As we move into 2026, several significant federal updates are reshaping the financial landscape for retirees, individuals with disabilities, and families engaged in long-term estate planning. From Social Security cost-of-living adjustments and Medicare premium changes to expanded ABLE account benefits and higher federal tax thresholds, these updates can have a meaningful impact on household budgets and legacy plans.
While these changes apply nationwide, understanding their impact on individuals and families in Virginia and North Carolina is crucial. At McDowell Law Group, we help clients connect the dots between benefits, taxes, and estate planning, so no opportunity or risk is overlooked.
Below is a comprehensive guide to the most important 2026 benefit and tax changes and what they may mean for you.
2026 COLA Updates: New Social Security Benefit Rates
The Social Security Administration has announced a 2.8% Cost-of-Living Adjustment (COLA) for 2026. This increase is designed to help benefits keep pace with inflation and rising living costs. Social Security retirement, survivor, and disability beneficiaries will begin seeing this increase in January 2026, while Supplemental Security Income (SSI) recipients will see changes starting December 31, 2025.
Although a COLA increase is always welcome, it’s important to understand that it doesn’t operate in isolation. Rising Medicare premiums and healthcare costs may offset part of the increase for many retirees, making proactive planning even more important. For retirees in Virginia and North Carolina, where housing, healthcare access, and tax considerations vary by region, this adjustment should be viewed as part of a broader retirement income strategy rather than “extra” spending money.
What the 2026 SSI Increase Means for Your Benefits
For individuals receiving Supplemental Security Income, the 2026 COLA translates into higher federal payment standards:
- Individuals: $994 per month
- Couples: $1,491 per month
SSI is a critical lifeline for individuals with disabilities and limited income, but it comes with strict eligibility rules and asset limits. Even modest financial changes, such as receiving an inheritance, settlement, or gift, can unintentionally jeopardize eligibility. This is where coordinated planning matters. Tools like ABLE accounts and special needs trusts can help preserve SSI benefits while still allowing families to plan for long-term financial security.
2026 COLA Guide: Adjusting Your Retirement Budget
While a 2.8% COLA provides some relief from inflation, retirees should approach 2026 with cautious optimism. Medicare premiums, prescription drug costs, and everyday expenses continue to rise, and COLA increases don’t always fully cover those increases.
For many Social Security recipients, Medicare Part B premiums are automatically deducted from monthly benefit checks, which can reduce the net increase received. Reviewing your retirement budget annually and stress-testing it against healthcare and long-term care costs is a critical step in protecting financial stability.
Budgeting for 2026: New Medicare Premium Rates
Medicare premiums and deductibles are also adjusting in 2026:
- Medicare Part B premiums are increasing to $202.90 per month
- Medicare Part A deductibles and hospital-related costs are also rising with inflation
These changes are federally determined and apply equally in Virginia and North Carolina. However, the impact on household finances can vary depending on income, supplemental insurance coverage, and long-term healthcare needs.
Because Medicare costs often rise faster than COLA increases, many retirees find that their “raise” from Social Security feels smaller than expected. Planning for these increases, especially when coordinating Medicare with retirement income and estate plans, is essential.
Maximizing Your ABLE Account Benefits in 2026
ABLE accounts are tax-favored savings programs designed to help individuals with disabilities and their families plan for long-term financial security. When used properly, these accounts allow individuals to save and invest without jeopardizing means-tested benefits such as Supplemental Security Income (SSI) and Medicaid.
For families in Virginia and North Carolina, ABLE accounts can be a valuable tool for balancing financial independence, quality of life, and benefit preservation.
Key ABLE Account Updates for 2026 Include:
- Annual contribution limit increased to $20,000
- Major eligibility expansion: individuals whose disability onset occurred before age 46 now qualify (up from age 26), opening ABLE accounts to millions previously excluded
- Continued ability to roll over funds from certain 529 education savings plans into ABLE accounts
- Tax-advantaged growth when funds are used for qualified disability-related expenses
Prior to January 1, 2026, an individual could only qualify for an ABLE account if their disability occurred before age 26. Beginning in 2026, the eligibility age increases to 46, which is one of the most significant expansions since the ABLE program was created. This change dramatically broadens access to ABLE accounts, allowing many adults who acquired disabilities later in life to finally take advantage of these powerful planning tools.
How 2026 ABLE Changes Impact Disability Savings
The increased contribution limit gives families more room to plan proactively. However, ABLE accounts should not be used in isolation. Contribution timing, investment choices, and coordination with special needs trusts all matter.
Improper use or exceeding limits can still affect benefit eligibility. This is why ABLE accounts work best as part of a comprehensive disability and estate planning strategy, not as a standalone solution.
Important Tax Changes for 2026
Several federal tax thresholds are increasing for 2026, creating new planning opportunities:
Federal Standard Deduction (2026)
- Single filers: $16,100
- Married filing jointly: $32,200
- Head of household: $24,150
Annual Gift Tax Exclusion
- $19,000 per recipient (no change from 2025)
- $38,000 for married couples using gift splitting
Federal Estate & Gift Tax Exemption
- $15 million per individual
- $30 million for married couples
- Amounts exceeding the exemption are still taxed at rates up to 40%.
Virginia and North Carolina do not impose a separate state estate or inheritance tax, meaning federal rules are the primary concern for estate tax planning purposes. However, relying solely on the exemption can be risky. Exemptions can change, and failing to plan may expose families to unnecessary taxes, probate delays, or unintended distributions.
Why These Changes Matter Together
What makes 2026 unique isn’t just the individual updates, it’s how they interact. This is where thoughtful legal planning makes a real difference.
- An SSI increase can affect benefit eligibility.
- A COLA raise may be offset by Medicare premiums.
- An inheritance could disrupt disability benefits without proper planning.
- Higher estate tax exemptions create opportunities, but only if acted upon strategically.
Planning Ahead with McDowell Law Group
Whether you are preparing for retirement, supporting a loved one with a disability, or reviewing your estate plan in light of 2026 changes, proactive guidance matters.
At McDowell Law Group, we help individuals and families throughout Virginia and North Carolina navigate the intersection of benefits planning, estate planning, and long-term financial security, so changes in the law don’t catch you off guard.
To learn how these 2026 updates may affect your unique situation, contact McDowell Law Group to schedule a consultation and ensure your plan is aligned with the year ahead.