Social Security taxable wage base goes to $184,500 in 2026

Running the numbers is important for everyone, but critical for older folks who rely on Social Security benefits, and the annual cost-of-living increase, to cover much of their living expenses.

In addition to the annual earnings bump, which affects payroll taxes, the Social Security Administration also announced that recipients of federal retiree and disability benefits will get a 2.8 percent bump in their 2026 monthly payments.

There’s some good news for the more than 75 million recipients of Social Security payments.

The Social Security Administration (SSA) today (Oct. 24) announced that these beneficiaries will soon see an increase in their retirement and/or Supplemental Security Income (SSI) payments.

The nearly 71 million retirees who receive monthly Social Security deposits will see a 2.8 percent cost-of-living adjustment (COLA) beginning with their January 2026 benefit deposit. On average, the retirement benefits will increase by about $56 per month starting next year.

Recipients of SSI — this separate government payment goes to nearly 7.5 million qualifying individuals who are 65 or older, blind, or have a qualifying disability, and have limited income and resources — also will see a 2.8 percent in their monthly amounts beginning on Dec. 31, 2025. Some people receive both Social Security and SSI benefits.

The SSA notes that over the last decade, the annual COLA increase has averaged about 3.1 percent. The COLA was 2.5 percent in 2025.

Other inflation offsets increase: The COLA bump was a tad more than anticipated. And it’s a safe bet that no Social Security or SSI recipient will turn down the 2.8 percent hike.

But many who rely primarily on the monthly federal payments say this latest hike is not enough to cover other costs, which have gone up even more.

Housing, either rent or property taxes for homeowners, have increased across much of the United States. Folks on fixed incomes also face challenges from persistently high prices for groceries and utilities.

Then there are health care costs, which older people tend to incur more than the younger population.

Overall expenses for medical services went up 3.9 percent year-over-year in September, according to recently released data from the Bureau of Labor Statistics.

And premiums for Medicare Part B, the government health insurance component that covers medically necessary outpatient treatments and preventive care for older Americans, is expected to increase by more than 11 percent next year.

So, the 2.8 percent Social Security increase likely will not make much of a difference for many.

Earnings limits for early retirees: Difficulty covering growing day-to-day expenses is why some Social Security recipients work, at least part-time.

If you wait until your full retirement age or older to collect Social Security, Uncle Sam generally has no problem with your added income. (There’s some calculating in your first year of retirement, as noted at the end of this section.)

But if you opt to collect Social Security early and still work, you could lose part of your government benefits depending on your earnings.

The good news is that the amount you can earn before your Social Security benefit is reduced is also adjusted for inflation each year.

For 2026, it will increase to $24,480. The SSA will deduct $1 from benefits for each $2 earned over $24,480.

The earnings limit for people reaching their full retirement age in 2026 will increase to $65,160. The SSA will deduct $1 from benefits for each $3 earned over $65,160 until the month the worker hits full retirement age.

Higher wage earners will pay more tax: Then there are the Social Security effects for non-retirees who are making really good money.

These folks are not thrilled with today’s SSA news, which also included an increase in the amount of income subject to the payroll taxes that take a bite out of workers’ income each pay period.

This amount, known as the Social Security wage base, will be $184,500 in 2026. That’s an $8,400 COLA increase from this year’s $176,100 wage base.

Specifically, the wage base increase means a larger amount of earnings will be subject in 2026 to the Social Security retirement portion of the Federal Insurance Contributions Act (FICA) tax.

This 6.2 percent payroll tax is paid, up to the wage base amount, by both workers and employers and goes into the Social Security trust fund, which pays for eventual retiree benefits.

Here are the calculations, both for 2026 and 2025 for comparison purposes, of the practical tax effects of the Social Security wage base on the amount taken out for the federal retirement benefits.

Let’s start with this year, since we’re still paying tax on our 2025 earnings. If you make up to or more than $176,100, your annual Social Security out-of-pocket, or more precisely out-of-paycheck, tax amount will be $10,918. The math calculation is $176,100 X 6.2 percent (and I did round down the 0.20 portion per IRS protocol).

Again, that $10,918 is also paid by your employer.

Next year’s larger Social Security wage base means your earnings up to $184,500 will be subject to a potential maximum FICA tax of $11,439. That math is $184,500 x 6.2 percent. And one more time, your boss pays the $11,439 on your earnings, too.

“Wait,” say tax observant readers of the ol’ blog. “More than 6.2 percent comes out of MY paycheck. What’s the deal?” Y’all are right.

The total payroll tax amount, paid equally by you via withholding from your pay and by your boss, is 7.65 percent. That other 1.45 percent tax covers Medicare, the aforementioned government medical insurance benefit that also costs retirees.

There is no income cap on the Medicare payroll tax component, paid by both employees and employers. So, while the Social Security FICA tax will stop on earnings exceeding $176,100 this year or $184,500 in 2026, Uncle Sam will continue to collect the Medicare payroll tax on all your earnings both years from you and your employer, regardless of how much you make.

ACA add-on: Workers whose six-figure earnings exceed the Social Security wage base get a break on the retirement tax amount.

But the Medicare portion, which is collected on all earnings sans a cap, also could create another issue for high earners. They could face the Medicare surtax.

The Affordable Care Act, aka the ACA or Obamacare, assesses a 0.9 percent additional Medicare tax on employees who, as single taxpayers, earn more than $200,000; more than $250,000 if married filing jointly; or $125,000+ if married filing separately.

Those Medicare surtax earnings limits are not adjusted for inflation. They are set by the health care law. The bottom line is that all of us pay FICA’s Social Security and Medicare taxes on at least some of our income. And the wealthier among us pay 0.9 percent more toward Medicare.

Sort of an inflation adjustment: Although this annual Social Security adjustment sometimes is referred to as an inflation-based increase, the yearly change officially is a cost-of-living, or COLA, amount.

And technically, it is not indexed for inflation.

Instead, each year the SSA uses a specific formula to set the maximum taxable earnings level when a COLA is effective so that Social Security benefits can keep pace with, you guessed it, inflation. And yes, that twisty connection is why I do include the Social Security wage base announcement in the ol’ blog’s annual 10-part tax inflation adjustments series, typically in the post on the Alternative Minimum Tax and other earnings issues (Part 6 this year).

Tax inflation review, preview: In fact, as soon as I post this, I’m going to that AMT etc. post to add in 2026’s Social Security wage base information.

Then it’s on to the series’ Parts 7 through 10. While I make the updates on prior posts, you can check out the table of contents below to find links to earlier segments of the tax inflation series and see what’s to come.

1. 2026 tax rates and income brackets
2. Standard deduction amounts and itemized deduction considerations
3. Credits and deductions, including adoption costs and assistance, Lifetime Learning Credit, Earned Income Tax Credit, educators’ expenses, interest on education loans and transportation fringe benefits
4. Medical-related tax provisions, including contributions to a flexible spending account (FSA), health savings account (HSA), medical savings account (MSA), and eligible and eligible long-term care premiums
5. Capital gains tax income brackets, estate and gift tax limits, kiddie tax, kiddie tax, and nanny tax
6. Alternative Minimum Tax exemption amounts and One Big Beautiful Bill Act changes for 2026, along with the Social Security wage base increase amount and other pay-related taxes
7. International worker tax issues, including foreign income and housing exclusions
8. Retirement (e.g., IRA etc.) and pension plan contribution limits
9. Penalties, for both individuals and tax pros, for things such as failure to file a timely 1040 or certain information returns
10. Standard mileage deduction rates (This is the final component, since the IRS issues these adjustments and later in the year.)

Again, I know all y’all tax geeks want as much tax information as soon as possible. I get it. So, I really appreciate your patience when comes to my extended presentation of the 2026 tax inflation info.

This post also appeared on my Don’t Mess With Taxes Substack.