Updated October 30, 2026. Quick answer: Massachusetts retirees got a 3% COLA on the first $13,000 of the retirement benefit from July 1, 2026, a maximum increase of $390 per year or $32.50 per month. The state calls that its fiscal year 2027 COLA. The teachers’ retirement system’s notice limits it to retirees who retired on or before June 30, 2025; the statute names both the state employees’ and the teachers’ systems. The next COLA, for the July 2027 payment, is not set yet: the Legislature must vote on it.
How the COLA is granted
Massachusetts General Laws chapter 32, section 102 says: “If the general court thereafter determines by law that a cost of living increase is required and establishes the percentage thereof, the retirement allowance, pension or annuity of every member of the state employees’ system and the teachers’ retirement system who has received a retirement allowance, pension or annuity on June 30 of the preceding fiscal year, or of a spouse or other beneficiary of such member who has received a retirement allowance, pension or annuity on June 30 of the prior fiscal year, shall be increased by the percentage as determined by such law.” On the amount, for an allowance of $13,000 or more, it says: “the cost of living adjustment shall be in an amount determined by applying the percentum of change determined pursuant to paragraph (a) to the sum of $13,000.”
The Massachusetts Teachers’ Retirement System explains the process: “The Legislature then votes whether to grant a COLA based on the increase in the CPI or 3%, whichever is less.” The statute adds that where the revised allowance cannot be determined in time for the July payment: “such cost-of-living adjustment shall be added to the monthly retirement allowance, pension or annuity in August or September, as the case may be.”
Who is eligible and who is left out
For the fiscal year 2027 COLA, the retirement system’s notice lists eligible recipients: “a retiree who retired on or before June 30, 2025”, “a survivor of an Option C retiree who retired on or before June 30, 2025”. and others. A retiree who retired after that date waits for a later COLA. Local city, town and county retirement systems are not covered by this page.
One gap to know about: the state employees’ retirement board page was not available to read, so the 2027 figure for state employees rests on the statute, which names both the state employees’ system and the teachers’ system, and on the teachers’ system notices.
The latest increase: fiscal year 2027
The teachers’ retirement system notice says: “The Governor and Legislature have approved a cost-of-living adjustment (COLA) as part of the Commonwealth’s FY2027 budget.” It states the terms: “Effective July 1, 2026, this COLA provides an increase of three percent on the first $13,000 of your retirement benefit, for a maximum increase of $390 per year or $32.50 per month”. The retirement system’s retiree page confirms: “For your reference, the COLA for fiscal year 2026 was 3% on a base of $13,000, effective July 1, 2025. For fiscal year 2027, it was also 3% on a base of $13,000, effective July 1, 2026.”
Where 2027 stands
The next Massachusetts COLA, for fiscal year 2028 and the July 2027 payment, is not set yet: it requires a new vote of the Legislature, and this page updates when one is enacted.
The notice also describes a new COLA Reserve Fund. It says the enhancements “are not effective immediately”, and they do not change the figures above.
A worked example
The notice shows its own arithmetic: “3% x $13,000/year = $390/year; $390/year ÷ 12 months = $32.50/month”. Because the percentage applies only to the first $13,000 of an allowance of $13,000 or more, a larger benefit gets the same maximum dollar increase.
Common mistakes
- Expecting the percentage on the whole benefit. For an allowance of $13,000 or more, the statute applies the percentage to the first $13,000 of the annual allowance.
- Reading fiscal year 2027 as a January 2027 increase. The increase was effective July 1, 2026.
- Assuming a COLA every year. The Legislature must vote on each one, and the July 2027 COLA is not set yet.
Related: Massachusetts state retirement retirement decisions, how public pension decisions work, and whether Massachusetts taxes pensions.
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Answer againSources
- Massachusetts General Court, M.G.L. c.32 s.102 Cost-of-living: malegislature.gov
- Massachusetts Teachers’ Retirement System (state agency), MTRS Retirees page, Cost-of-living adjustments: mtrs.state.ma.us
- Massachusetts Teachers’ Retirement System, FY2027 State Budget Includes COLA, Future COLA Enhancements & Higher Post-Retirement Earnings Limit: mtrs.state.ma.us
- Related official page (not quoted): IRS Tax Topic 410, Pensions and annuities: www.irs.gov
- Related official page (not quoted): IRS Tax Topic 411, Pensions: the General Rule and the Simplified Method: www.irs.gov
Read from the primary documents linked above on October 30, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer or the IRS itself is the right place to confirm anything consequential.