Social Security COLA 2026: Will Tariffs Impact It?
Written by
Stacy Sare Cohen
Edited by
Amber Barkley
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The cost-of-living adjustment (COLA) for 2026 is projected to be the lowest in five years at 2.4%, according to NBC New York. That would be one-tenth of a percent lower than 2025’s COLA, 2.5%, potentially lowering Social Security increases for seniors, survivors and disabled beneficiaries.
In April 2025, inflation decreased to 2.3%. But what does this mean for retirees living on a fixed income?
Before you panic, know the rate isn’t set in stone. If tariffs increase inflation in the next six months, the COLA for 2026 could change. Another factor is prescription drug costs, NBC New York reported. Here’s a closer look at these impacting factors.
Tariffs Could Drive Up Inflation
Inflation dropped to a 12-month low of 2.3% in April, the slowest pace seen since 2021, based on the consumer price index. However, that downward trend could reverse if new tariffs on imported goods lead to inflationary pressure.
Tariffs often lead to higher costs for businesses, which tend to pass these expenses on to consumers, which could drive prices — and inflation — back up in the coming months.
If inflation starts to rise again, it could influence the projected 2026 COLA for Social Security beneficiaries. COLA estimates are updated monthly, as new inflation data is released.
The Impact of Prescription Drug Costs on COLA
Another factor that could contribute to inflation is the rising costs of prescription drugs. But that may be changing.
On May 12, 2025, President Donald Trump issued an executive order to lower prescription drug costs. The order stated that pharmaceutical companies “deeply discount” drug prices to foreign markets and aims to make other countries to pay their fair share.
Still, even if drug prices drop, it’s unclear how much that would affect COLA and retirees’ expenses in general at this time. It should become clearer how inflation and drug prices unfold in the upcoming months.
Although experts can speculate, they won’t know for certain until Social Security announces the official 2026 COLA report in October 2025.
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