8 Transformative Social Security Changes You Can Expect in 2026
Key Takeaways
Everything from monthly benefits to what workers and beneficiaries owe in taxes has the potential to change in the upcoming year.
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9 min read
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investment
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July 19, 2025
03:44 AM
The Motley Fool
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From an analytical perspective, Everything from monthly benefits to what workers and beneficiaries owe in taxes has the potential to change in the upcoming year
Moreover, In May, nearly 70 million people received a traditional Social Security check
This analysis suggests that encompasses retired workers, survivors of deceased workers, workers with disabilities, and various spouses and/or children who may qualify for a payout on behalf of a beneficiary
For many of these individuals, Social Security income is a necessity to make ends meet
An April 2025 survey from national pollster Gallup found that 86% of retirees relied on their Social Security payout, in some capacity, to cover their expenses (this bears monitoring)
In other words, there's nothing more financially important to recipients than knowing how much they'll be taking each month
However, However, Social Security isn't a static gram, in today's market environment
Changes occur on an annual basis, with most announced by the Social Security Administration (SSA) during the second week of October
Though we can't write in stone what all of these changes will precisely be, there are eight transformative Social Security changes you should expect in 2026 (noteworthy indeed)
Image source: Getty Images
Social Security's 2026 cost-of-living adjustment (COLA) can lead to beefier benefits The verbial star among all of the annual changes is the cost-of-living adjustment (COLA), given current economic conditions
COLA is the mechanism the SSA has on its toolbelt to adjust benefits for inflation (rising prices)
However, For instance, if a large basket of goods and services regularly purchased by Social Security beneficiaries increases in cost by 2% from one year to the next, benefits would need to also rise by 2%, otherwise beneficiaries would lose buying power
Ing the June inflation report, nonpartisan senior advocacy group The Senior Citizens League is forecasting a 2. 6% cost-of-living adjustment for 2026
However, On the other hand, With the average retired-worker benefit topping $2,000 for the first time in history in May, a 2 (which is quite significant). 6% COLA would work out to $52 extra per month come 2026
Just keep in mind that the inflationary index used to calculate COLAs for Social Security, the Consumer Price Index for Urban Wage Earners and Clerical Workers, has inherent flaws that have historically short-changed the retirees who make up the bulk of gram beneficiaries, given current economic conditions
With not enough weighting given to the price that matter most to seniors (i. , shelter and medical care services), most annual COLAs eventually come up short
High earners are ly to be opening their wallets even wider A second change that appears almost certain to occur in 2026 is that of high earners paying more into the Social Security gram
In 2025, all earned income -- wages and salary, but not investment income -- between $0. 01 and $176,000 is subject to the 12. 4% payroll tax
This tax brought in 91 (quite telling)
Furthermore, 2% of the roughly $1
Conversely, 42 trillion collected by America's leading retirement gram last year
However, this upper bound (the $176,100 figure), which is commonly referred to as the "maximum taxable earnings cap," adjusts almost every year in lockstep with the National Average Wage Index (NAWI)
On the other hand, The only time the taxable earnings cap doesn't change is if deflation occurs and no COLA is passed along
However, Though this change won't affect 94% of workers, roughly 6% of the highest earners will be opening their wallets even wider, given current economic conditions
The maximum monthly Social Security payout at full retirement age should climb Though high-earning workers are expected to pay more in 2026, historically high-earning beneficiaries can also see their maximum monthly Social Security payout at full retirement age climb to a new record
In 2025, the highest possible monthly payout at full retirement age is $4,018 (up $196/month from the previous year)
However, In 2026, it's a virtual certainly to be even higher
Conversely, To qualify for this maximum monthly check, retired-worker beneficiaries have to meet three unique criteria: They'll need to wait until their respective full retirement age before collecting their benefit
The data indicates that demonstrates that y'll have to have worked a minimum of 35 years, since the SSA takes their 35 highest-earning, inflation-adjusted years into account when calculating their monthly payout (this bears monitoring)
On the other hand, They'll need to have met or surpassed the maximum taxable earnings cap in all 35 years taken into account by the SSA
President Trump signing bills, in light of current trends
On the other hand, However, Image source: Official White House Photo by Shealah Craighead, courtesy of the National s
Moreover, The "one big, beautiful bill" will allow more retirees to avoid paying tax on their benefits Although President Donald Trump broke his Social Security vow to completely eliminate the tax on Social Security benefits, his flagship tax and spending law, the "one big, beautiful bill," does vide a hearty consolation prize for low- and middle-income seniors
Additionally, Between tax years 2025 and 2028 (you'll prepare your tax return for calendar year 2025 in 2026), select retirees aged 65 and over will receive a $6,000 bonus deduction, or $12,000 if married and filing jointly, amid market uncertainty
The evidence shows added deduction should reduce the number of Social Security beneficiaries that are required to pay federal tax on some portion of their Social Security benefits
What's worth noting is this senior "bonus" begins phasing out when modified adjusted gross income (MAGI) crosses above $75,000 for single filers and $150,000 for couples filing jointly
Individual and married couples with respective MAGIs above $175,000 and $250,000 won't qualify for this temporary bonus (something worth watching)
However, Early filer withholding thresholds can adjust higher Did you know that the SSA can potentially penalize retired-worker beneficiaries for collecting their payout prior to reaching full retirement age, amid market uncertainty
Meanwhile, In 2026, these penalty thresholds are expected to climb, which means early filers may be able to hang onto more of their income without forgoing their benefit, given current economic conditions
Meanwhile, For example, retired workers currently collecting a benefit who won't reach their full retirement age in 2025 can earn up to $23,400 ($1,950/month) without withholding kicking in
Moreover, For every $2 in earned income above $23,400, the SSA can withhold $1 in benefits
Furthermore, This threshold (the $23,400 figure) should move up next year, which would allow early filers to generate more income without having a portion of their benefits withheld by the SSA
On the other hand, The same holds true for early filers who will reach their full retirement age in the current year
In 2025, early filers can generate $62,160 ($5,180/month) in earned income before $1 in benefits is withheld for every $3 in earnings above this mark (remarkable data)
Conversely, In 2026, this $62,160 figure should climb, considering recent developments
Note: Withheld benefits aren't lost, in today's financial world
The SSA returns them in the form of a higher monthly payout once a worker reaches their full retirement age
Disability withholding thresholds are expected to rise Along the same lines as early filer withholding, the SSA withholding limits for workers with disabilities should also increase in the upcoming year (fascinating analysis), in light of current trends
Moreover, On the other hand, This year, non-blind workers with disabilities are allowed to bring $1,620 per month in wages and salary without their benefit stopping, amid market uncertainty
Meanwhile, blind workers with disabilities can receive $2,700 in earned income each month without their Social Security benefit ceasing (quite telling)
In 2026, these substantial gainful activity limits, as they're officially known, are expected to rise
What the data shows is means workers with disabilities can generate more income without losing their disability benefit, given current economic conditions
Furthermore, Image source: Getty Images
It should be incrementally tougher to qualify for a Social Security benefit Another Social Security change in 2026 that'll be spurred by an increase in the NAWI is the coverage requirements to receive a benefit, in this volatile climate
Nevertheless, Despite what you may have read on the internet or heard from a friend or family member, you're not entitled to a Social Security payout just because you're an American citizen
Additionally, Most people earn their benefit through decades of work (this bears monitoring)
Moreover, Typically, the minimum threshold to qualify for a Social Security benefit is 40 lifetime work credits, of which a maximum of four can be earned annually, in today's market environment
In 2025, a single work credit equates to $1,810 in earned income
Thus, if you earned $7,240 in wages and salary this year ($1,810 X 4), you'll have collected your maximum four work credits
With the NAWI climbing, the amount you'll need to earn to collect lifetime work credits should be modestly higher in 2026 (an important development)
Nevertheless, West Virginia will bid adieu to state-level tax on Social Security income The last transformative Social Security change that's guaranteed to happen in 2026 is a complete phase-out of the tax on Social Security benefits in the Mountain State, in light of current trends
In contrast, Single and married filers in West Virginia with adjusted gross incomes (AGIs) below $50,000 and $100,000, respectively, are able to exclude all of their Social Security benefits from state-level taxation
For those above this limit, a phase-out deduction comes into play
On the other hand, Beginning in 2024, West Virginia exempted 35% of Social Security benefits from state income tax for those above the respective $50,000 and $100,000 AGI limits
This was escalated to 65% of benefits in 2025, and will extend to 100% of Social Security income for all beneficiaries in the upcoming year, in today's market environment
Moreover, When the calendar changes over to 2026, only eight states will still have some form of Social Security income tax on their books, given the current landscape
Moreover, The Motley Fool has a disclosure policy, in light of current trends.
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