U.S. Social Security will experience important changes this month of January. These changes will affect millions of people, including retirees, workers about to retire, and people who keep working while receiving benefits. There will be increments on monthly payments, new income limits, tax changes, and new rules for those working while receiving Social Security benefits. So, let’s find out more about all these changes, shall we?
General increment on Social Security payments
One of the main changes for this year is the increment of the 2.8% on Social Security benefits. This increment is called cost of living adjustment (COLA) and its goal is to help people face inflation, which is the increment of prices of basic things like food, rent, and transport.
Around 75 million Americans will receive this increment. It will be applied for both Social Security benefits for retirement and Supplemental Security Income (SSI). The idea is that the money people receive doesn’t lose value with the passage of time.
Even though this increment is a bit higher than the average in the last 25 years, which was 2.6%, many elderly people consider it’s not enough to cover all their expenses.
More income will be taxed for Social Security
Another relevant change in 2026 affects people who still work. The Social Security Administration increased the maximum amount of income subject to Social Security taxes: in 2025, the limit was $176,100; and in 2026, the limit increases to $184,500.
This means that employees will pay 6.2% in Social Security taxes on their income up to this new limit. Employers will also contribute an additional 6.2%. As a result, workers with higher incomes will see larger deductions from their paychecks.
New limits to work and receive Social Security
Many people start receiving Social Security benefits before reaching the full retirement age. In 2026, the rules to work while receiving benefits change a bit:
- For those who start receiving benefits at 62 years old: in 2026 they could earn up to $24,480 per year without losing any benefits. This is an increase compared to the previous year. If they earn more than this amount, Social Security will withhold $1 in benefits for every $2 earned above the limit.
- For those reaching the full retirement age in 2026: people reaching the full retirement age (a bit earlier of turning 67 years old) will have a higher income limit: $65,160 up from $62,160 in 2025. Above this amount, Social Security will withhold $1 for every $3 earned.
It is important to know that this withheld money is not lost forever. It is later returned in the form of higher monthly payments once the person reaches full retirement age. However, claiming benefits early still results in lower monthly payments for life.
Work credits are harder to get
To qualify for Social Security you need 40 work credits, which equals about 10 years working. The amount of the monthly benefit is calculated using the 35 years with the highest income.
In 2026, the income to obtain one work credit will increase from $1,810 to $1,890. This means a person must earn at least $7,560 per year to earn the maximum four credits for that year. This change may make it more difficult for people who work part-time or earn lower wages to qualify for Social Security benefits.
Key changes for retirees
Even though the 2.8% increment is slightly higher than the historic average, many elderly people don’t feel it covers their basic needs. According to the AARP, 77% of elderly people think that even a 3% increment wouldn’t be enough.
What’s more, a new provision from the One Big Beautiful Bill allows people aged 65 and older to reduce or offset taxes on their Social Security income by up to $6,000, if they meet certain requirements.
However, healthcare costs are also rising. The standard Medicare Part B premium will increase by 9.7%, reaching $202.90 per month starting in January 2026. This means higher out-of-pocket medical costs for many retirees.
So…
These updates create a mixed situation for millions of Americans. While Social Security payments are increasing, so are expenses and financial responsibilities. Understanding these changes can help individuals better prepare for the future and make informed decisions about retirement, work, and income planning.