# A flat COLA would shrink checks and tax bills

> Swapping Social Security's percentage raise for a flat dollar amount would cut most retirees' benefits, and quietly trim some tax bills too.
- Title: A flat COLA would shrink checks and tax bills · Kiplinger
- Summary: Swapping Social Security's percentage raise for a flat dollar amount would cut most retirees' benefits, and quietly trim some tax bills too. A flat COLA is a…
- Keywords: social security, cola, retirement, taxes, policy, flat, shrink, checks, tax, bills, Kiplinger
- Source: Kiplinger — https://kiplinger.com/taxes/what-a-new-flat-rate-social-security-cola-would-mean-for-retiree-taxes
- Published: 2026-09-13T13:17:00+00:00
- Read time: 2 min
- Topics: social security, cola, retirement, taxes, policy
## Same raise for everyone
Proposals would replace Social Security's percentage COLA with one flat dollar amount paid to every beneficiary, regardless of how big their monthly check is.

> a flat-rate cost-of-living adjustment gives each recipient the same flat dollar amount
## Why anyone is asking
The retirement trust fund is projected to run out of reserves in 2032, so lawmakers are hunting for ways to close the gap.
## Pegged to the 20th percentile
The flat amount would be set using the benefit of someone around the 20th percentile of the benefit distribution, then paid to everyone.
## Small checks gain, big checks lose
Relative to their existing benefit, low earners get a bigger bump and high earners get a smaller one. Even so, some low-income retirees could end up behind over time.
## Half the shortfall
The Committee for a Responsible Federal Budget estimates the switch could close about half of Social Security's projected 75-year financing shortfall.
## AARP calls it a cut
AARP opposes the idea, saying benefits would grow more slowly than today and roughly 80% of retirees would be worse off.
## Fifty-eight dollars versus thirty-four
Under the 2.8% COLA the average retired worker got about $58 more a month. AARP puts the flat-rate version at roughly $34, a $24 monthly gap.
## The gap compounds
Benefits often run 15 to 20 years or more. Someone who retired at 65 in 1998 could have collected $77,900 less by age 93 under the flat approach.
## Less benefit, less taxable income
Benefits become taxable once combined income is high enough: AGI excluding Social Security, plus tax-exempt interest, plus half your annual benefits.

> Depending on income, up to 85% of Social Security benefits may be taxable.
## Thresholds frozen since 1983
Taxation kicks in at $25,000 for singles and $32,000 for joint filers, unchanged for over four decades. About half of beneficiaries now pay tax on part of their benefits.
## Who actually gets the offset
Retirees living mostly on Social Security are already under the thresholds, so they just lose money. Those with a pension or IRA withdrawals may fall into a lower taxable share.
## Watch mid-October
A senior bonus deduction of up to $6,000 runs through 2028, and the 2027 COLA, projected at 3.4% to 3.6%, gets announced mid-October.
## Key takeaway

A flat COLA is a benefit cut for roughly 80% of retirees, and the smaller tax bill that comes with it recovers only a fraction of what you lose.