Personal Finance
Social Security 2026 benefit amounts will be affected by these changes
Ascentxmedia | E+ | Getty Images
About 75 million Americans will see a 2.8% cost-of-living adjustment to their Social Security and Supplemental Security Income benefits in 2026.
The increase is expected to add $56 per month on average to Social Security retirement benefits, according to the Social Security Administration.
But other changes — particularly a new tax deduction for seniors and rates for Medicare Part B premiums — will affect the final amount retirees see in their monthly checks starting in January.
The Social Security Administration is will send beneficiaries a one-page statement starting in early December with “exact dates and dollar amounts” of new monthly benefits for 2026, as well as any deductions, according to the agency.
The cost-of-living adjustment notice was available online for beneficiaries who have a My Social Security account starting Nov. 12, with all notices scheduled to be available online by Dec. 12, according to an SSA spokesperson. Paper statements will be sent in the mail starting Dec. 1, with all beneficiaries slated to receive their statements by the end of December, the spokesperson said.
To make the most of the inflation adjustment, beneficiaries need to consider how changes may influence their 2026 monthly checks.
New senior ‘bonus’ aims to curb taxes on benefits
Social Security benefits are still subject to federal taxes, depending on income.
But legislation passed in July provides a senior “bonus” of up to $6,000 for qualifying individuals aged 65 and over to help curb those taxes.
Most retirees won’t notice the change until tax filing season, because the $6,000 is provided through a deduction. Those eligible won’t necessarily see that $6,000 in their refunds.
“It won’t be a dollar for dollar savings like a credit would be,” said Andrew Herzog, a certified financial planner and enrolled agent at The Watchman Group in Plano, Texas. “It’ll just be on a case-by-case basis, how much it’s actually going to save you.”
Notably, not everyone will be eligible for the new senior deduction. It begins to phase out for individuals with $75,000 in income and married couples with $150,000. Singles with $175,000 in income and couples with $250,000 will see no benefit from the change, according to the Urban-Brookings Tax Policy Center.
Those who benefit the most will be seniors who earn between $80,000 and $130,000, who would see an average tax cut of about $1,100, the Urban-Brookings Tax Policy Center estimated.
Some beneficiaries might see less of a benefit from the change than they expect, particularly if their incomes are low enough that they are not paying much tax to begin with, according to Joseph Rosenberg, senior fellow at the Urban-Brookings Tax Policy Center.
Existing federal tax rules are still in effect for Social Security benefits. Benefits may be taxed based on beneficiaries’ combined income, or the sum of adjusted gross income, nontaxable interest income and half of annual Social Security benefits.
Up to 50% of individuals’ benefits are taxed if their combined income is between $25,000 and $34,000, and up to 85% is taxable for more than $34,000.
As much as 50% of Social Security benefits are taxable for married couples who file jointly with between $32,000 and $44,000 in combined income, and up to 85% is taxable for income above $44,000.
Beneficiaries can plan for those levies by requesting to withhold taxes from their monthly payments. They may choose withholding rates of 7%, 10%, 12% or 22%.
The new senior deduction may reduce some taxpayers’ liability for 2026, which means it may make sense to reduce withholdings on benefits or other income, according to Ron Johnson, a certified financial planner and wealth planner at Baird.
“There would be some math involved to try and get it right,” Johnson said.
For example, a tax professional may use your prior tax liability and estimated tax liability for 2026 to help find the target percentage to withhold from Social Security, he said.
While the new senior deduction went into effect in 2025, it is late in the year to make adjustments now based on that change, according to Johnson.
Medicare Part B premiums to jump nearly 10%
To cover healthcare services, new 2026 premiums for Medicare Part B are poised to take a bigger bite out of beneficiaries’ checks in 2026.
The standard monthly Part B premium will climb 9.7% in 2026 to $202.90, up from $185 in 2025 — the second highest increase in the program’s history, according to Mary Johnson, an independent Social Security and Medicare analyst. That rate applies to individuals whose yearly income in 2024 was $109,000 or less, and married couples who file taxes jointly with income of $218,000 or less.
Individuals and couples with modified adjusted gross incomes above those thresholds will pay higher Medicare Part B premium rates. This is due to what is called income-related monthly adjustment amounts, or IRMAA.
Medicare Part B premiums are typically deducted directly from Social Security benefit checks, possibly reducing the cost-of-living boost beneficiaries will see in their monthly payments.
But a hold harmless provision prevents Medicare Part B premiums from wiping out beneficiaries’ COLAs entirely. Yet some beneficiaries are excluded from that protection, such as new retirees and those with higher incomes who pay more than the standard premium, according to the Senior Citizens League, a nonpartisan senior group.
Beneficiaries who have seen their income decline, particularly due to a qualifying life-changing event, may notify the Social Security Administration of the change to have their Part B premium rates adjusted.
This year’s premium rates are based on modified adjusted gross income from the latest tax return, typically for the prior two tax years.
Because selling your home before retirement can kick up Medicare premiums later, it’s wise to plan for how tax income thresholds may shape your retirement spending later, Herzog said.
“It’s becoming increasingly common that now tax planning should be table stakes,” Herzog said. “For any client who has an advisor, they need to be getting into the weeds.”
Medicare open enrollment ends Dec. 7
Social Security beneficiaries may also have other premiums for Medicare Part D prescription drug coverage or private Medicare Advantage insurance deducted from their monthly checks.
Unlike Medicare Part B, there is no hold harmless provision for the Medicare Advantage and Part D deductions, according to Johnson. So those premiums may reduce Social Security benefits, she said.
Medicare beneficiaries have until Dec. 7 to shop around for coverage, which can help limit the prices they pay for care in 2026.
During this window, beneficiaries may switch from original Medicare, including Parts A and B, to Medicare Advantage, or vice versa; change Medicare Part D prescription plans; or opt for a different Medicare Advantage plan that may or may not include drug coverage.
A Medicare Advantage open enrollment period from Jan. 1 to March 31 lets beneficiaries switch Advantage plans or drop their Advantage plan for original Medicare. Special enrollment periods may also be available during the year, depending on individual personal circumstances.
But beneficiaries have the most flexibility during this annual enrollment period, according to Ryan Ramsey, associate director at the National Council on Aging. In particular, everyone can now compare their standalone Part D plan or Medicare Advantage drug coverage to make sure it suits their needs and costs them the least for the following year, he said.
“Anyone who has Medicare in any form or fashion should do a comparison during this time each year,” Ramsey said. “It’s always a great practice, even if you have no intention of switching plans.”
The Federal Reserve held interest rates steady at the conclusion of its policy meeting on Wednesday.
In what could be Jerome Powell’s last as chair before President Donald Trump’s yet-to-be-confirmed nominee Kevin Warsh takes the helm, central bankers maintained the federal funds rate in a target range of 3.5% to 3.75%.
Inflation has surged since the war with Iran began, leaving policymakers with limited room to act, according to Sean Snaith, the director of the University of Central Florida’s Institute for Economic Forecasting. “We’re in a kind of suspended animation — between Iran and the Fed transition,” Snaith said.
Before the oil shock, inflation was holding above the Fed’s 2% target but not worsening. Now the jump in energy costs could have longer-term inflationary effects, economists say.
For Americans struggling in the face of higher gas prices and overall affordability challenges, the central bank’s decision to keep interest rates unchanged does little to ease budgetary pressures. “The cavalry isn’t coming anytime soon,” Snaith said.
How the Fed decision impacts you
The Fed’s benchmark sets what banks charge each other for overnight lending, but also has a trickle-down effect on many consumer borrowing and savings rates.
Short-term rates are more closely pegged to the prime rate, which is typically 3 percentage points above the federal funds rate. Longer-term rates, such as home loans, are more influenced by inflation and other economic factors.
Credit cards
Most credit cards have a short-term rate, so they track the Fed’s benchmark.
After the Fed cut rates three times in the second half of 2025, the average annual percentage rate has stayed just under 20%, according to Bankrate.
“Without Fed rate cuts, there’s not much reason to expect meaningful declines anytime soon, so carrying a balance will remain very expensive,” said Matt Schulz, chief credit analyst at LendingTree.
Mortgage rates
Fixed mortgage rates, on the other hand, don’t directly track the Fed but typically follow the lead of long-term Treasury rates.
Concerns about how the Iran war will impact the U.S. economy have already pushed the average rate for a 30-year, fixed-rate mortgage up to 6.38% as of Tuesday, from 5.99% at the end of February, according to Mortgage News Daily.
That leaves homeowners with existing low mortgage rates “feeling stuck,” said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion. “Mortgages, more than any other credit type, work on a churn,” she said, referring to how a dip in rates can boost borrowing activity.
Student loans
Federal student loan rates are also fixed and based in part on the 10-year Treasury note, so most borrowers are somewhat shielded from Fed moves and recent economic uncertainty.
Current interest rates on undergraduate federal student loans made through June 30 are 6.39%, according to the U.S. Department of Education. Interest rates for the upcoming school year will be based in part on the May auction of the 10-year note.
Car loans
Auto loan rates are tied to several factors, including the Fed’s benchmark. Because financing costs remain elevated, new car buyers are taking on longer loans to keep their monthly payments manageable, according to the latest data from Edmunds.
Even so, with the rate on a five-year new car loan near 7%, the average monthly payment on a new car rose to $773 in the first quarter of 2026, an all-time high.
“Car buyers are in a tough spot right now because they’re getting squeezed from both ends: high sticker prices and high interest rates, with neither showing any signs of letting up,” said Joseph Yoon, consumer insights analyst at Edmunds.
“Until the rate picture shifts, buyers will keep stretching loan terms to make payments work, which only adds to the total cost of ownership down the road,” Yoon said.
Savings rates
While the Fed has no direct influence on deposit rates, the yields tend to be correlated with changes in the target federal funds rate. So, although rates on certificates of deposit and high-yield savings accounts have fallen from recent highs, they are holding above the annual rate of inflation.
For now, top-yielding online savings accounts and one-year CD rates pay around 4%, according to Bankrate.
“Yields on high-yield savings accounts and certificates of deposit are down from their peaks of a few years ago, but they’re still strong compared to what we’ve seen for most of the past decade,” Schulz said.
Milan Markovic | E+ | Getty Images
The average tax refund is 11.2% higher this season, compared with about the same period in 2025, according to the latest IRS filing data.
As of April 10, the average refund amount for individual filers was $3,397, up from $3,055 about one year ago, the IRS reported on Friday.
The IRS data reflects about 114 million individual returns received, out of about 164 million expected through Tax Day. Next week’s filing update is expected to include data through the April 15 deadline.
President Donald Trump‘s 2025 legislation, rebranded to the “working families tax cuts,” was a key talking point for Republicans on Tax Day.
With the November midterm elections approaching and Republicans defending slim majorities in Congress, many GOP lawmakers have highlighted Trump’s tax breaks and higher average refunds.
Meanwhile, affordability has been top of mind for many Americans amid rising costs of gas, electricity, food and other living expenses.
For filers who expected a refund this season, nearly one-quarter, or 23%, planned to use the funds to pay down credit card debt, and the same share said they would save the payment, according to the CNBC and SurveyMonkey Quarterly Money Survey, released in April. It polled 3,494 U.S. adults at the end of March.
Who benefited from Trump’s ‘big beautiful bill’
“It’s been a great tax season for the American people,” many of whom have benefited from Trump’s tax breaks, Treasury Secretary Scott Bessent said during a White House press briefing on Wednesday.
More than 53 million filers claimed at least one of Trump’s “signature new tax cuts” — the deductions for tip income, overtime earnings, seniors and auto loan interest — the Department of the Treasury also announced on Wednesday.
Those filers, who claimed the deductions on Schedule 1-A, have seen an average tax cut of over $800, according to the Treasury. Tax cuts can trigger a higher refund or reduce taxes owed, depending on the filer’s situation.
Some filers who itemize tax breaks have also seen benefits from the bigger federal deduction limit for state and local taxes, known as SALT. Trump’s legislation raised that cap to $40,000, up from $10,000, for 2025.
The latest SALT deduction limit change is expected to primarily benefit higher earners, according to a May 2025 analysis of various proposals from the Tax Foundation.
The Treasury has not released data on how many filers have claimed the SALT deduction during the 2026 filing season.
Traders work at the New York Stock Exchange on April 16, 2026.
NYSE
U.S. stocks climbed to record highs on Thursday against a backdrop of war, an oil supply shock and economic forecasts warning of stunted growth amid a protracted conflict.
Many investors may be thinking: Why?
Largely, it’s because the stock market is a barometer of what investors think will happen in the future, rather than an assessment of the present day, according to economists and market analysts.
Investors are essentially shrugging off the Middle East conflict as a blip that will be resolved relatively quickly, they said.
“The stock market isn’t trying to price what’s happening today,” said Joe Seydl, a senior markets economist at J.P. Morgan Private Bank. “The stock market is always trying to price what the world is going to look like six to 12 months from now.”
Why stocks have been ‘resilient’
The S&P 500, a U.S. stock index, fell about 8% in the initial weeks of the Iran war, from the start of the conflict on Feb. 28 to a recent low on March 30.
But stocks have rebounded since then, erasing all losses since the beginning of the war. The S&P 500 closed at an all-time high on Thursday — about 11% higher than its nadir at the end of March. That followed a record close on Wednesday.
“The market has remained very resilient in the face of the war and has rallied strongly on the prospect that it will be resolved,” said Mark Zandi, chief economist at Moody’s.
A ship waits to pass through the Strait of Hormuz following the two-week temporary ceasefire between the US and Iran, which is conditional on the opening of the strait, in Oman on April 8, 2026.
Shady Alassar | Anadolu | Getty Images
And while investors cheered the possibility of a diplomatic off-ramp to the conflict, the temporary ceasefire has appeared tenuous, with the U.S. and Iran each accusing the other of breaking the agreement.
Nations haven’t been able to reach a peace deal ahead of the ceasefire’s end. Vice President JD Vance said U.S. officials left peace talks in Pakistan over the weekend after the Iranian delegation refused to agree to American demands not to develop a nuclear weapon.
The markets ‘have memory’
Ultimately, the stock market is signaling a collective belief that tensions will ratchet down, the war will end in the near term and oil flows through the Strait of Hormuz will normalize, economists said.
That’s largely because investors have been conditioned to believe that President Donald Trump will back off if the economic pain becomes too intense, economists said — the so-called “TACO” trade, shorthand for “Trump always chickens out.”
“Investors strongly believe — and have been conditioned to believe — he’s going to stand down, find a way to pivot, declare victory and move on,” Zandi said.
Trump has pushed back on the notion of backing down, framing his brinkmanship as a savvy negotiating tactic.
Economists pointed to a recent example of this dynamic: in April 2025 during so-called liberation day, when the Trump administration levied a host of tariffs on U.S. trading partners.
Within days — after the stock market had cratered more than 12% — Trump announced a 90-day pause on those tariffs. Stocks then saw one of their biggest daily rallies in history following Trump’s reversal.
Investors remember that Trump often de-escalates geopolitical shocks — which is why they’ve seized on positive headlines that hint at progress in peace talks, for example, Seydl said.
“The markets have memory,” Seydl said.
AI stocks and the ‘tech boom’
Traders celebrating at the New York Stock Exchange on April 15, 2026, as the S&P 500 closed above the 7,000 level for the first time.
NYSE
There are other factors underpinning market resilience during wartime, economists said.
One is the investors’ enthusiasm for artificial intelligence and technology stocks, which account for almost half of the S&P 500’s market capitalization, Zandi said.
“Those stocks run on their own dynamic independent of anything, including the war in Iran,” Zandi said. “I think we would have been down a lot more and it would have been harder for us to recover had it not been for the very, very optimistic perspectives on AI.”
We’re in the middle of a “tech boom” — and investors are likely to remain optimistic until they think the tech cycle has run its course, Seydl said.
More broadly, stock investors are essentially making a bet on the future earnings growth of a company — and the earnings backdrop has been “pretty solid,” Seydl said.
Consumer spending appears to be stable, for example, economists said. And companies are getting a boost to their after-tax earnings from the GOP’s so-called “big beautiful bill,” which, among other things, made it easier to write off investments upfront and therefore reduce their tax liability, Zandi said.
Going forward
Experts said there will be an economic hit from the Iran war, though.
“Despite the recent news of a temporary ceasefire, some damage is already done, and the downside risks remain elevated,” Pierre-Olivier Gourinchas, director of research at the International Monetary Fund, wrote Tuesday.
A protracted conflict risks deep and global economic pain, he wrote.
Even if the conflict is short-lived — as the broad market expects — stocks are unlikely to march much higher until it’s clear the U.S. is on the other side of the war and its economic fallout, Zandi said.
If investors are incorrect, and President Trump doesn’t back down or quickly extricate the U.S. from the war, the stock market may see a “full-blown correction” or worse, Zandi said. A stock market correction is a decline of at least 10% from recent highs.
“Everyone thinks they know what the script is,” Zandi said. “Now they just need to follow the script. If they don’t, the market will have some real problems.”
The uncertainty provides yet another example of why the average investor with a long time horizon should stick to their investment plan and ignore the noise, experts said.
“Trying to time the market is very difficult if not impossible for the average investor,” Seydl said. “It’s better to take a long-term perspective and ride out bouts of volatility.”
What that means for consumer loans
Checks and Balance newsletter: Of God and MAGA
Why software stocks, 2026’s market dogs, have joined the rally
Armanino adds Strategic Accounting Outsourced Solutions
New 2023 K-1 instructions stir the CAMT pot for partnerships and corporations
