If you’re one of the roughly 75 million Americans receiving Social Security or Supplemental Security Income (SSI) benefits, you’ve likely noticed your monthly check has changed. The short answer: benefits are periodically adjusted through a cost-of-living adjustment (COLA), and several related thresholds — taxable earnings, the earnings test, and how benefits are taxed — move alongside it.
Here’s a breakdown of the Social Security benefit changes that matter most.
Cost-of-Living Adjustment (COLA)
Nearly 71 million Social Security beneficiaries and roughly 7.5 million SSI recipients receive an annual cost-of-living adjustment, currently set at 2.8%.
In dollar terms, that translates to:
- An average monthly benefit for a retired worker of about $2,071, an increase of roughly $56.
- An average monthly benefit for a couple who both receive benefits of about $3,208.
The Social Security COLA is tied to inflation, so the percentage varies from year to year. The current adjustment is close to the recent 10-year average.
Earnings Subject to Social Security Tax
The maximum amount of earnings subject to Social Security tax — known as the taxable maximum — currently stands at $184,500, up from the prior year’s level.
This change affects only workers who earn above that threshold; everyone else pays the same rate on all their wages. Workers pay 6.2% of earnings up to the taxable maximum into Social Security, plus 1.45% of all earnings into Medicare, for a combined 7.65%. Employers match that amount, bringing the total to 15.3%. Self-employed workers pay the full 15.3% themselves under FICA (the Federal Insurance Contributions Act).
The upside: once your earnings pass the taxable maximum, neither you nor your employer owes Social Security tax on the excess.
How Work Affects Your Benefits
If you’re collecting Social Security benefits before reaching full retirement age (FRA) and you’re still working, your earnings can temporarily reduce your benefit.
Currently:
- Under full retirement age all year: the Social Security Administration deducts $1 in benefits for every $2 earned above $24,480.
- Reaching full retirement age during the current year: the earnings limit rises to $65,160, and $1 is deducted for every $3 earned above that amount, only counting earnings before the month you reach FRA.
- At full retirement age or older for the entire year: there’s no earnings limit at all.
Full retirement age depends on birth year — it’s 66 for people born between 1943 and 1954, and gradually increases by two months per birth year after that until it reaches 67 for anyone born in 1960 or later.
Social Security and Taxes
Whether — and how much — of your Social Security benefit is taxable depends on your combined income (adjusted gross income, plus nontaxable interest, plus half of your Social Security benefits):
- Single filers: combined income between $25,000 and $34,000 may owe tax on up to 50% of benefits; above $34,000, up to 85% may be taxable.
- Joint filers: combined income between $32,000 and $44,000 may owe tax on up to 50% of benefits; above $44,000, up to 85% may be taxable.
These thresholds haven’t been adjusted for inflation in decades, which means more beneficiaries are pulled into taxable territory every year as incomes and COLAs rise.
What’s new: the One Big Beautiful Bill Act (OBBBA) created a temporary $6,000 “senior bonus deduction” for filers age 65 and older ($12,000 for married couples who are both 65+). It doesn’t change the Social Security taxation formula itself, but it can meaningfully reduce or offset the tax many retirees owe — including tax on Social Security benefits. The deduction phases out starting at $75,000 of modified adjusted gross income for single filers ($150,000 for joint filers), and it’s set to expire after a few tax years, so it’s worth checking whether it’s still in effect when you file.
The SECURE Act’s Ongoing Impact
The SECURE Act continues to shape retirement withdrawals for both current and future beneficiaries.
- Required minimum distributions (RMDs) start later. The SECURE Act first pushed the RMD age from 70½ to 72. SECURE 2.0 later raised it further — to 73 for people born between 1951 and 1959, and to 75 for those born in 1960 or later.
- The stretch IRA is gone for most heirs. Under prior law, non-spouse beneficiaries could spread inherited IRA withdrawals over their own lifetime. Now, for most account owners who have since passed away, non-spouse beneficiaries generally must empty the inherited account within 10 years of the owner’s death.
If you’ve inherited — or expect to inherit — a retirement account, it’s worth reviewing how the 10-year rule affects your tax picture.
FAQ: Social Security Changes
What is the current Social Security COLA?
The current cost-of-living adjustment is 2.8%, raising the average retired worker’s benefit to roughly $2,071 per month.
What is the Social Security earnings limit?
Workers under full retirement age can currently earn up to $24,480 before benefits are reduced. Those reaching FRA during the current year can earn up to $65,160 before the reduction applies. There’s no limit once you’re at full retirement age for the full year.
Are Social Security benefits taxable?
Yes, depending on your combined income. Up to 50% of benefits may be taxable above certain thresholds, and up to 85% may be taxable at higher income levels. A temporary senior deduction under the One Big Beautiful Bill Act can reduce this tax burden for many filers age 65 and older, subject to income limits.
What is the Social Security taxable maximum?
The maximum amount of earnings subject to Social Security tax currently stands at $184,500.
Talk Through Your Social Security Strategy
Social Security benefit changes happen regularly, and small shifts in COLA, earnings limits, or taxation rules can affect your broader retirement income plan — especially if you’re weighing when to claim benefits or managing withdrawals from a retirement account.
The team at The Art and Science of Successful Planning, a fee-only fiduciary firm based in Fort Myers, works with retirees throughout Southwest Florida to coordinate Social Security timing with the rest of their financial plan. Reach out today to talk through your options.
