I Asked ChatGPT Why Your Paycheck Might Feel Smaller in 2026

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People are feeling the pinch of rising costs everywhere they turn. As the holidays pass, having added extra burden, and essential expenses remain inflated, many Americans may be wondering if their paychecks will be up to the challenge of expenses this year.

To find out some of the stressors likely to cut into people’s paychecks in 2026, I turned to ChatGPT to help me source some of the common culprits and offer solutions.

Inflation Is Still Reducing Purchasing Power

Inflation may not be skyrocketing like it did during the pandemic, but it is still chipping away at what your paycheck can buy, even after prices have cooled from their 2022 peak, ChatGPT said. Research shows that even modest inflation eats away at your purchasing power year over year, especially for households whose wages don’t keep pace.

Federal data supports this, too, the AI said. The Bureau of Labor Statistics shows that prices rose faster than wages for long stretches between 2021 and 2024, and while inflation has stabilized, it remains sticky in categories like housing, food and insurance. Even a 3% inflation rate means every dollar is effectively worth less than it was the year before.

Essential Expenses Are Claiming a Bigger Share of Income

Another reason why your paycheck might feel slimmer is that essential costs are taking up a larger portion of household pay. From tariffs to healthcare premium spikes, costs aren’t showing any signs of coming down, ChatGPT said. The biggest chunk of people’s paychecks is still housing. The AI cited Census Bureau data showing that housing costs now consume more than 30% of income for a growing share of renters and first-time buyers, eating into paychecks.

Even if your paycheck hasn’t declined, more of it is being absorbed by non-negotiable expenses.

Wage Growth Is Slowing as the Labor Market Cools

While wages rose quickly in the immediate post-pandemic years, raise sizes have since shrunk and don’t show any signs of rising heading into 2026, ChatGPT said.

It pointed to Bureau of Labor Statistics reports that show real average hourly earnings grew only slightly through 2024 and 2025. And it reported MarketWatch data that found weakening labor demand and softer job growth, both things that tend to reduce employers’ willingness to give raises.

All of this may add up to feeling like you earn less when your salary remains the same on paper.

Rising Healthcare Costs Cut Into Take-Home Pay

As the fate of the Affordable Care Act subsidies is still in limbo with a bill to extend the subsidies now with the Senate, healthcare could be taking a much bigger bite out of paychecks in 2026. ChatGPT suggested that workers are facing higher premiums and out-of-pocket maximums for 2026.

What People Can Do About It

Individually, any of these pressures might be manageable. But in combination they create the feeling that a paycheck simply doesn’t go as far as it once did.

While many of the pressures affecting take-home pay are outside individual control, there are practical steps people can take to stay ahead of shrinking purchasing power. ChatGPT cited the commonly given advice of financial advisors:

• Update your budget: Create a realistic, updated budget that reflects today’s prices rather than pre-inflation spending habits.
• Review and negotiate: Review subscriptions, renegotiate bills and pause nonessential expenses to free up room in a tighter paycheck.
• Revisit benefits: Compare healthcare plans, using health savings accounts or flexible savings accounts when available and review employer contributions to help blunt rising medical costs.
• Increase retirement: Workers may also want to increase retirement contributions gradually or automate small savings transfers so long-term goals don’t stall.
• Build negotiating power: Whether that means updating skills, pursuing certifications or tracking market salary data to make a stronger case during reviews. Even modest raises can help offset inflation when combined with intentional budgeting.

Taking proactive steps now can help workers protect their financial footing and feel more control over their income heading into 2026.

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