The Social Security Administration has announced the Cost of Living Adjustment (COLA) for 2027. Based on the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of 2025 through the third quarter of 2026, Social Security and Supplemental Security Income (SSI) recipients will receive a 3.6% increase for 2027. The estimated average monthly retirement benefit will rise from $2,088 to $2,163 in January.
Other expected changes next year:
- Social Security wage base: The maximum amount of earnings subject to Social Security tax rises from $184,500 to $192,300.
- Standard deduction [PROJECTED – pending IRS]: $16,600 single / $33,200 joint, up from the 2026 amounts of $16,100 / $32,200, an increase of $500 / $1,000.
- Tax brackets [PROJECTED – pending IRS]: The top federal rate remains 37%; it applies to incomes above roughly $661,350 single / $793,650 joint. Thresholds are expected to rise about 3.2%.
- Federal estate tax exemption [PROJECTED – pending IRS]: The 2026 exemption is $15,000,000 per person, made permanent by the One Big Beautiful Bill Act, which indexes it for inflation going forward. The projected 2027exemption is roughly $15.45 to $15.49 million.
- Annual gift tax exclusion [PROJECTED – pending IRS]: The 2026 exclusion is $19,000 per recipient. We expect to see this increase to $20,000 per recipient.
As we approach the end of 2026, remember to reach out about these upcoming changes with your tax professional, and to our office to discuss any planning ideas for the year ahead.
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