2027 Annual Changes to Social Security

Every October, the Social Security Administration (SSA) makes adjustments to Social Security programs to keep pace with inflation. These adjustments then go into effect the following January. The most significant of these annual changes are typically the Cost-of-Living-Adjustments (COLA), the annual tax caps and earning limit increases.

COLA

What is COLA? Since 1975, Social Security has determined an annual cost-of-living adjustment (COLA) based on inflation. The adjustment helps protect the purchasing power of Social Security and Supplemental Security Income (SSI) benefits.¹

The Social Security Administration (SSA) increased the COLA for 2027 to 3.6% in addition to several other changes to benefits.² This demonstrates that the rate of inflation over the last year has continued to rise. The increase in COLA for 2027 is higher than last year's increase of 2.8%, and higher than the 10-year average COLA increase of approximately 3.44%.³

You'll be notified by mail starting in December about your new benefits, and can review your new benefit amounts online through your individual Social Security account at SSA.gov.

Annual Tax Cap

Social Security also announced that the income subject to Social Security taxes is capped (called maximum taxable earnings) at a higher income level. Maximum earnings subject to Social Security taxes for 2027 is $192,300, which is a significant increase from $184,500 in 2026.² We expect to see the earnings cap continue to increase as it's the primary tool that Social Security has used to increase funding into the program.

Earnings Limit Increase

Social Security benefits might change if you are working while collecting benefits and have not yet hit your full retirement age. If you plan to work part or even full time after you elect Social Security, you need to be aware of the potential earnings limit.

If your income exceeds the annual earnings limit while collecting benefits (before you reach your full retirement age) your Social Security benefit will be reduced for the remainder of the year in which you exceeded that limit. However, the income that is withheld will be paid out once you reach full retirement age.

It is important to note that investment income does not count toward your annual earnings limit; the only income that counts is earned income by working for a company or as a self-employed person.²

• If you won't yet reach full retirement age in 2027, you'll be subject to an annual earnings limit of $25,560. If you make more than that amount, SSA will deduct $1 from your benefits for every $2 you make above the limit.

• If you will reach full retirement age sometime during 2027, the limit on your earnings is much higher at $67,920. But your benefits will be reduced at the rate of $1 for every $3 you make above that limit.

• The month you reach full retirement age, you will no longer be subject to a limit on your earnings.

We have an entire class dedicated to part-time work and how it impacts your Social Security income. In that class, we also share practical examples and strategies to help you build a stronger financial future while making the most of government benefits such as Social Security and Medicare.

SOURCES

1. “Cost-Of-Living Adjustments.” SSA.gov, Social Security Administration, https://www.ssa.gov/pubs/EN-05-10526.pdf. Accessed 14 October 2026.

2. “Cost-of-Living Adjustment (COLA) Information for 2027.” SSA.gov, Social Security Administration, https://www.ssa.gov/news/en/cola/. Accessed 14 October 2026.

3. “Cost-Of-Living Adjustments.” SSA.gov, Social Security Administration, https://www.ssa.gov/oact/cola/colaseries.html. Accessed 14 October 2026.