The cost-of-living adjustment for Social Security could be 2.5% in 2026, based on the latest inflation data, new estimates show.
That’s up from last month’s estimate of 2.4%, said Mary Johnson, an independent Social Security and Medicare policy analyst who forecasts 2026 COLA using monthly inflation data. A 2.5% increase would be the same gain beneficiaries received this year, but there’s still time for the 2026 estimate to rise because the full impacts of President Donald Trump’s tariffs are still unknown.
“This estimate may rise with four more months of data still to come in before the 2026 COLA will be announced in October,” Johnson said.
What do tariffs have to do with COLA?
Even though May inflation remained tame, most economists predict Trump’s tariffs will raise inflation, which in turn, boosts the COLA.
“Another month goes by with little evidence of tariffs, but the longer-term inflation challenge they pose remains,” said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.
Ken Kim, senior economist at KPMG, sees inflation peaking above 4% annually in the fall.
That would be sharply higher than the 2.4% annual increase in the May consumer price index, a measure of average changes in goods and services costs.
How much would a 2.5% COLA increase amount to in dollars?
The average monthly Social Security check in May reached a record high $1,948.17. Based on that, a 2.5% increase would raise the monthly benefit by about $40.70.
Roughly 75 million Americans, or about a fifth of the population, receive Social Security benefits.
What is COLA?
COLA is an annual adjustment to benefits meant to keep beneficiaries’ purchasing power from being eroded by inflation. The final COLA for the following year is typically announced in October by the Social Security Administration.
How is COLA calculated?
COLA is based on the percentage increase in the consumer price index for Urban Wage Earners and Clerical Workers from July through September of the last year as compared to the same three months of the current year. CPI-W tracks the overall inflation rate but can differ slightly.
In May, annual CPI-W rose 2.2%, compared with the 2.4% rise in overall consumer prices.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
This article originally appeared on USA TODAY: Social Security COLA may be 2.5% in 2026, but tariffs could lift it
