Social Security recipients get a raise and a tax deduction

For elderly Americans suffering through this affordability crisis, every little bit helps. Inflation and tariffs have made everything more expensive, so a boost to your Social Security monthly checks is welcome, but it's no cure for what ails us.

Given that inflation is ‘officially’ hovering around 3% per year, a 2.8% boost in cost-of-living adjustment (COLA) for 2026 is good news. This follows a 2.5% increase in 2025. The Social Security Administration estimates that the average retirement benefit will jump by $56 a month, from $2,015 to $2,071, starting this month.

From my point of view (and I am sure yours), this raise will in no way cover the spike in consumer prices we are feeling. But before you can even count the money, remember that the standard monthly premium for Medicare Part B is going to hit you with a 9.7% increase. That means you need to subtract this additional $17.90 from the COLA benefit, so the cost to cover doctor visits and other outpatient care will climb in January from $185 to $202.90.

What could help retirees even more will be the 2026 federal senior ‘bonus’ deduction. For the coming year (returns filed in 2027), seniors aged 65 and older can claim a new but temporary tax break. The deduction you can claim for individual filers is up to $6,000 and $12,000 for married couples filing jointly. However, there are income limits on this deduction.

For a married couple, your Modified Adjusted Gross Income can be no higher than $150,000; for single filers, $75,000. If you exceed those levels, there is a phase-out scheme in which benefits are reduced until an Individual earns $ 175,000 and $250,000 for couples. These benefits can be claimed whether you itemize or take the standard deduction on your taxes.

In addition to the new $6,000 bonus, standard deduction amounts have also increased for 2026. What that means is that if you are filing separately, you can deduct $16,100 from your taxes, up from $15,759 in 2025. For married couples filing jointly, the new amount is $32,200. There is also an additional senior deduction for anyone over 65. If you file as a single, singles receive an extra $2,50, while married taxpayers or surviving spouses receive $1,650 each.

As an example, a married couple over 65 taking the standard deduction could potentially shield up to $47,500 from federal income tax ($32,200 standard deduction +$3,300 additional senior deduction + $12,000 from the ‘bonus’ payment.

The affordability crisis has affected seniors in many ways. Over one-third of seniors 65 and older were struggling with housing affordability. Over 12 million households were paying more than 30% of their income on housing, according to a Harvard University joint study.

The bottom 20% of Americans aged 60 and older have no assets, and many of them are in debt. Almost half have an average income below what they need to cover basic needs. Failing health is a constant fear for 60% of all older adults. Most cannot afford two years of in-home, long-term services and support. Over 80% do not have the resources to pay for long-term care or be able to weather financial emergencies.

The Affordability gap has just gotten worse. And as we enter 2026, 22 million Americans, many of them seniors, especially early retirees who are not yet eligible for Medicare, are facing the end of the enhanced premium subsidies under the Affordable Care Act. Some face a doubling of health care coverage costs as a result.

All in all, most seniors are facing dire straits in this country. Legislators seem to be oblivious to their predicament. Even their scant remedies are temporary at best, like the ‘bonus’ credit to Social Security that expires in 2028. The majority in Congress wants to get rid of Obamacare but has no alternative to the out-of-control costs of our failing health system. They say we can’t afford Social Security or Medicare but are at a loss for a workable alternative. Will anything change in 2026? I doubt it.