In part due to the government shutdown which delayed the release of some important economic data points (including 3rd quarter inflation), the Social Security Administration announcement for the 2026 Cost of Living Adjustment (COLA) was slightly delayed this year until October 24th, 2025. Once it was released, the increase was announced at 2.8%. This is slightly higher than the 2.5% increase recipients saw in 2025. The new COLA will go into effect for Social Security benefits being paid in January of 2026.
For those still working, the COLA increases the amount of earnings that are subject to FICA taxes, which fund both Social Security and Medicare. Employers and employees each pay 7.65% of wages to fund Social Security and Medicare (self-employed individuals pay both the employer and employee share). The 2026 COLA will increase the maximum amount of wages subject to the 6.2% portion of the FICA tax that funds Social Security from $176,100 in 2025 to $184,500 in 2026.
The remaining 1.45% of the FICA tax is used to fund Medicare and applies to all earnings, even those above the Social Security limit of $184,500. Married couples filing jointly who make in excess of $250,000 and individuals who earn more than $200,000 pay an additional 0.9% in Medicare taxes- this is the same as in 2024 and 2025.
The Social Security Administration estimates that the new COLA will increase the average retirement benefit by approximately $56, from $2,015 per month up to $2,071 per month. The maximum retirement benefit for someone who retires at “full” retirement age in 2026 will increase from $4,018 per month to $4,152 per month.
As for Medicare Part B premiums, they will increase from $185.00 per month to $202.90 per month, or $17.90 more per month. This equates to an increase of approximately 9.7%.
If you have any questions regarding the impact to your unique situation regarding the new 2026 Social Security Cost of Living Adjustment, or the increase in Medicare Part B premiums, please feel free to contact our office. We always stand ready to help our trusted clients and friends as we all “Move Life Forward” together.
© 2025 Nathan Ollish
Senior Financial Advisor
Related Content
Securities and advisory services offered through Cetera Advisors LLC, member FINRA, SIPC, a broker/dealer and a registered investment adviser. Cetera is under separate ownership from any other named entity. For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisors LLC nor any of its representatives may give legal or tax advice.
Featured Blog Image Source: iStock.com/bagira22