Few changes have been made to Social Security in 2026. Despite dire clickbait headlines warning that the Social Security Trust Fund is in imminent danger of collapse, Social Security payments are projected to be fully funded through the last quarter of 2032. Until this year, the Trust Fund was not expected to be depleted until the first quarter of 2033, but provisions of the law formerly known as the One Big Beautiful Bill will likely accelerate the depletion.
Most political analysts expect Congress to take action to avoid benefit reductions that would result from depletion of the Trust Fund. Congress can easily fix the problem by raising the maximum limit of income to which payroll taxes apply, assuring that high-income workers pay their fair share to fund Social Security. To do otherwise would be political suicide for members of Congress, given that people over 65 are the largest voting bloc and the most likely to vote. In 2026, the maximum income subject to Social Security payroll taxes will be $184,500.
COLA Increase
The most significant change to Social Security in 2026 is one that occurs every year: the cost-of-living adjustment (COLA) to Social Security benefits. The COLA is tied to the inflation rate, a reality that forced the Bureau of Labor Statistics to recall workers during the government shutdown so it could calculate the Consumer Price Index upon which the COLA is based.
In November, the Social Security Administration (SSA) announced that the COLA would increase benefits by 2.8%. Social Security recipients will see an increase in their monthly payments beginning in January 2026.
The COLA will give an average Social Security recipient another $56 per month. According to the SSA, the average widow or widower living alone in 2025 received a Social Security benefit of $1,867. That average monthly benefit will increase to $1,919 in 2026.
Medicare Premium and Deductible Increase
Unfortunately, while the Social Security benefit increases to keep pace with inflation, the cost of medical care has been rising faster than the Consumer Price Index. PricewaterhouseCooper expects healthcare costs to increase by 8.5% in 2026.
The rising cost of medical care is reflected in the increased Medicare premium that Medicare recipients will bear. The Medicare premium for Part B coverage is automatically deducted from Social Security benefits for those who receive them. The monthly premium will be $202.90 in 2026, a 9.7% increase from the $185.00 premium in 2025. The annual deductible that Medicare recipients must pay before receiving any benefits will be $283 in 2026, an increase from $257 in 2025.
Income Tax Deduction
While not directly affecting Social Security or Medicare, a tax deduction for people 65 or older might offset some or all of the Medicare premium increase for some taxpayers. The full $6,000 deduction applies to senior taxpayers who do not itemize deductions and who have an adjusted gross income of $75,000 or less (or married couples with an adjusted gross income of $150,000 or less). The deduction is scheduled to expire after the 2028 tax year.
Taxation of Social Security Benefits
Social Security benefits are subject to income taxation if the taxpayer’s “combined income” (consisting of adjusted gross income plus tax-exempt interest income plus one-half of Social Security benefits) is $25,000 or more ($32,000 for married taxpayers who file jointly). The portion of Social Security benefits that are taxed ranges from 50% to 85%, depending on taxpayer income and filing status.
Social Security recipients with online accounts received an email from SSA boasting that “nearly 90% of Social Security beneficiaries will no longer pay federal income taxes on their benefits” because of the budget reconciliation law formerly known as the One Big Beautiful Bill. In fact, the reconciliation act did not change the taxation of Social Security benefits, notwithstanding campaign promises to eliminate taxes on Social Security.
The SSA based its emailed claim on the new $6,000 deduction. Just as the temporary deduction might or might not offset increased Medicare premiums, it might or might not offset taxation of Social Security benefits. Again, the deduction applies only to taxpayers who take a standard deduction and do not exceed the applicable income threshold.