Social Security Is Rising 3.6% in 2027: What It Means for Your Taxes

On October 14, 2026, the Social Security Administration (SSA) announced a 3.6% cost-of-living adjustment (COLA) for 2027. About 76 million people who receive Social Security or Supplemental Security Income (SSI) will see larger payments. A bigger check is welcome news, though it can also change your tax picture. Here is what is changing and what to keep in mind before the year ends.

What the 2027 COLA Means for Your Check

• Nearly 72 million Social Security beneficiaries will receive the increase starting in January 2027.

• About 7.3 million SSI recipients will see higher payments beginning December 31, 2026.

• SSA estimates the average retired worker benefit will rise from $2,095 to $2,170 a month, an increase of about $75.

• The SSI federal payment standard rises to $1,029 a month for an individual and $1,544 a month for a couple.

Your personal COLA notice will appear in your my Social Security account starting in late November. To see it online, SSA says you need to create an account by November 18. If you are not signed up for paperless notices, your letter will arrive by mail in December.

Can a Bigger Check Mean a Bigger Tax Bill?

Some of your Social Security benefits may be taxable, depending on your total income. IRS Publication 915 explains the test. Start with half of your benefits, then add your other income, such as pensions, wages, interest and dividends. When that total is more than the base amount for your filing status, part of your benefits becomes taxable.

• $25,000 if you file as single, head of household or qualifying surviving spouse

• $32,000 if you are married filing jointly

• $0 if you are married filing separately and lived with your spouse at any time during the year

Up to 85% of your benefits can be taxable once that total passes $34,000, or $44,000 for married couples filing jointly. These base amounts have stayed the same for many years, while COLAs raise benefits each year. Over time, that can move more of your benefits over the line.

Each year, SSA sends Form SSA-1099, which shows the benefits paid to you. Keep it with your tax records. If you expect to owe tax on your benefits, you can ask to have federal income tax withheld from your payments by filing Form W-4V.

The Senior Deduction May Help

For tax years 2025 through 2028, taxpayers age 65 and older may be eligible for an additional deduction of up to $6,000 each. A married couple can claim up to $12,000 when both spouses qualify. This deduction is on top of the existing standard deduction for seniors. It begins to phase out when modified adjusted gross income is above $75,000 for individual filers or $150,000 for joint filers.

Still Working? The Wage Cap Is Going Up

The maximum amount of earnings subject to Social Security tax rises from $184,500 in 2026 to $192,300 in 2027. The tax rates themselves stay the same: 7.65% for employees and 15.3% for self-employed people, with Medicare included in both. The Medicare portion still has no earnings cap. Higher earners, especially the self-employed, may want to factor the new cap into their 2027 estimated payments.

If you collect benefits before your full retirement age while still working, the earnings test also changes. The 2027 exempt amount is $25,560 a year, or $67,920 in the year you reach full retirement age. Earnings above these amounts can cause SSA to hold back some of your benefits during the year.

Three Steps to Take Before Year End

1. Create or sign in to your my Social Security account before November 18 to view your COLA notice online.

2. Estimate your 2027 income using your new benefit amount, then compare it to the base amounts above.

3. Review your withholding or estimated tax payments so a larger check does not lead to a surprise at tax time.

Every household is different. If you would like help understanding how these changes fit your situation, explore our Personal Tax Advisory services or Request a Private Consultation.

Sources

• SSA: Social Security Announces 3.6 Percent Benefit Increase for 2027

• SSA: 2027 Cost-of-Living Adjustment (COLA) Fact Sheet

• IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits

• IRS: Check Your Eligibility for the New Enhanced Deduction for Seniors

• IRS Topic No. 423, Social Security and Equivalent Railroad Retirement Benefits

This article is for general educational purposes only and is not tax, legal, or financial advice. Tax rules change and every situation is different. Information is current as of October 16, 2026. Upscale Tax Professionals is not a law firm.