Social Security numbers are moving again, and for 2026 the changes hit both workers’ paychecks and retirees’ benefits in quiet but very real ways. Higher caps, higher thresholds, and tighter math are about to reshape how much money flows into and out of the system.
The updates are not cosmetic. They affect payroll taxes, earnings limits, and what retirees can earn without losing part of their monthly checks. For many households, the difference will only show up after January, when the first statements land and the new figures start to bite.
Social Security
For people still working, the most immediate change is the higher earnings cap subject to the Social Security payroll tax. In 2026, the 6.2 percent tax will apply to wages up to $184,500, up from $176,100. Everything earned above that line is not taxed for Social Security purposes.
This matters especially for federal employees under FERS. Once earnings cross the new cap, the Social Security deduction stops, and only the civil service retirement contribution continues. Depending on the hiring date, that rate is 0.8, 3.1, or 4.4 percent, and nothing more. Employees under CSRS Offset see a different effect. They still contribute a combined 7 percent overall, but once the cap is reached, the full amount goes into the federal retirement fund instead of Social Security. Those in “pure” CSRS remain outside the Social Security payroll tax altogether.
For retirees already receiving Social Security, the earnings test is also changing. Beneficiaries between age 62 and full retirement age will be allowed to earn $24,480 in 2026 before reductions apply, up from $23,400. Above that limit, the rule stays the same: one dollar in benefits is withheld for every two dollars earned through work or self-employment.
A separate, and often misunderstood, rule applies in the year someone reaches full retirement age. In the months before hitting that age, benefits are reduced by one dollar for every three dollars earned above $65,160, an increase from $62,160. Once full retirement age is reached, the earnings limit disappears completely.
Why these thresholds matter more than they look
These figures rarely make headlines, but they shape decisions about part-time work, delayed retirement, and even whether to keep a consulting contract alive for another year. Small adjustments can mean thousands of dollars over time, especially for people right near the cutoff lines. Many retirees assume earnings limits are fixed or outdated. They are not. They change almost every year, and missing that update can lead to unexpected benefit reductions that only become visible months later.
Medicare
Alongside Social Security, Medicare costs are also rising in 2026. The standard Part B premium will be $202.90 per month for most enrollees, covering physician services and outpatient care. That is the base figure, before any income-related adjustments.
Higher-income beneficiaries will pay more. For single filers earning above $109,000 and joint filers above $218,000, monthly surcharges apply, reaching up to an additional $487 per month at the highest income levels.
The Part B annual deductible is increasing as well, from $257 to $283, meaning beneficiaries will pay more out of pocket before coverage fully kicks in.
Hospital coverage under Part A is also getting more expensive. The deductible will rise to $1,736, with higher daily coinsurance amounts for extended hospital stays. From day 61 to day 90 of a benefit period, the cost will be $434 per day, and beyond day 90 it climbs to $868 per day.
Prescription drug coverage under Part D remains more complex. Premiums will average around $35, though actual costs vary by plan. Higher-income retirees may also face surcharges of up to $91. Many federal retirees, however, avoid Part D altogether because prescription coverage is already included in their FEHB plans.