Social Security remains a central pillar of financial stability for retirees, with Gallup surveys showing that between 80% and 90% of retirees rely on this income to cover daily expenses. With over 70 million beneficiaries in the system, changes to the program resonate widely.
As the calendar turns to 2026, seven updates to the Social Security program are now in effect. From adjustments in benefit payouts to increases in payroll tax thresholds, the updates reflect the system’s effort to adapt to economic shifts and inflationary trends.
Monthly Benefits Rise, but Inflation May Still Cut into Purchasing Power
The most closely watched change each year is the cost-of-living adjustment (COLA), which directly affects monthly Social Security payments. For 2026, the Social Security Administration (SSA) has confirmed a 2.8% COLA increase. According to the SSA, this translates into a $56 rise in the average monthly benefit for retired workers, bringing the total to $2,071. Individuals receiving disability benefits will also see an increase, with average monthly payouts climbing by $44 to $1,630.
This marks the fifth year in a row with a COLA of at least 2.5%, the first such streak in nearly three decades. Despite this consistent growth, the impact of rising costs in other sectors may diminish the real-world value of the raise. Medicare Part B premiums, for instance, are increasing by 9.7% this year, while inflation in shelter and medical care remains strong. According to the SSA, these factors are likely to erode some of the added value that the COLA aims to provide.
At the same time, those reaching full retirement age (currently 67 for individuals born in or after 1960) may now qualify for a maximum monthly benefit of $4,152, up from $4,018 last year. However, only about 2% of retirees typically qualify for the highest payout, as it requires reaching the taxable earnings cap for 35 years and delaying benefit claims until full retirement age.
Tax Burdens and Income Thresholds Shift for High Earners and Early Filers
The Social Security updates also affect employed individuals, particularly high earners and early retirees. Workers paying into Social Security now face an increased payroll tax ceiling. In 2025, income up to $176,100 was subject to the 12.4% payroll tax. According to the SSA, this cap has now been raised to $184,500 for 2026. For self-employed workers who reach this cap, the change could result in up to $1,041.60 in additional payroll taxes. Employees working for an employer could see their share rise by as much as $520.80.
Meanwhile, those who claim benefits before full retirement age are subject to the earnings test, which determines how much they can earn before benefits are partially withheld. In 2026, early filers who haven’t yet reached full retirement age can earn up to $24,480 before facing reductions, an increase from the previous $23,400 limit. Those who will reach retirement age during the year now face a higher threshold of $65,160, up from $62,160.
Other changes include updated criteria for workers with disabilities. Non-blind disabled workers can now earn up to $1,690 per month without losing benefits, while blind individuals may earn up to $2,830. Additionally, the earnings required to earn work credits (a key factor in future eligibility) have risen from $1,810 to $1,890 per credit.
In West Virginia, all Social Security income is now exempt from state taxation following a multi-year phase-out signed into law in 2024. According to the SSA and state records, this change affects more than 476,000 beneficiaries in the state.
