How the Social Security COLA is calculated

Six numbers, two averages, one subtraction and one rounding step. The whole computation fits on this page, and the 2026 adjustment is worked through below from the actual published index values.

Step 1 — take three monthly CPI-W readings from each quarter

The index is CWUR0000SA0: CPI-W, all items, U.S. city average, not seasonally adjusted. The seasonally adjusted variant exists and must never be used, because seasonal factors are recalculated annually and the adjusted series is revised for up to five years afterward. A revisable index cannot underpin a statutory benefit computation.

Step 2 — average each quarter, and round it

Sum the three and divide by three. The average is then rounded before anything else happens to it — and the precision of that rounding is not a constant. From determination year 2007 the mean is rounded to three decimal places under 20 CFR 404.275. Before that it was rounded to the nearest tenth, because the Labor Department published the index to one decimal place.

Step 3 — which base quarter, exactly

This is the step almost every published explanation gets slightly wrong. The comparison is against the third quarter of the last year in which an adjustment became effective — not simply the prior year. Those two readings coincide in every year except the one after a zero, and SSA’s own two pages state the rule differently.

In the 2026 case the base is Q3 2024, which happens to be the prior year, so the distinction does not bite. On 2011 and 2012 and 2017 it bites hard. The rule and the half-point error it prevents.

Step 4 — subtract, divide, round, and floor at zero

The percentage increase is (317.265 − 308.729) ÷ 308.729 × 100 = 2.76488%. Rounded to the nearest tenth of a percentage point, that is 2.8%.

If the comparison average had not exceeded the base, the result would be zero rather than negative. The statute floors it: benefits hold at the prior rate rather than falling, and the base quarter is carried forward to the next year. The three years that has happened.

Step 5 — what it does to an actual payment

The percentage applies to the monthly benefit, and the result is floored to the whole dollar. A $2,000 benefit becomes $2,056. Then the Medicare Part B premium is deducted, and the premium moved too — which is why the raise that lands is not the raise that was announced. That gap, computed across the ladder.

Common questions

Going deeper

• The three regimesfull methodology
• The base quarterthe walk-back
• The CPI-W seriesthe input
• CPI-W vs CPI-Ethe proposals
• Every adjustmentsince 1975
• The next oneprojection