Tax Tip #275

If you are receiving Social Security benefits, you may be happy to know that there is a 2.8% increase in benefits in 2026 compared to 2025.

Why 2.8%? This is the cost of living (COLA) adjustment that the Social Security Administration (SSA) determined was needed. This is up from 2.5 percent last year.

Up to 85% of social security benefits are taxable for a single income over $25,000 or married filing jointly (MFJ) taxpayers with an income over $32,000.

Example: MFJ taxpayers with an income of $100,000 in the 22% federal income tax bracket received $20,000 in Social Security benefits in 2025. In 2026, this amount will increase to $20,560.

After taxes, a total of $455 of the $560 increase remains, and $105 goes to Uncle Sam ($560 x .85 x .22).

Here’s some good news — NY and NJ are among many states that do not tax Social Security benefits.