Social Security beneficiaries will face several key changes in 2026, including a cost-of-living adjustment, revised rules on earnings, and an increase in the maximum taxable earnings limit. These updates, outlined by AARP, are expected to impact how much retirees receive and how much workers contribute to the program.

Cost-of-Living Adjustment and Medicare Premiums

The Social Security Administration has announced a 2.8% cost-of-living adjustment (COLA) for 2026, which will increase monthly benefits for most retirees. For the average retired worker, this translates to about $56 more per month or approximately $672 more annually, according to Nancy LeaMond, chief advocacy and engagement officer at AARP.

However, the actual increase retirees receive will be reduced by the rising Medicare Part B premium, which is automatically deducted from most beneficiaries’ payments. The standard Medicare Part B premium has increased by about $21 per month in 2026. As a result, the net benefit increase for the average retiree is around $35 per month.

Despite this reduction, the 2.8% COLA still provides crucial inflation protection for retirees who rely heavily on Social Security. This adjustment helps ensure that their retirement income keeps up with the rising cost of living.

Retirement Earnings Test Adjustments

The Social Security Administration has also updated the retirement earnings test, which affects how benefits are calculated for those who begin collecting payments before reaching their full retirement age and are still working.

Under the revised rules, the earnings threshold for 2026 has increased by $1,080 to around $24,480. This means retirees can now earn more without experiencing a reduction in their benefits. If they do exceed this threshold, they will still receive their benefits back in the form of higher monthly payments once they reach their full retirement age.

“You’ll get it back in the form of higher monthly benefits after you reach your full retirement age,” LeaMond said. “And once you reach your full retirement age, the retirement earnings test goes away. At that point, there are no limits and no deductions.”

This change provides more flexibility for older workers, especially those earning part-time income, to continue working without facing as much of a financial penalty.

Maximum Taxable Earnings Increase

The third key change for 2026 involves the maximum taxable earnings limit, which determines how much of a worker’s income is subject to Social Security taxes. In 2026, this limit has increased by $8,400 to $184,500.

“Once you’ve earned that amount, you stop paying Social Security taxes for the rest of the year,” LeaMond said. This increase brings more revenue into the Social Security system, helping to maintain the program’s funding for the future.

While this change primarily affects higher-income earners, it is part of broader efforts to ensure the long-term sustainability of the Social Security program for all beneficiaries. The increased taxable maximum allows more workers to contribute to the program, which in turn helps support retirees and future beneficiaries.

AARP emphasized the importance of understanding these changes for retirees and those preparing to claim benefits. These updates can help individuals better plan their finances for 2026 and beyond.