Retirement Social Security

We're Just 1 Month Away From These 5 Major Social Security Changes

Five upcoming Social Security and Medicare changes that could shift your budget.

By David Maina, CPA , Edited by Laura Hohenstein

Updated Nov. 24, 2025

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January 2026 is almost here, and a new set of Social Security and Medicare changes is about to take effect. These updates arrive every year, but many retirees underestimate how much they can shift a monthly budget.

Some changes affect monthly checks, others touch taxes or healthcare costs, and a few simply reset long-standing limits. Taken together, these updates can influence how far your checks stretch and what you can do to maximize your senior benefits in the year ahead.

Here's a clear look at the five updates coming in January, and what each one means for you.

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Bigger checks from the 2.8% COLA (Cost-of-Living Adjustment)

About 71 million Social Security recipients will see their benefits rise by 2.8% in 2026. This adjustment is tied to inflation and sets the new baseline for monthly checks. For the average retired worker, the raise comes to about $56, increasing the typical benefit from roughly $2,015 to $2,071.

Supplemental Security Income (SSI) payments rise by the same percentage. An individual's benefit increases from $967 to $994, and a couple's benefit moves from $1,450 to $1,491.

Still, most retirees know the raise won't erase the pressure of rising prices. Food, housing, and medical costs have climbed sharply in recent years, and some of that extra money will likely be pulled back by higher Medicare premiums.

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Higher Medicare premiums

For most retirees, a portion of every Social Security check goes straight to Medicare, and in 2026, that deduction gets larger.

The biggest jump comes from Medicare Part B, which covers doctor visits and outpatient care. The standard Part B premium rises to $202.90 per month, up from $185.00 in 2025.

Because the SSA subtracts this premium before your check even hits your account, your take-home benefit may feel smaller than the COLA headlines suggest.

Part A (hospital coverage) also gets more expensive for people who pay for it. The full monthly premium increases to $565, and the hospital deductible moves to $1,736. These changes don't apply to most retirees, but they matter for anyone without enough work credits for premium-free Part A.

Earnings Test goes up

If you're still working and collecting Social Security before full retirement age (FRA), you need to pay attention to the earnings test. In 2026, those thresholds rise in line with wages.

Specifically, if you have not yet reached your FRA, you can earn up to $24,480 a year, about $2,040 per month, without any benefit reduction.

If you go above that limit, Social Security withholds $1 for every $2 you earn over the line. So if you earn $40,000, the SSA counts $15,520 as excess income and withholds $7,760 in benefits.

If you'll reach FRA in 2026, the rules ease up. The limit jumps to $65,160, and the withholding rate improves to $1 for every $3 earned above that amount.

Once you reach FRA, the earnings test ends. You can earn any amount for the rest of the year with no reduction, and Social Security will later adjust your benefit to credit back what was withheld.

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Payroll tax ceiling increases

In 2026, the maximum amount of income subject to Social Security's 6.2% payroll tax rises to $184,500, up from $176,100 in 2025. Once your wages pass that number, you stop paying the 6.2% OASDI tax for the rest of the year.

Most retirees won't feel this change directly, but it matters if you're still working or if you have a spouse with a high salary.

The higher ceiling means a larger tax bill on the first $184,500 of wages. At the new limit, the total Social Security tax comes to about $11,439 for someone earning at the cap.

In summary, higher earners will pay a bit more in Social Security payroll taxes next year, but retirees won't feel any direct impact.

New senior deduction

A new federal tax deduction for older taxpayers goes into effect next year, allowing anyone 65 or older to subtract up to $6,000 from their taxable income. For many retirees, this could sharply reduce, or even eliminate, the federal taxes they owe on Social Security.

The deduction is income-based:

Single filers with up to $75,000 MAGI (modified adjusted gross income) can take the full $6,000.
Married couples filing jointly can take the full amount up to $150,000 MAGI.
Partial deductions apply up to $175,000 (single) and $250,000 (joint).

Because federal taxes on Social Security benefits flow into the program's trust funds, the new deduction will reduce SSA tax revenue significantly in the coming years.

But for retirees, the immediate effect is positive. Your tax bill may shrink, and in some cases, you might owe nothing on your benefits at all.

Bottom line

As January approaches, the changes coming to Social Security and Medicare may feel small, but they can still influence your monthly budget in ways that matter. It's understandable to feel uneasy when so much of your income depends on rules you don't control.

Taking a few minutes now to understand what's shifting can help you stay prepared and avoid money mistakes when the new year begins.

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