Social Security Adjustments for 2026
About 75 million Americans will receive a 2.8 percent cost of living adjustment to their Social Security and Supplemental Security Income benefits in 2026. The increase will raise the average retirement benefit by $56 per month. However, several additional changes — including a new senior tax deduction and higher Medicare Part B premiums — will shape what beneficiaries ultimately see in their monthly payments starting in January.
Understanding the 2026 COLA Increase
The Social Security Administration will send one page statements beginning in December detailing each beneficiary’s updated monthly payment and any relevant deductions. Notices are also available through My Social Security accounts. While the COLA offers a modest increase, its impact depends heavily on taxes, spending patterns and rising health care costs.
New Senior Deduction and Tax Impact
A new federal deduction of up to $6000 aims to reduce the tax burden on older Americans. It is not a credit, so savings will vary by household. The deduction phases out for single filers above $75,000 and married couples above $150,000, disappearing at higher income levels. Seniors earning between $80,000 and $130,000 are expected to see the largest benefit, averaging a tax reduction of roughly $1100. Existing rules still apply: up to 85 percent of benefits may be taxable based on combined income. Adjusting withholding rates may help retirees avoid unexpected tax bills.
Medicare Part B Premium Increase
Medicare Part B premiums will rise nearly 10 percent in 2026. The standard premium will climb from $185 to $202.90, the second largest increase in the program’s history. Higher income beneficiaries will pay more under IRMAA brackets. These premiums are deducted directly from Social Security checks, reducing the apparent benefit of the COLA. While the hold harmless provision protects many retirees from having their COLA fully offset, new enrollees and higher income households are not covered.
Planning Around Medicare Premiums
Premiums are based on modified adjusted gross income from prior tax years, so financial events such as home sales can raise future Medicare costs. Beneficiaries who experience a drop in income due to a life changing event may request a premium adjustment from the SSA. Because Medicare Advantage and Part D premiums lack hold harmless protection, these deductions can further reduce net Social Security payments.
Open Enrollment and Coverage Choices
Medicare open enrollment runs until December 7, allowing beneficiaries to review or change their Medicare Advantage or Part D drug plans. Comparing coverage each year can help reduce health care spending in 2026. A separate Medicare Advantage enrollment window from January 1 to March 31 allows additional adjustments for eligible participants. Experts emphasize that annual plan comparisons are essential, even for beneficiaries not planning to switch.
Conclusion
The 2026 COLA provides a meaningful increase, but taxes and rising Medicare premiums will determine how much retirees ultimately keep. Reviewing tax strategies, updating withholding and evaluating Medicare coverage can help beneficiaries protect more of their income in the year ahead.
