Article Summary: Social Security benefits will rise 2.8% in 2026, lifting the average monthly check to about $2,071.
-But many retirees will barely feel the bump. Medicare Part A and Part B premiums and deductibles are climbing faster than benefits, and inflation still pressures household budgets.
Social Security Check. Image Credit: Creative Commons.
-Despite campaign rhetoric, Social Security is not tax-free; a new “senior bonus” deduction up to $6,000 per person through 2028 only helps lower- and middle-income retirees.
-Paper checks are ending as SSA goes fully electronic. Meanwhile, the trust fund faces possible benefit cuts by 2033–34 unless Congress enacts long-term fixes.
Social Security in 2026: Why Your Raise Will Feel Smaller Than You Think
The Social Security Administration last month announced that the annual COLA (cost-of-living adjustment) for the program in 2026 will be 2.8 percent, effective January 2026. The COLA for 2025 had been 2.5 percent.
COLA is pegged to inflation, so it was very high in 2022 and 2023, when the increases were 5.9 percent and 8.7 percent, respectively.
The average payment for a retired worker will rise by about $56 per month, from $2,015 to $2,071, according to an SSA fact sheet. However, there are a wide variety of factors that could affect how much Social Security recipients actually receive per month, from marital status to whether the recipient is widowed to whether they collect disability.
How much this helps retirees, however, is a whole other question.
The AARP, citing a survey of its members from earlier this year, found that “77 percent of older adults said a 3 percent COLA for 2026 would not be enough to help them keep up with rising prices.”
Indeed, costs of other things are rising as well, including other government programs.
Medicare Costs Go Up
The Centers for Medicare & Medicaid Services announced on November 14 that Medicare premiums will increase in 2026 at a rate higher than the rate of Social Security benefits.
“The Medicare Part A inpatient hospital deductible that beneficiaries pay if admitted to the hospital will be $1,736 in 2026, an increase of $60 from $1,676 in 2025,” the announcement said.
“The standard monthly premium for Medicare Part B enrollees will be $202.90 for 2026, an increase of $17.90 from $185.00 in 2025. The annual deductible for all Medicare Part B beneficiaries will be $283 in 2026, an increase of $26 from the annual deductible of $257 in 2025.”
On top of that, inflation, while not as high as it was a few years ago, is not exactly a thing of the past, which makes it even more likely that some recipients won’t notice a big change in their income.
What About “No Taxes on Social Security”
While running in 2024, President Donald Trump had promised to eliminate taxes on Social Security. Once the “One Big Beautiful Bill” passed this summer, the president bragged about having delivered on that promise. But the reality is not quite so simple.
“The bill ensures that nearly 90% of Social Security beneficiaries will no longer pay federal income taxes on their benefits, providing meaningful and immediate relief to seniors who have spent a lifetime contributing to our nation’s economy,” the Social Security Administration said in an announcement, sent to beneficiaries, on the eve of the bill’s passage in July.
But as reported in an analysis this July by the Detroit Free Press, there is no provision in the new law that makes Social Security benefits tax-free. The analysis also states that the language describing this has changed on the agency’s website.
In reality, the new law added a “senior bonus” deduction of $6,000 for taxpayers aged 65 or older, for each of the next four years. But that is not anything resembling a blanket elimination of taxes on Social Security.
Jackson Hewitt Tax Services, which is in the business of helping people file their taxes, also clarified how things will work.
“Social Security benefits are still taxed under current tax law and considered a part of a recipient’s taxable income. However, the 2025 Tax Act (One Big Beautiful Bill Act) introduced a temporary deduction that allows eligible beneficiaries to lower their overall taxable income and reduce their tax,” the website says.
“The new senior deduction allows eligible seniors and their spouses who are 65 or older to deduct up to $6,000 each from their taxable income for tax years 2025 through 2028. There are adjusted gross income limits to this deduction. It is only available to single filers making less than $75,000 or couples making less than $150,000.”
Going Paperless
Back in July, the Social Security Administration announced that it was transitioning fully to electronic payments and doing away with paper checks. It’s the last part of a transition that’s been in the making for several years across other parts of the government, which officially stopped issuing any paper checks at the end of September.
“This change is part of a broader government-wide initiative to modernize payment systems and enhance service delivery,” SSA said in its statement. “By moving to electronic payments exclusively, we aim to improve efficiency, security, and ensure beneficiaries receive their monthly benefits promptly.”
Heading into this year, SSA said, less than one percent of Social Security beneficiaries were still receiving paper checks. Such beneficiaries are urged to switch to Direct Deposit or a Direct Express card.
90 Years, and an Uncertain Future
Social Security, which dates back to the New Deal, marked its 90th anniversary earlier this year. But the program faces an uncertain future, with the central trust fund expected to run out of the ability to pay full benefits at some time in the mid-2030s, barring Congressional action.
Per CNBC, the latest government report indicates that calamity could occur in 2033 or 2034.
“Starting in 2033 — two years before its 100th anniversary — the program may only be able to pay 77% of scheduled benefits for retirees, their families and survivors, Social Security’s trustees projected in an annual report released in June,” the report in August said. “However, should those funds be combined with Social Security’s trust fund for disability benefits, as has happened in prior emergencies, payments may be cut one year later, in 2034. At that point, 81% of scheduled benefits would be payable, Social Security’s trustees project.”
So what could happen to prevent that?
This July, Sen. Bill Cassidy (R-LA) and Sen. Tim Kaine (D-VA) introduced a bipartisan plan to shore up the future of Social Security.
“We propose creating an additional investment fund — in parallel to the trust fund, not replacing it — that would be invested in stocks, bonds, and other investments that generate a higher rate of return, helping keep the program from running dry,” the senators wrote in a Washington Post op-ed.
About the Author: Stephen Silver
Stephen Silver is an award-winning journalist, essayist, and film critic, and contributor to the Philadelphia Inquirer, the Jewish Telegraphic Agency, Broad Street Review, and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. For over a decade, Stephen has authored thousands of articles that focus on politics, national security, technology, and the economy. Follow him on X (formerly Twitter) at @StephenSilver, and subscribe to his Substack newsletter.
