Military Retirement COLA 2026: What You Need to Know

What is the military retirement COLA for 2026?  

Congress has set a 2.8 percent cost-of-living adjustment for military retirees in 2026. It’s slightly less than the 3.2 percent increase in 2024 and notably less than 2023’s 8.7 percent adjustment, which was the third highest in the past 50 years. The smaller increases of the last couple of years are a reflection of the fact that, even though prices remain high, the rate of inflation, as measured by the Consumer Price Index (CPI), has slowed.

What are the COLA increases for the last 10 years?

Here are the most recent COLAs for retired pay:

What is the military retiree COLA?

A cost-of-living adjustment, or COLA, is an increase in compensation that helps offset rising consumer prices. COLAs originated in the 1970s — during a period of high inflation — to help government workers keep pace with rising costs. For military retirees, a COLA typically increases their pension income.

The U.S. Department of Labor bases the annual military retiree COLA on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The CPI-W measures price changes across a broad basket of goods and services. If CPI-W is flat or lower, military retirement pay remains the same.

Who qualifies for the military retiree COLA?

Anyone eligible or qualified for retiree benefits also receives a COLA, including:

• Active-duty retirees
• Reserve retirees
• Disabled veterans
• Survivor Benefit Plan recipients
• Surviving spouse recipients of Dependency and Indemnity Compensation

How is the military retiree COLA determined?

Just like Social Security, the military retirement COLA is based on the CPI-W. Any service members in their first year of retirement receive a partial COLA if they retired between Jan. 1 and Sept. 30 to prevent the receipt of retirement pay based on both a new pay raise and a full COLA. This partial COLA is calculated differently depending on an individual’s retirement plan.

COLAs for retirees who joined the military after Aug. 1, 1986 and are in the Career Status Bonus/REDUX retirement plan are one percentage point lower than most other military retirees get. For more information, visit: Retirement Cost of Living Adjustments.

When does the 2026 COLA take effect?

The 2026 COLA becomes effective Dec. 1, 2025. Military retirees will see the additional pay beginning Dec. 31, 2025.

Is the COLA for military retirees the same as the annual pay raise for active-duty service members?

No. The retiree cost of living adjustment (COLA) and the annual active-duty pay raise are different. Retiree COLA is tied to CPI. The annual active-duty pay raise is benchmarked by the Employment Cost Index (ECI), which tracks private-sector wage growth; the final amount can be changed by Congress and the President.

For details on next year’s increase for currently serving members, see our 2026 military pay raise article.

Is the military retiree COLA taxable?

Yes. Military retirement pay is subject to federal income tax. State tax treatment varies.

Don’t confuse the retiree COLA – which affects other government benefits like Social Security and VA disability – with active duty and overseas cost-of-living allowances, which are based on changes in the CPI.

Taxable COLA vs. Non-Taxable COLA

Not all COLAs are the same. Here’s a comparison:

How does military COLA compare to Social Security COLA?

Both are tied to CPI-W and announced annually. Military COLA adjusts retired pay; Social Security COLA adjusts benefits. Retired pay (including COLA) is federally taxable. Social Security taxation depends on your provisional income.

Some REDUX retirees receive CPI-W minus 1% until a one-time catch-up at age 62. Yet Social Security’s taxability depends on your provisional income.

Lastly, the military retiree COLA is effective with December entitlements while Social Security COLA typically shows up in January checks.

Are other military, VA or government benefits affected by the COLA?

Yes. Survivor Benefit Plan annuities, VA disability compensation and pensions, and Social Security benefits are adjusted to keep pace with inflation using the same COLA that applies to military retirement pay.

Your military pension and full retirement

Retirement planning for military families often looks different from that of civilian retirees. TSP withdrawal and tax strategies may need to be adjusted to coordinate with military pension income, Social Security, and other benefits. Factors like TRICARE coverage, state tax rules, and second-career earnings can also influence when and how to draw income in retirement.

Careful coordination across these areas may help you maximize your income, manage taxes more efficiently, and capitalize on the unique benefits earned through military service.

To learn more about how you can effectively leverage these assets to prepare for your retirement, check out our article on income planning for retirement, or reach out to a First Command Financial Advisor near you.

First Command and its affiliates do not provide legal or tax advice. This material is for informational purposes only and should not be relied on for legal or tax advice. You should consult your own legal or tax advisors before engaging in any transaction.