Annual automatic increases in taxes and Social Security benefits are based on different formulas, both set by Congress.
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The nation’s 75 million Social Security recipients will receive a 2.8 percent cost-of-living adjustment (COLA) increase in their benefits in 2026, slightly higher than this year’s 2.5 percent increase, reflecting the upward trend in inflation, according to the Social Security Administration was announced today.
Meanwhile, the maximum amount of a worker’s earnings subject to Social Security tax (also known as the wage base) will increase by a hefty 4.8%, or $8,400 to $184,500, from $176,100 in 2025. That adjustment, which means higher taxes on about 6% of the changes in the national average wage earners x Urban wage earners and employees office (CPI-W), which determines the beneficiaries’ COLA. The Social Security tax rate itself set in Congress remains unchanged at 12.4% for 2026, with the employee and employer paying half and the self-employed paying the full 12.4% themselves. That means the maximum Social Security tax per employee will increase by $1,041.60 to $22,878 with $11,439 of that taken directly from an employee’s paycheck, up from $10,918.20 this year.
The 2.8% increase in Social Security benefits would raise the average monthly check for all retired workers by $56 to $2,071while retired couples receiving both benefits will see an average increase of $88 to $3,208 a month. The announcement of the annual COLA, which is based on the increase in the CPI-W from the third quarter of 2024 to the third quarter of 2025, was delayed because the government shutdown delayed the release of the September CPI numbers until today. The Trump administration has called back some furloughed Bureau of Labor Statistics employees to manage the release of the CPI. (The BLS says it collected all the data before the shutdown.)
Automatic Social Security COLAs have been in place since 1975, when Congress decided to prevent itself—and the political pressures of the day—from an annual adjustment that affects so many voters. However, the debate over the appropriate COLA continues, with the Senior Citizens Association calling for it to be based on special CPI for the elderly and a new white paper by the Committee on a Responsible Federal Budget, suggesting that capping the COLA for higher-income recipients would be a way to shore up the Social Security program’s shaky finances.
Many Social Security beneficiaries could lose a large portion of their 2026 benefits in a yet-to-be-announced increase in Medicare Part B premiums for 2026. Based on the 2025 Medicare Administrators report issued in June, the basic annual premium for Medicare Part B, which covers doctor visits and other outpatient services, is an increase of 11.6% is expectedincreasing $21.50 per month to $206.50 per person. (Higher income beneficiaries pay much higher premiums, which this year’s range from $259 per month to a peak of $628.90 per month per individual for individuals with adjusted gross income over $500,000 and couples with income over $750,000. And those will be adjusted for 2026.) It’s worth noting, however, that 2026 premium increases for Medicare Part D, which covers prescription drugs, were lower than expected, with premiums in some states fall.
Current beneficiaries should receive notices in the mail in early December with the new 2026 individual benefit amounts, but can receive this information earlier by creating an individual online account. The individual one-page notice should include information not only about the 2026 benefit amount, but also about any deductions, including Medicare premiums. The actual increase will appear in payments for regular Social Security recipients in January, while those receiving Supplemental Security Income (SSI) payments for low-income recipients will see it on December 31.
The maximum benefit for a single, high-income worker claiming Social Security at “full” retirement age will be $4,152 a month in 2026, up $134 from the $4,018 maximum for those reaching full retirement age in 2025. (This isn’t based on the CPI either.) But the actual maximum benefit increases with the working age limit. For example, someone born in 1959 reaches full retirement age at 66 years and 10 months, meaning most of them will reach it in 2026, while those born in January or February will reach it this November or December. But for every month they wait past full retirement age to claim, their benefits increase slightly, with a maximum boost 25.3% if they wait until 70. Instead, they could have claimed Social Security as early as age 62, but that would mean a decrease of 34.17%. in their monthly payment.
Those who claim before full retirement age also face another potential penalty — if they earn too much working, their benefits can be frozen, with the actual amount they can earn before benefits are cut also adjusted each year. In 2026, most early Social Security takers will lose $1 in benefits for every $2 in earnings over $24,480 a year or $2,040 a month, down from $23,400 a year or $1,950 a month in 2025. Those who reach full retirement age in 2026 have more generous earnings. They will be able to earn up to $65,160 ($5,430) a month in the period before they reach full retirement age and will lose only $1 in benefits for every $3 they earn above the limit. In reality, the work penalty isn’t as onerous as it sounds, since Social Security recalculates your benefits when you reach full retirement age to account for any amounts you missed before that date because you claimed early while you were still working. After full retirement age, a Social Security recipient can earn an unlimited amount from work without having their benefit check tied up.
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