Each year since 1975, all benefits issued by the Social Security Administration (SSA) are adjusted to account for any year over year inflation and this inflation adjustment is called the Cost of Living Adjustment (COLA). Prior to this, Congressional approval was required if benefit amounts were to be adjusted to account for any inflation and as such, increases were sporadic at best and were decided upon at random.
The COLA announcement is made annually by the SSA in October, however, this year’s announcement was faced with a minor delay as a result of the ongoing federal government shutdown. This delay occurred due to the Bureau of Labor Statistics (BLS) ceasing all operations as of October 1st due to the shutdown. The CPI data used to determine the COLA increase is released by BLS, and as such, the COLA announcement had to be delayed from October 15th to October 24th.
October 24th has just passed us and with it came the official COLA announcement that revealed a 2.8% increase for all 75 million recipients in the Social Security program starting in January 2026. Other important figures such as the maximum taxable income, and early retirement earnings limit for 2026 have also been confirmed. Here is what you need to know.
SSA announces 2.8% increase for all benefits in 2026
Retirees were not in for too big a surprise once the COLA had officially been announced. This is because the latest estimates based on the July and August CPI data projected a COLA of 2.7%. With a COLA of 2.8%, a retiree earning the average benefit amount of around $2,008, will see a $56 bump in their checks as of January.
Personalized notices outlining the increase will be mailed to beneficiaries as of early December. Alternatively, recipients can view their increase online through their my Social Security accounts also starting in December. The SSA does, however, note that “you will need to have a personal my Social Security account by November 19 to see your COLA notice online.”
“Social Security is a promise kept, and the annual cost-of-living adjustment is one way we are working to make sure benefits reflect today’s economic realities and continue to provide a foundation of security,” Social Security Administration Commissioner Frank J. Bisignano said in the October 24th press release. “The cost-of-living adjustment is a vital part of how Social Security delivers on its mission.”
New wage cap and earnings limit for 2026
Along with benefit amounts, the maximum taxable earnings limit or wage cap, as well as the retirement earnings limit is also increased from one year to the next. The maximum taxable earnings, or wage cap, is the limit to how much of your earnings is considered when paying into the Social Security payroll tax.
In 2025, the wage cap is $176,100, however, this will increase to approximately $184,500 in the new year. This means that income only up to that figure will be considered when paying into the payroll tax. This wage cap has been put in place because the SSA also has a maximum amount it pays out in benefits. As such, the highest possible annual contribution a working individual can make into the Social Security payroll tax will go up from $10,917 in 2025 to $11,438 in 2026.
Additionally, if you have claimed benefits early and are also continuing to work and earn an income, you may be subject to a retirement earnings test. If your income exceeds certain thresholds, your benefits will be temporarily reduced, with the reduction phasing out once you reach full retirement age.
As such, if you have claimed benefits early and will not reach full retirement age for the full year, the retirement earnings limit will be increased from $23,400 to $24,480 in 2026. If you will reach full retirement age within the year, the retirement earnings limit will be increased from $62,160 to $65,160 for the upcoming year.