Every year, Social Security benefits can go up to help older adults keep up with rising prices. This increase is called the Cost-of-Living Adjustment (COLA). Experts now say that Social Security checks may go up by about 2.5% in 2026, based on the latest inflation data. This change would affect about 67 million people who receive these payments.
Below, we break down what this means, how it’s calculated, and what else older adults can expect in the coming year.
What Is the COLA and Why Does It Matter?
The COLA is a yearly increase to Social Security payments. It’s meant to make sure people don’t lose money over time due to inflation. When prices of goods like food, gas, and rent go up, the COLA helps older Americans keep up.
The government announces the COLA every October. In 2024, the increase for 2025 was set at 2.5%. That means monthly payments will go up a little to help cover higher prices.
How Is the COLA Calculated?
The COLA is based on a number called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This number measures how prices change for common items and services over time.
Recently, the CPI-W went up 2.2% over the past year—this is the lowest increase since 2020. Even though prices are still rising, they’re doing so more slowly than before.
Economist Mary Johnson, who studies Social Security and Medicare policies, says the 2.5% COLA is a good estimate for now. But the final number could still change based on future inflation trends.
Could Tariffs Raise the COLA Later?
So far, President Donald Trump’s tariffs—taxes on imported goods—haven’t made a big impact on prices. But experts think that might change soon. If prices start rising faster, the COLA for 2026 could go up even more than expected.
Will There Be Any Tax Breaks for Seniors?
Many older adults had hoped for a tax cut on their Social Security benefits. When Trump ran for president, he promised to stop taxing Social Security payments. But that change is not part of the current tax bill in Congress.
Instead, lawmakers are working on a bill called the One Big Beautiful Bill Act. It doesn’t remove taxes on Social Security, but it does offer some tax relief. The bill could raise the standard tax deduction by $4,000 for people aged 65 and older, depending on their income.
This change would offer modest savings but not the full tax break some were hoping for.
What Happens Next?
The official COLA for 2026 will be announced by the Social Security Administration in October 2025. Until then, the 2.5% estimate is just a prediction. It could go up or down depending on how much prices change in the coming months.
Conclusion
For now, Social Security benefits are likely to increase by about 2.5% in 2026, helping older adults deal with rising prices. The final number depends on how inflation changes in the months ahead.
While there won’t be a big tax break on benefits, some seniors may get a small boost from the new tax bill. Keeping an eye on inflation and upcoming announcements will help people plan better for their future.