3 Key Social Security Changes Coming in 2026: What Beneficiaries Need to Know
Social Security, which celebrated its 90th anniversary in 2025, continues to evolve as it enters its 10th decade of providing financial support to millions of Americans. Originally signed into law by President Franklin D. Roosevelt in 1935, the program has undergone numerous changes over the years, including adjustments to eligibility and benefits. As we approach 2026, several important changes are slated to impact Social Security beneficiaries and workers alike. Here are three key updates to watch for:
1. Cost-of-Living Adjustment (COLA) to Increase by 2.8%
The most significant change for Social Security recipients in 2026 is the annual Cost-of-Living Adjustment (COLA), which the Social Security Administration (SSA) recently announced will increase by 2.8%. Starting in January 2026, the average monthly Social Security retirement benefit will see an increase of approximately $56. While this bump is welcome news for millions of retirees, it is somewhat lower than the 3.1% average COLA over the last decade.
The 2026 COLA represents a slight improvement over the 2.5% increase seen in 2025, but for many seniors, it may not be enough to keep pace with rising costs. “The 2026 COLA is going to hurt for seniors,” said Shannon Benton, executive director of The Senior Citizens League, a nonprofit advocacy group. Benton has urged Congress to revise how COLA is calculated to more accurately reflect the costs faced by older Americans, particularly those related to healthcare, housing, and food.
2. Higher Earnings Limits for Early Retirees
For individuals who choose to begin receiving Social Security benefits before reaching full retirement age (FRA), the Social Security Administration imposes an earnings test. If they continue working while collecting benefits, the SSA deducts a portion of their benefits for every dollar earned above a certain limit. This can be a crucial consideration for those who want to work part-time or continue their careers while drawing Social Security.
In 2026, the annual earnings limit for early retirees will increase to $24,800, up from $23,400 in 2025. This means individuals who claim Social Security benefits before reaching their FRA and earn over $24,800 in 2026 will have $1 deducted from their benefits for every $2 earned above that threshold.
For individuals who reach full retirement age during the year but continue working, the earnings limit is higher. In 2026, the threshold for individuals who are under FRA but reach it during the year will increase to $65,160, up from $62,160 in 2025. The SSA will deduct $1 from benefits for every $3 earned above this limit.
These increases provide more flexibility for early retirees, allowing them to keep more of their earnings while still receiving Social Security benefits.
3. Increased Maximum Taxable Earnings for Social Security
For workers paying into Social Security, there is a cap on the amount of income subject to Social Security taxes. In 2026, the maximum amount of earnings subject to Social Security’s portion of the FICA payroll taxes will increase to $184,500, up from $176,100 in 2025. This means that individuals earning more than $184,500 in 2026 will not have to pay Social Security taxes on the income above that threshold.
For employees, FICA taxes are split between the employee and employer, with each paying 7.65% of wages to fund Social Security and Medicare. Self-employed individuals are required to pay both portions, which adds up to 15.3% of their income. While income above $184,500 will not be taxed for Social Security purposes, it will still be subject to Medicare taxes, which have no income cap.
This change primarily affects higher-income earners and ensures that Social Security remains funded by the working population. It’s also worth noting that the maximum taxable earnings threshold is expected to continue rising in future years to account for inflation and wage growth.
An Important Medicare Change Tied to Social Security
In addition to the three major changes outlined above, there is another key adjustment that could impact Social Security beneficiaries: Medicare Part B premiums. These premiums are automatically deducted from most individuals’ Social Security benefits, and while the standard Part B premium in 2025 was $185, it is expected to increase by 11.6% in 2026, reaching approximately $206.50.
For those who have higher income levels, Medicare Part B premiums can be even higher, based on their modified adjusted gross income. While the COLA increase of 2.8% in 2026 is intended to help offset rising living costs, the higher Medicare premiums could reduce the net increase in Social Security benefits for many retirees.
The Centers for Medicare and Medicaid Services (CMS) has not yet officially confirmed the exact amount for Part B premiums in 2026, but the projected increase will likely affect many retirees’ take-home benefits.
Looking Ahead: The Future of Social Security
Social Security continues to play a crucial role in the financial well-being of millions of Americans, especially those in retirement. While the changes for 2026 bring some relief, the overall effectiveness of the program will depend on ongoing reforms and how it adjusts to demographic shifts and economic pressures in the coming years.
As always, it is important for Social Security beneficiaries and workers to stay informed about the latest changes and how they might affect their retirement plans. Consulting with a financial advisor can also help ensure that individuals are making the most of their Social Security benefits and planning for the future.
| Change | Description | Impact |
|---|
| Cost-of-Living Adjustment (COLA) | Benefits will increase by 2.8% starting January 2026, with an average increase of $56 per month. | Helps beneficiaries keep up with inflation, though it may not fully cover rising living costs. |
| Higher Earnings Limits for Early Retirees | The annual earnings limit for early retirees will increase to $24,800. For those who reach full retirement age during the year, the limit will rise to $65,160. | Allows early retirees to earn more without having Social Security benefits deducted. |
| Increased Maximum Taxable Earnings | The maximum earnings subject to Social Security taxes will increase to $184,500. Earnings above this threshold will not be taxed for Social Security. | Affects high-income earners by increasing the amount subject to Social Security taxes. |
| Medicare Part B Premium Increase | Medicare Part B premiums are expected to rise by 11.6% to approximately $206.50 per month. | Reduces the net benefit increase from the COLA for many retirees, as premiums are deducted directly from Social Security benefits. |
