Significant changes to Social Security are on the horizon for 2026, impacting beneficiaries and high-income earners alike. These adjustments come as the Social Security program, initiated in 1935, celebrates nearly ten decades of service to Americans.
Major Social Security Updates Set for 2026
- Cost-of-Living Adjustment (COLA)
- Higher Earnings Limits for Early Retirees
- Increased Maximum Taxable Earnings
1. Cost-of-Living Adjustment (COLA)
The most significant change for 2026 is the cost-of-living adjustment (COLA), which will see an increase of 2.8%. This adjustment will take effect in January 2026, providing an average boost of approximately $56 per month to retirement benefits. While this increase surpasses the 2.5% adjustment from 2025, it falls short compared to the average COLA of 3.1% over the previous decade. Advocacy groups, such as The Senior Citizens League, have voiced concerns, stating that the adjustment does not adequately reflect rising expenses faced by seniors.
2. Higher Earnings Limits for Early Retirees
Another important update addresses early retirees. In 2026, the earnings limit for individuals under full retirement age will rise from $23,400 to $24,800 annually, or $2,040 monthly. For those reaching full retirement age while still working, the limit will increase from $62,160 to $65,160 annually, or $5,430 monthly. Beneficiaries who exceed these earnings thresholds will experience reductions in their Social Security benefits.
3. Increased Maximum Taxable Earnings
The maximum taxable earnings subject to Social Security payroll taxes will also see a significant adjustment. Beginning in 2026, the threshold will increase from $176,100 to $184,500. All employees and employers contribute a combined rate of 7.65% to Social Security and Medicare. Self-employed individuals are responsible for both portions, totaling 15.3%. Earnings exceeding $184,500 will no longer incur FICA taxes.
Impact on Medicare Part B Premiums
Furthermore, there are anticipated changes regarding Medicare Part B premiums, which are deducted from Social Security benefits for most individuals. The standard monthly premium, which was $185 in 2025, is expected to rise to approximately $206.50 in 2026, reflecting an 11.6% increase. This escalation may reduce the effectiveness of the COLA increase for many retirees.
These major updates to Social Security in 2026 underscore the ongoing evolution of the program in response to changing demographics and economic conditions. Beneficiaries and high-income earners alike will need to prepare for these adjustments as the year approaches.
