Millions of Americans will see changes to Social Security next year, and beyond higher monthly retirement benefits, more wages will be subject to Social Security taxes. The Social Security Administration announced that benefits will rise 3.6 percent in 2027 under the annual cost-of-living adjustment, or COLA. Meanwhile, the maximum earnings subject to Social Security payroll taxes will rise from $184,500 in 2026 to $192,300 in 2027.
Other Social Security thresholds will also rise, including the amount beneficiaries below full retirement age can earn before some benefits are temporarily withheld. Social Security's yearly changes can affect both retirees' household budgets and how much working Americans pay into the program. The 3.6 percent COLA applies to Social Security and Supplemental Security Income benefits, so nearly 72 million Social Security beneficiaries will receive the increase beginning with benefits payable in January.
Meanwhile, about 7.3 million SSI recipients will receive increased payments beginning December 31, 2026. The largest change for current retirees is the 3.6 percent COLA. SSA calculates the adjustment using changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W.
The agency said the CPI-W increased 3.6 percent from the third quarter of 2025 through the third quarter of 2026. For retired workers, the estimated average monthly Social Security benefit will rise from $2,095 before the adjustment to $2,170 after it, an increase of about $75 per month. At the same time, higher earners could pay more Social Security payroll tax because a larger portion of their wages will fall under the program's taxable maximum.
The maximum amount of earnings subject to Social Security's payroll tax will rise to $192,300 in 2027, up from $184,500 in 2026. Employees pay a 6.2 percent Social Security tax on earnings up to that limit, with employers contributing another 6.2 percent. The Social Security portion is part of the combined 7.65 percent Social Security and Medicare payroll tax employees pay.
That means an employee earning at least $192,300 in Social Security-covered wages could pay up to $11,922.60 in Social Security payroll tax in 2027, compared with $11,439 on the 2026 maximum. Another change will particularly affect Americans who claim retirement benefits before reaching full retirement age but remain in the workforce. In 2027, Social Security beneficiaries under full retirement age for the entire year can earn $25,560 before the retirement earnings test begins withholding some benefits.
Extract — continue reading at the source.
