Social Security beneficiaries are set to receive a significant financial boost in 2026, driven by a combination of a new Cost-of-Living Adjustment (COLA) and sweeping tax changes designed to let seniors keep more of their money.
Following the enactment of the “One Big Beautiful Bill Act” (OBBBA) in mid-2025, millions of retirees will see a dual benefit: larger monthly payments and a reduced—or completely eliminated—federal tax bill on those benefits.
Here is a breakdown of the changes bringing bigger checks to bank accounts this year.
1. The 2026 COLA Boost
Starting in January 2026, Social Security checks will increase by 2.8%. This adjustment is designed to help benefits keep pace with inflation.
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Average Increase: For the average retired worker, this translates to roughly $56 more per month, raising the average check from $2,015 to approximately $2,071.
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Married Couples: Couples who both receive benefits will see their average combined payment rise by about $88 per month, to a total of $3,208.
While the 2.8% rise is slightly higher than the 2.5% adjustment seen in 2025, the real story for 2026 lies in how much of that money retirees get to keep, thanks to new tax rules.
2. The Two Major Tax Changes
The headline news for the 2026 tax season (filing for the 2025 tax year) is the introduction of two specific tax adjustments from the OBBBA that effectively exempt Social Security income from federal taxes for millions of seniors.
Change #1: The New “Senior Tax Deduction”
The OBBBA introduced a specific, additional deduction for taxpayers aged 65 and older. This is separate from the standard deduction everyone gets.
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Single Filers: An extra $6,000 deduction.
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Married Filing Jointly: An extra $12,000 deduction (if both spouses are over 65).
This deduction targets the specific income thresholds that previously caused Social Security benefits to become taxable. By shielding this additional chunk of income, the law ensures that the “taxable portion” of Social Security is significantly reduced or wiped out for middle-income retirees.
Change #2: The Enhanced Standard Deduction
In addition to the new senior-specific deduction, the Standard Deduction itself has been increased and adjusted for inflation.
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For the 2025 tax year (filed in 2026), the standard deduction for married couples has risen to $31,500.
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When combined with the existing “additional standard deduction” for seniors (approx. $1,600 per spouse) and the new OBBBA Senior Deduction ($12,000), a married couple over 65 could potentially shield up to $46,700 of income from federal taxes.
The “No Tax” Result
These two changes work together to fulfill the promise of “No Tax on Social Security” for approximately 88% of seniors.
Previously, retirees with a combined income (Adjusted Gross Income + nontaxable interest + 1/2 of Social Security benefits) between $25,000 and $34,000 had to pay taxes on up to 50% of their benefits. Those above $34,000 paid taxes on up to 85% of their benefits.
With the massive increase in total deductions, many seniors who fell into these taxable brackets will now find their taxable income drops below the threshold, meaning they owe $0 in federal taxes on their Social Security checks.
Summary of Impact:
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Bigger Gross Checks: Thanks to the 2.8% COLA.
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Bigger Net Checks: Thanks to the new $6,000/$12,000 Senior Deduction and increased Standard Deduction preventing Uncle Sam from taking a cut.
Beneficiaries should look for their COLA notices in their my Social Security accounts to see their exact new benefit amounts for 2026.
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