The VA can keep veterans on edge with its policies and procedures, but its Cost of Living Adjustment (COLA) increases over the last five years have been consistently positive. The projected increase for 2026 ranges from 2.1% to 2.7%, with a likely increase of 2.6%, although some predict an increase as high as 4%.
The VA’s own SITREP YouTube channel talked about the earliest projection in July 2025.
Any increase is helpful, but COLA rates have been on a decline in recent years, following a 2023 high of 8.7%. In 2025, the COLA increase was 2.5%, the smallest increase in the past three years. Another 8% increase would be great; however, based on current data, the last time a significant increase followed a 2% COLA increase was in the mid-to-late 2000s, nearly 20 years ago.
The reason for that is how the increases are calculated. The Social Security Administration bases Cost of Living Adjustments on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is calculated every month by the Bureau of Labor Statistics. A key indicator for the VA COLA increase is the Social Security COLA increase, which analysts predict will be between 2.4% and 2.7% for 2026, falling short of expectations.
“The SSA COLA is not a mystery; it is based on the CPI-W,” Brooke Petersen, CFP, ChFC, and wealth consultant at investment advisory firm Conrad Siegel, told AOL. “The COLA is based on the percentage increase in the CPI-W from the third quarter of the previous year to the third quarter of the current year.”
According to Social Security policy, a COLA effective for December of the current year is equal to the percentage increase in the CPI-W from the average of the third quarter of the current year to the average of the third quarter of last year in which the COLA became effective. If an increase does occur, it is rounded to the nearest tenth of one percent. If there is no increase or if the rounded increase is zero, there is no COLA for the year. The last three times there was a zero percent increase were in 2016, 2011, and 2010.
Now, for a little quick math with a useful chart: In the third quarter of 2024, the average CPI-W is 308.729. Because it exceeds 301.236 by 2.5%, the COLA for December 2024 is 2.5%. The COLA calculation is as follows:
(308.729 – 301.236) / 301.236 x 100 = 2.5 percent. As the CPI-W for the third quarter is not yet available, our prediction can only be based on prior increases and current expert opinions on the potential rise. Now that you know how to calculate it, give it a try yourself.
While the math is there in black and white, that’s not necessarily the end of the story. In a recent Military Officers’ Association of America article, market analysts predicted a 2.6% raise in COLA. Meanwhile, Goldman Sachs predicted an inflation rate as high as 3.8% by the end of 2025, which is higher than the Federal Reserve’s projections. These are affected by the potential fallout from tariffs on imported goods to the United States. All in all, COLA takes a regimented analysis to predict accurately, and even then, the government might make an unexpected change.
Still, many sources predict the VA COLA increase will most likely be 2.6% for 2026. The increase will be the same as the Social Security COLA increase and may still fall below the actual inflation rate.
Stay strong and positive, fellow vets.
