
The most significant change for beneficiaries next year will be the annual Cost of Living Adjustment (COLA). Recently, the Social Security Administration disclosed a 2.8% increase in benefits effective January 2026, translating to an average monthly increase of about $56.
This increase surpasses the 2.5% bump from 2025 but is a bit lower compared to recent figures. In fact, the average COLA over the last decade has been about 3.1%.
Some aren’t entirely content with the 2.8% rise. Shannon Benton, Executive Director of a nonprofit that advocates for seniors, voiced concerns, suggesting that this COLA could be insufficient for many older adults. Benton and her group are urging Congress to rethink how COLAs are calculated to more accurately reflect seniors’ actual expenses.
2. Increased Income Limits for Early Retirees
Many people continue working while claiming Social Security benefits before reaching the full retirement age. Income from those jobs can be measured against the Social Security Retirement Test.
The Social Security Administration deducts $1 from benefits for every $2 earned over a set annual limit for those under full retirement age. In 2025, that limit stands at $23,400, which will rise to $24,800 in 2026.
For individuals reaching full retirement age while still employed, the SSA has a separate limit. For 2025, it was $62,160, but next year it will increase to $65,160.
3. Increase in Maximum Taxable Income
This change doesn’t just affect current beneficiaries; it also pertains to high-income earners in the workforce.
The upper limit for income subject to the FICA Payroll Tax will rise from $176,100 in 2025 to $184,500 in 2026. Employees, employers, and self-employed individuals are all contributing to this fund through a 7.65% tax rate, which supports both Social Security and Medicare.
Any earnings beyond $184,500 in 2026 will not be subjected to these FICA taxes, although there might be future increases to this threshold.
Additional Changes Related to Social Security
A 2.8% COLA, heightened early retirement income limits, and the higher maximum taxable income represent the biggest shifts for Social Security in the coming year. Another noteworthy change relates to Medicare.
Typically, Medicare Part B premiums are automatically deducted from most individuals’ monthly Social Security benefits. While the standard premium for 2025 was $185, some may end up paying more. The Centers for Medicare and Medicaid Services hasn’t yet confirmed the premiums for 2026, but preliminary expectations suggest a rise of 11.6%, potentially bringing the standard premium to around $206.50. This increase could significantly offset the COLA for many retirees.
