The Social Security Administration said it would provide a 2.0 percent cost of living adjustment in 2018, the biggest increase since 2012.

The COLA increase will affect more than 61 million Social Security recipients starting in January, the Social Security Administration said Friday. Increased payments to more than 8 million Supplemental Security Income beneficiaries will also begin on Dec. 29, 2017. Some people receive both Social Security and SSI benefits, the SSA noted. The Social Security Act ties the annual COLA to the increase in the Consumer Price Index as determined by the Department of Labor’s Bureau of Labor Statistics. However, there was only a 0.3 percent increase in 2017 and no increase in 2016.

Several other adjustments that take effect in January are also based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $128,700 from $127,200, according to the SSA. Of the estimated 175 million workers who will pay Social Security taxes in 2018, approximately 12 million of them will pay more thanks to the increase in the taxable maximum.

For more information, see this fact sheet.

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Michael Cohn

Michael Cohn

Michael Cohn, editor-in-chief of AccountingToday.com, has been covering business and technology for a variety of publications since 1985.