Social Security changes in 2025

January 3, 2025

Maybe you’ve heard there are changes coming to Social Security in 2025. But do you know what they are? If you’re looking for a quick reference guide, you’ve come to the right place.

Here’s what you need to know

Before we address specific changes to Social Security in 2025, let’s look at some different types of benefits - that are paid monthly - that you may be able to claim:

Retirement—Based on the highest 35 years of your eligible earnings. Eligibility requires you to be 62+ and have worked and have earned 40 social security credits. You can earn up to 4 credits per year.
Disability—For people with specific disabilities and sufficient work history.
Survivor—For specific family members of someone who worked and paid Social Security taxes before they died, such as a current or ex-spouse, dependent parents or kids.
Family—For some family members of a person eligible for Retirement or Disability payments, like a current or ex-spouse, kids and, possibly, grandchildren.
Supplemental Security Income—People who have little or no income and/or resources, are 65+, and have a specific disability.

Now that we’ve gone through a few of the types, let’s look at Social Security benefit changes coming next year.

Social Security benefit change #1: Cost of living (COLA) raises

Beginning January 2025, there’s a 2.5% COLA increase for Social Security and Supplemental Security Income (SSI) benefits, which affects about 72.5 million people.¹Though the exact amount of the Cost-of-living Allowance can vary, there typically is one.

The Social Security Administration instituted automatic, annual COLA increases in 1975. These raises are tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) and are an effort to combat inflation.² The CPI-W is based on the average inflation from July, August and September and is indicative of cost-of-living changes that year. It’s important to note that, despite these efforts, the increases don’t always keep pace with inflation—especially post-Covid. Additionally, according to an October 10, 2024, press release from The Social Security Administration:³

“This year, for the first time, Social Security beneficiaries will receive a newly designed and improved COLA notice that makes it easier for customers to find the information they need most. The simplified COLA notice is now only one page, uses plain and personalized language, and provides exact dates and dollar amounts of a person's new benefit amount and any deductions.”

How do you know what your COLA will be? Notices will be available online to most beneficiaries in December, and you can expect to receive a notice in the mail early that month.

Social Security benefit change #2: Raising maximum taxable earnings

The Social Security tax is calculated as a percentage of your gross earnings, but only up to a specified limit. The government determines said limit and it varies each year. It’s correlated to the increase in average wages and, in 2025, will be raised to $176,100—up from $168,600 in 2024.⁴

Social Security benefit change #3: Maximum Social Security benefits at full retirement age

The amount of your Social Security check depends, in part, on your age when you start to claim benefits. Full retirement age varies by birth year, and the oldest full retirement age is currently 67 years old. If you start claiming benefits at full retirement age, the maximum amount you can get is $4,018, which is up from $3,822 in 2024.⁵

Social Security benefit change #4: Adjustments to earnings-test-exempt amounts

What is the earnings test? Social Security may reduce your benefits if you file before the normal retirement age (NRA), which is age 67, and earn more than a certain amount. This is called a retirement earnings-test-exempt amount.

So how is this determined? The government decides exempt amounts through a process that’s laid out in the Social Security Act. In 2025, there are two exempt amounts, $23,400 (before NRA) and $62,160 (year of attaining NRA).⁶For income that exceeds the exempt amounts, social security benefits will be reduced.