Despite the federal government shutdown, the Social Security Administration announced the official cost-of-living adjustment (COLA) for 2026 on Oct. 24. Benefits will increase 2.8% next year, which means the raise coming to retired workers will be three-tenths of a percentage point larger than what they received this year.

Importantly, while all beneficiaries will see Social Security payments adjusted by the same percentage, pay raises as measured in dollars will vary widely. Read on to learn the 10 states in which retirees will get the largest COLAs (and smallest COLAs) in 2026.

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How Social Security’s cost-of-living adjustments (COLAs) are calculated

Social Security’s annual cost-of-living adjustments (COLAs) are determined based on how the Consumer Price Index (CPI) changes during the third quarter, the three-month period between July and September. For example, the CPI-W increased 2.8% in the third quarter this year, so Social Security benefits will receive a 2.8% COLA next year.

That percent increase is added to the benefit paid to each retired worker, inclusive of any Medicare premiums and tax withholdings. The number is then rounded down to the next lowest dime. For example, a retired worker that received $2,000 per month in 2025 would receive $2,056 in 2026, an increase of $56. But a retired worker than received $3,000 per month in 2025 would receive $3,084 in 2026, an increase of $84 per month.

That means retirees with bigger baseline benefits also receive bigger COLAs as measured in dollars. Consequently, retirees living in the 10 states with the biggest median Social Security benefits will, collectively, receive the largest COLAs next year. Similarly, retirees living in the 10 states with the lowest median Social Security benefits will receive the smallest COLAs.

10 states with the highest median Social Security benefits for retired workers

The Social Security Administration publishes an Annual Statistical Supplement, a detailed report that includes program descriptions and population data. The chart below shows the 10 states with the biggest median Social Security benefits for retired workers as of December 2024.

Data source: Social Security Administration.

While state of residence does not directly impact how much income retirees receive from Social Security, there is an indirect connection. Benefits are calculated using a formula that considers lifetime income and claim age, which means states with higher incomes generally have higher Social Security benefits.

Not surprisingly, Federal Reserve data indicates that five states listed above — New Jersey, Connecticut, New Hampshire, Maryland, and Massachusetts — rank among the 10 states with the highest median income. Additionally, three other states listed above — Delaware, Washington, and Minnesota — have median incomes above the national median.

Michigan and Indiana do not fit the pattern. They simultaneously rank among the 10 states with the highest median Social Security benefits, but also have median incomes below the national median. One explanation is people who worked in other states with higher wages may frequently choose to retire in Michigan or Indiana. Alternatively, retirees in those states may claim Social Security at older ages, which results in a larger benefit.

10 states with the lowest median social security benefits for retired workers

The chart below shows the 10 states with the lowest median Social Security benefits for retired workers as of December 2024. The data comes from the most recent Annual Statistical Supplement.

Data source: Social Security Administration.

Federal Reserve data shows five states listed above — Mississippi, Louisiana, New Mexico, Arkansas, and Kentucky — also rank among the 10 states with the lowest median incomes. Additionally, Montana has a median income that is below the national median.

However, California and Washington, D.C. break the pattern. They rank among the 10 states with the lowest median Social Security benefits, but also rank among the 10 states with the highest median incomes. The most likely explanation is that more workers move away from those locations when they retire due to the relatively high cost of living.

Here is the big picture: State of residence indirectly influences how much income a retired workers receives from Social Security simply because benefits are based on earnings. So, people in states with higher median incomes tend to receive larger benefits, while people in states with lower median incomes tend to receive smaller benefits.

However, merely moving to a different state will not have a direct impact on your Social Security check, though it could change whether your benefits are taxable at the state level. Currently, 41 states (plus Washington, D.C.) do not tax Social Security, but the other nine states do.

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