Will the 2026 State Pension rise push you into paying tax? Here’s what the new DWP triple lock means for you

A revised wage growth figure from the Office for National Statistics (ONS) has strengthened expectations that the UK state pension will see a larger increase in April 2026 than previously projected. Under the government-backed triple lock guarantee, pensions rise annually by whichever is higher: inflation, average earnings growth, or 2.5%. With earnings now estimated at 4.8%, pensioners may benefit from an earnings-led increase rather than the inflation route.

This upward adjustment propels the full new state pension closer to, or even over, the tax-free personal allowance, raising fresh debates about pensioner taxation and fiscal sustainability.

How the Triple Lock Works and Why Earnings Matter

The triple lock mechanism ensures that each year, on 6 April, the state pension increases by the highest of:

1. Inflation (measured by CPI in September of the previous year)
2. Average earnings growth (May–July)
3. 2.5% floor

Introduced in 2010 to protect pensioners from stagnating incomes, the triple lock has become a politically sensitive commitment, especially as cost pressures mount.

For April 2025, the pension rose by 4.1%, reflecting stronger earnings growth over inflation.

Now, with ONS revising average earnings growth upward to 4.8%, that metric looks poised to lead the 2026 increase, assuming inflation in September remains lower.

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Projected Increase: How Much Will Pensioners Get?

If earnings at 4.8% remain the dominant measure, analysts forecast that:

• The new state pension could rise to around £241.30 per week, or roughly £12,548 annually.
• The basic (old) state pension may increase to about £184.90 per week.

This growth, while modest in percentage terms, pushes the full new pension closer to, and potentially past, the frozen personal allowance of £12,570, which has not increased since 2021.

Tax Implications and Driving Concerns

A key implication of the rising pension is the possibility that pensioners relying solely on state pension income could start paying income tax. Currently, the personal allowance allows individuals to earn up to £12,570 tax-free. With pension payments nearing that threshold, some pensioners may cross it, resulting in tax liabilities.

Financial commentators warn this could lead to hundreds of thousands of pensioners being pushed into the tax system for the first time, creating political and fiscal pressure on the Treasury.

Political and Fiscal Challenges Ahead

The projected increase places further strain on public finances as government commitments to the triple lock remain firm. Labour’s platform has pledged to uphold this guarantee for the current parliamentary term.

However, sustaining triple lock increases becomes more difficult when tax thresholds are frozen, while pensioner numbers grow and wage pressures persist. Some experts now argue for reform, such as adopting a smoothing mechanism of wage increases over multiple years to reduce volatility.

The state pension age is also under review. The government recently announced it will conduct a fresh assessment, which could influence future uprating and eligibility schemes.

What Pensioners Should Do Now

• Check your entitlement: Review your National Insurance record to see whether you qualify for the full new state pension or if gaps exist.
• Plan for tax exposure: If your pension alone nears the personal allowance, you may need to anticipate paying income tax.
• Watch September inflation: The ultimate value used in the triple lock depends on whether inflation in September exceeds earnings growth.
• Monitor government decisions: Stay alert to policy signals around future tax thresholds, pension reform, or possible changes to the triple lock.

This impending state pension rise will deliver welcome support to millions of retirees but also poses new puzzles over taxation, affordability, and the future of pension guarantees in the UK.

FAQ

1. What is the expected state pension increase for 2026?

The DWP’s 2026 state pension is projected to rise by around 4.8%, driven by strong wage growth. This means the new full state pension could reach approximately £241.30 per week or £12,548 per year, based on the latest ONS earnings data.

2. When will the 2026 state pension increase take effect?

The new state pension rates will come into effect from April 6, 2026, following the government’s triple lock formula that compares inflation, wage growth, and 2.5%.

3. What is the triple lock, and how does it affect pensions?

The triple lock ensures pensions rise each April by the highest of:

• Inflation (CPI),
• Average earnings growth, or
• 2.5%.
  For 2026, earnings growth (4.8%) currently leads, guaranteeing an inflation-beating increase for retirees.

4. Will pensioners start paying tax on their state pension in 2026?

Yes, many pensioners could be pushed into paying tax for the first time. The tax-free personal allowance is frozen at £12,570, while the new state pension could rise close to £12,548, leaving a narrow gap before tax applies.

5. Why are more pensioners facing tax bills despite higher payments?

Because while the state pension increases annually, the personal allowance remains frozen. This “fiscal drag” means higher pension income can now fall within the taxable threshold, affecting an estimated 650,000 retirees in 2026–27.

6. How is the new state pension different from the basic state pension?

• The new state pension applies to people reaching pension age after April 6, 2016, with a full rate of around £241.30/week in 2026.
• The basic state pension, for older retirees, will rise to about £184.90/week.

7. Will Labour keep the triple lock policy in place?

Yes. The current Labour government has pledged to maintain the triple lock for the rest of its term, ensuring pensioners’ incomes keep pace with inflation and earnings.

8. How can I check if I qualify for the full state pension?

Visit gov.uk/check-state-pension to review your National Insurance record. You typically need 35 qualifying years to receive the full new pension.

9. Could inflation change the final pension increase?

Yes. The final increase is based on the higher of inflation (September 2025 CPI) or earnings (May–July 2025). If inflation rises above 4.8%, that figure could replace earnings as the uprating measure.

10. How will the 2026 pension rise impact government finances?

Analysts warn that maintaining the triple lock amid frozen tax thresholds will strain public finances, costing billions more annually. The DWP is under pressure to consider reforms or gradual adjustments after 2026.

11. Is the state pension taxable income?

Yes. The state pension counts as taxable income, but tax is only due if your total income (including private pensions or savings) exceeds £12,570.

12. Can pensioners avoid paying tax on their state pension?

Pensioners can stay below the tax threshold by limiting other sources of taxable income or using tax-free savings accounts like ISAs. However, if the pension surpasses £12,570, some tax will be unavoidable.

13. How much could pensioners gain from the 2026 rise?

A full new state pensioner will earn about £575 more per year, while basic pensioners will gain roughly £430, depending on individual contributions.

14. Will the 2026 rise affect Pension Credit or other benefits?

Yes. An increase in state pension income can reduce eligibility for means-tested benefits like Pension Credit, although these thresholds may also be reviewed in 2026.

15. What should pensioners do now?

• Check NI contributions to maximise entitlement.
• Plan for potential tax bills in 2026.
• Monitor inflation and government updates in late 2025.
• Seek advice if nearing retirement or tax thresholds.