3 Social Security Changes Coming in January 2026: What You Need to Know.

Yahoo

19 hours ago

Key Points
Social Security beneficiaries will likely receive a "raise" in 2026.
The Social Security full retirement age will officially be higher beginning next year.
Workers could have to pay more Social Security taxes on their earnings in 2026, too.
The $23,760 Social Security bonus most retirees completely overlook ›
Bob Dylan was 23 years old when he wrote "The Times They Are a-Changin'." Social Security was probably the last thing on his mind. Today, though, Dylan is 84. He has been eligible to receive Social Security benefits for years, and the title of his song from the 1960s applies to the popular federal program.
Three Social Security changes are coming in January 2026. Here's what you (and perhaps Dylan) need to know.
1. A cost-of-living adjustment
Probably the one change that every Social Security beneficiary looks forward to each year is the annual cost-of-living adjustment (COLA). The Social Security Administration will announce the 2026 COLA in mid-October of this year.
It's theoretically possible that there won't be a COLA. That can happen if the average Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of the current year is equal to or lower than the average CPI-W for the third quarter of the previous year. This has occurred three times since 2009.
However, I think the chances of no COLA in 2026 are very low. The Senior Citizens League, a nonprofit organization that advocates for seniors, projects that next year's benefit increase will be 2.6% based on the latest data. This would be slightly above the 2.5% COLA received in 2025.
2. The full retirement age will officially be 67
One Social Security change next year that has been a while in the making is that the full retirement age (FRA) will officially be set at 67. For a long time, the FRA was 65. However, legislation passed in 1983 gradually increased the retirement age to 67 for anyone born in 1960 or later. As of the beginning of 2026, the period of gradual increases will be complete.
Note, though, that the early retirement age will remain 62 for everyone. Also, the age for obtaining the maximum Social Security retirement benefit will still be 70.
3. Higher maximum taxable earnings
Another likely Social Security change that could take effect in January is a higher limit on maximum taxable earnings. This change applies to working Americans rather than retirees.
The maximum taxable earnings (also called the contribution and benefit base) is the maximum amount of annual earnings subject to FICA taxes used to fund Social Security. By the way, there is no maximum taxable earnings for the portion of FICA taxes that fund Medicare.
Note that I used the word "likely" to describe this change. The maximum taxable earnings limit is set based on the national average wage index. It's possible that this index won't change from year to year. For example, the average wage index -- and therefore the maximum taxable earnings -- remained the same in 2009, 2010, and 2011, and in 2015 and 2016.
However, I suspect the chances are greater than not that we'll see higher maximum taxable earnings next year. The limit is $176,100 for 2025. The latest projection is that the threshold will increase to $183,600 next year.
One other key change that will affect many retirees
One change that will be felt by many retirees isn't a Social Security change per se. The One, Big, Beautiful Bill narrowly passed by Congress and signed into law by President Donald Trump included a new additional standard deduction for Americans 65 and up.
This deduction can be up to $6,000 for an individual taxpayer and up to $12,000 for married senior couples filing jointly. The White House said that 88% of seniors receiving Social Security retirement benefits won't have to pay taxes on their benefits as a result of this so-called "senior bonus."
There are two caveats with this change, though. First, it's temporary. The senior bonus will only be available through 2028. Second, not everyone will receive the higher standard deduction. It begins to phase out for single filers with modified adjusted gross income (MAGI) of $75,000, and $150,000 for married couples filing jointly.
Specifically, the $6,000 per-person tax deduction is reduced by 6 percent of the amount of MAGI that exceeds the income limits. Single filers with MAGI above $175,000 and married couples filing jointly with MAGI above $250,000 won't receive the senior bonus at all.
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3 Social Security Changes Coming in January 2026: What You Need to Know. was originally published by The Motley Fool