Key Points
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The Social Security Administration will announce several changes on Oct. 24, including a historic cost-of-living adjustment (COLA).
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The retirement earnings test amount will increase, so beneficiaries under full retirement age can earn more income before benefits are withheld next year.
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The maximum taxable earnings limit will increase, meaning workers with incomes above the limit will see more FICA taxes withheld from their paychecks.
The federal government shutdown has dragged on for three weeks, and there’s still no end in sight. Even so, the Social Security Administration plans to make a big announcement on Oct. 24.
Retired workers and other recipients will learn about several big changes that will impact benefits next year, including a historic cost-of-living adjustment (COLA). Here are the important details.
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1. Social Security benefits will get a historic cost-of-living adjustment (COLA) in 2026
The buying power of Social Security benefits is protected from inflation by annual cost-of-living adjustments (COLAs). In other words, retired workers and other beneficiaries get a small raise each year to help them keep up with rising prices across the economy.
The precise size of the COLA in any given year depends on how the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) changed in the third quarter (July to September) of the previous year. For example, Social Security benefits received a 2.5% COLA in 2025 because the CPI-W increased 2.5% in the third quarter of 2024.
The Social Security Administration needs September CPI data before it can calculate the 2026 COLA. Despite the government shutdown, the Bureau of Labor Statistics is working to compile that information and plans to publish the report on Oct. 24 at 8:30 a.m. ET. The Social Security Administration will announce the official 2026 COLA shortly thereafter.
Beneficiaries are likely to get a historic pay raise. The latest forecasts put the 2026 COLA at 2.7% or 2.8%, marking the fifth straight year in which benefits have increased at least 2.5%. That last happened in the early 1990s. Moreover, whether the COLA is 2.7% or 2.8%, the five-year average will increase to 4.6%, the highest level since 1985.
2. Social Security’s retirement earnings test amounts will increase in 2026
Workers can claim retirement benefits as early as age 62, but anyone who begins receiving Social Security before full retirement age (FRA) will have benefits withheld if their income exceeds the relevant retirement earnings test (RET) amounts. Here’s how it works:
There are two RET limits. There’s a smaller amount that applies to beneficiaries who will not reach FRA during the year, and a larger amount that applies to beneficiaries who will reach FRA during the year.
- Smaller RET limit: The smaller amount is $23,400 in 2025. Beneficiaries who will not reach FRA this year will have $1 in benefits temporarily withheld for every $2 in earnings above the limit.
- Larger RET limit: The larger amount is $62,160 in 2025. Beneficiaries who will reach FRA this year will have $1 in benefits temporarily withheld for every $3 in earnings above the limit.
The RET amounts typically increase each year because they are based on average wages. The Social Security Board of Trustees estimates the RET limits will be $24,360 and $64,800 in 2026. Any benefits withheld are gradually repaid once a worker reaches FRA.
3. Social Security’s maximum taxable earnings limit will increase in 2026
Social Security is primarily funded by a payroll tax, whereby workers and their employers each contribute 6.2% of wages for a collective total of 12.4%. However, the payroll tax can only be applied to any income below the maximum taxable earnings limit, which tends to increase each year due to changes in the average wage.
The maximum taxable earnings limit is $176,100 in 2025. Any income above that level is not subject to Social Security’s payroll tax. That means someone who earns $180,000 this year will pay the exact same amount as someone who earns $1.8 million. The Social Security Board of Trustees estimates the maximum taxable earnings limit will be $183,600 in 2026.
Put differently, a little more income will be subject to Social Security’s payroll tax next year, which means some workers will see more FICA taxes withheld from their paychecks. For instance, assuming the trustees’ forecast is correct, workers with income above the taxable earnings limit in each of the last two years will owe an extra $465 in taxes in 2026.
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