As reported by AARP, both Social Security and Medicare saw important changes starting January 1, 2026. These updates affect monthly benefits, premiums, taxes, and eligibility rules—making 2026 a critical year for retirees, near-retirees, and working seniors to review their finances.
Below is a clear breakdown of the six biggest Social Security and Medicare changes in 2026, and what they mean for you.
1. Social Security Cost-of-Living Adjustment (COLA) Increases to 2.8%
Thanks to rising inflation, Social Security beneficiaries received a 2.8% COLA for 2026, up from 2.5% in 2025.
What this means:
The average monthly retirement benefit increases by about $56 Average benefit rises from $2,015 to $2,071 per month Applies to Social Security retirement and Supplemental Security Income (SSI)
This adjustment helps benefits keep pace with higher everyday costs like groceries, housing, and healthcare.
2. Medicare Premiums and Deductibles Rise Sharply
Medicare enrollees are seeing noticeable increases in 2026, especially for Part B.
Key Medicare changes for 2026:
Medicare Part B monthly premium: $202.90 (up from $185 in 2025) Part B annual deductible: $283 (up from $257) Medicare Part A inpatient deductible: $1,736 (up from $1,676)
These increases mean higher out-of-pocket healthcare costs for many retirees, making budgeting and supplemental coverage more important than ever.
3. Social Security Tax Cap Increases to $184,500
Social Security payroll taxes remain 12.4% total:
6.2% paid by employees 6.2% paid by employers (Self-employed workers pay the full amount)
What’s new in 2026:
Maximum taxable earnings increase to $184,500 Up from $176,100 in 2025
Higher-income workers will pay Social Security taxes on more of their earnings this year.
4. New Tax Relief for Adults 65 and Older
A major win for seniors in 2026 is a new federal tax deduction for people age 65+, backed by AARP and passed as part of the One Big Beautiful Bill Act in July.
Tax relief details:
Up to $6,000 deduction for eligible individuals Up to $12,000 for married couples Phased out for: Individuals earning over $175,000 Couples earning over $250,000
This change could significantly reduce taxable income for middle- and upper-middle-income retirees.
5. Social Security Earnings Test Threshold Increases
If you collect Social Security before reaching full retirement age (FRA) and continue working, the earnings test still applies.
2026 earnings test rules:
$1 withheld for every $2 earned over $24,480 Threshold increased from $23,400 in 2025 Applies only to beneficiaries under FRA (currently between ages 66 and 67)
Once you reach full retirement age, this earnings limit no longer applies.
6. Higher Earnings Required to Earn Social Security Credits
To qualify for Social Security retirement benefits, workers still need 40 lifetime credits. However, the earnings threshold to earn those credits is higher in 2026.
New credit requirement:
Earn $1,890 per quarter to receive one Social Security credit Up from $1,810 per quarter in 2025 Maximum of four credits per year
This change mainly affects part-time workers and those with fluctuating incomes.
What These 2026 Changes Mean for You
The 2026 updates to Social Security and Medicare bring a mix of higher benefits, higher costs, and new tax relief. While the COLA increase and senior tax deduction offer welcome support, rising Medicare premiums and taxes mean careful financial planning is more important than ever.
Key takeaways:
Retirees get higher monthly Social Security checks Medicare costs continue to climb Working seniors face higher tax caps but better earnings limits Older Americans may benefit from new federal tax deductions
Final Tip
If you’re nearing retirement or already receiving benefits, now is a smart time to:
Review your monthly budget Revisit Medicare coverage options Talk with a tax or financial advisor
Staying informed ensures you get the most out of your Social Security and Medicare benefits in 2026 and beyond.
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