As we approach 2026, big updates involving Social Security are taking effect. These changes will affect all Americans, including those already receiving benefits, approaching retirement, or those still working. Going into 2026, the changes will affect how much you receive, how much you keep, and how much you pay in taxes.
The three major updates occurring in Social Security revolve around the raise every beneficiary will get, the work rule that allows retirees to keep more, and the new ceiling that affects higher earners.
1. The 2.8% COLA Boost for 2026
The Social Security Administration recently announced the 2.8% cost-of-living adjustment (COLA) for 2026. This is a slight increase from 2025 and will see beneficiaries get an average increase of about $56 per month in their benefits starting in 2026.
The increase will offer financial relief to retirees who rely on Social Security to cover essentials. However, many say that it still falls short given the rising costs of housing, healthcare, and groceries. Still, the 2.8% COLA will ensure that every beneficiary receives an increase, even if it’s not sufficient to help them deal fully with inflation.
2. The Work Rule That Lets Early Retirees Keep More
Usually, individuals who claim Social Security before the full retirement age end up getting lower benefits for a lifetime compared to if they waited until their FRA. Although this earnings test will still apply in 2026, the rules will be more forgiving.
Americans who collect their benefits early while continuing to work part-time or even full-time see their Social Security checks reduced based on income. This structure will remain, but the earnings limit is rising. This will allow retirees to keep more of their salaries.
Here is how it works:
- If you are below FRA for the entire year, the SSA deducts $1 in benefits for every $2 that you earn above the annual limit.
- If you reach FRA during the year, the SSA deducts $1 for every $3 above a higher annual limit.
In 2025, the limit was $62,160, but beginning in 2026, the limit will rise to $65,160, which is equivalent to $5,430 per month.
“The earnings limit for people reaching their full retirement age in 2026 will increase to $65,160. (We deduct $1 from benefits for each $3 earned over $65,160 until the month the worker turns full retirement age)”, says the SSA in an official statement.
This increase will see early filers earn $3,000 more before facing any deduction. This is an advantage for retirees who are still earning while receiving benefits.
Although the withheld benefits due to the earnings test are later credited back to the retiree once they reach FRA, a higher limit upfront gives them more breathing room to earn more without consequence.
3. The New Ceiling That Changes the Math for High Earners
Starting in 2026, the maximum amount of earnings subject to Social Security taxes will rise from $176,100 in 2025 to $184,500. That’s an $8,400 increase in taxable income.
This change raises taxes for higher earners, meaning that they will owe more and employers will also pay more on their behalf. Remember, employees pay 6.2% in Social Security tax and employers match it.
The change also increases potential future benefits. Since your benefit is calculated from your highest earning years, a higher taxable wage will allow future retirees with high incomes to qualify for slightly higher benefits.
How the 2026 Social Security Updates Will Impact Your Benefits
The mentioned Social Security updates will see every beneficiary receive a COLA raise. Those who are still working yet they have already collected their benefits early will be allowed to keep more of what they earn. Lastly, higher earners will pay more into the system, but they will potentially receive more later in retirement.
The 2026 updates will affect about 75 million beneficiaries. Considering the high inflation rate, understanding these changes will enable workers and retirees to plan better for their retirement.