Every year, the Social Security Administration (SSA) modifies its operations to better serve its more than 72 million beneficiaries throughout its five programs and stay updated with society. There are other factors that Americans should consider when it comes to the SSA, even if each program is unique and has distinct requirements for enrollment.
A rise in the cost of living (COLA) is one change that impacts beneficiaries; other changes, such as an increase in taxable wages, have an impact on workers (future beneficiaries).
Social Security Changes for 2025:
Although it’s the most anticipated change, the cost-of-living adjustment (COLA) isn’t the only way Social Security fluctuates yearly. The estimated 184 million workers (and prospective beneficiaries) who pay into the system and the more than 68 million who receive Social Security payments are directly impacted by inflation, wage patterns, and new regulations. In 2025, Social Security will be different in seven significant ways.
1. Cost-of-living adjustment:
Benefits undergo an annual cost of living adjustment, or COLA, to ensure recipients can maintain their spending power and keep up with inflation. Following the release of the third-quarter inflation figures for the year, the adjustment is made public in October. Applied to the typical Social Security income received by a retired individual (for example), the 2.5% rise this year will result in a monthly increase of around $49.
Despite appearing to be a slight rise, it is consistent with the 2.6% average COLA since 2000. The gains we have witnessed since 2020 due to the COVID-19 pandemic’s aftermath, which sent the economy into a tailspin and caused inflation to soar, may have distorted our view.
Because the COLA is applied to all Social Security benefits, not just retirement, people who receive disability, survivor, family, and supplemental security income will also get an increase, even if the precise amount differs.
The earnings limit is increasing:
It is possible to work and get benefits at the same time. However, some of your benefits will be withheld if your 2025 income exceeds a threshold of $23,400 for those not yet at full retirement age and $62,160 for those who are.
Your benefits will be adjusted using the withheld amount once you reach full retirement age so that the withholding won’t be permanent.
Taxable earnings increase:
All workers in the United States pay 6.2% of their salaries to Social Security, which is matched by an additional 6.2% from their employers. Federal taxes fund Social Security. A yearly income ceiling caps this payroll tax, so earnings beyond that amount are not subject to Social Security taxes.
The maximum taxable income for 2025 will be $176,100, up from $168,000 in 2024. This change guarantees that the Social Security program will continue to generate enough income and reflect national salary patterns.
2. Medicare premiums:
In January, the usual monthly cost for Medicare Part B, which covers outpatient care, including doctor visits, increased from $174.70 to $185. The premium increase partially offsets the COLA by $10.30 per month because most Medicare members pay this standard rate, usually as a deduction from their Social Security income.
3. Service at Social Security offices
After two years of pandemic restrictions, local Social Security offices reopened in April 2022. Since then, the SSA has advised consumers who want in-person assistance to contact in advance rather than visit. By 2025, in most cases, the suggestion will be mandatory.
Customers must make an appointment in our field offices beginning January 6th to receive services, including Social Security card inquiries. SSA assistant commissioner Dawn Bystry, who works in the Office of Strategic and Digital Communications, said in an email sent to advocacy organizations and shared on the agency’s website on November 13.
With more than 1,200 field offices, the goal is to “reduce wait times, streamline service delivery, and improve the overall customer experience.” Bystry stated that several hundred offices have completed the switch and “seen significant improvements in wait times.”
Contact your local office or the SSA’s national support line at 800-772-1213 to arrange an office visit. Many SSA services are available over the phone or online if you have a My Social Security account.
The decree of appointment is not final. According to Bystry, offices “won’t turn away people who can’t make an appointment or don’t want to make an appointment for service.” For instance, persons with terminal diseases, members of vulnerable groups, members of the armed forces, and those in other circumstances needing urgent or specialized care can still stroll in for assistance at our field offices.
4. Full retirement age:
The age at which you may start receiving 100% of the retirement benefit based on your lifetime earnings is known as full retirement age or FRA. Depending on the birth, birth has birthed two months at a time for the previous few years.
Those born May 2, 1958, through February 28, 1959, will attain FRA in 2025. FRA is 66 years and 8 months for those born in 1958 and 66 and 10 months for those born in 1959. (Currently, it will settle at 67 for anyone born after 1960.)
Although the minimum age is 62, you can begin receiving retirement benefits before FRA; however, your monthly payout will be permanently lowered by up to 30%. Additionally, you can postpone FRA and benefit from Social Security’s incentive for postponing benefits, an additional 8% annually until you reach age 70. At this point, you can get your full amount.
5. Social Security taxes:
The 12.4 percent tax on the incomes of most workers is the primary source of funding for Social Security. If you are paid, your company spends 6.2 percent, and you pay 6.2 percent (via FICA withholding from your paycheck). Self-employed individuals pay both shares on their yearly tax return.
Although the rate has been constant since 1990, the amount of income subject to it is modified yearly to account for changes in national wages. Your employment income tax liability will increase from $168,600 in 2024 to $176,100 in 2025. Income from assets and earnings beyond that amount are not taxed to pay Social Security.
6. Social Security earnings test:
Social Security uses an earnings test for recipients without full retirement age. A portion of Social Security payments may be temporarily withheld from those who continue to work after receiving retirement, survivor, or family benefits before they achieve that milestone if their earnings surpass a specific threshold.
Every year, that cutoff varies in pay patterns. For every $2 in labor income over $23,400 (increased from $22,320 in 2024), $1 is withheld from the Social Security payout of claimants who would not attain FRA until a later year in 2025. For instance, your benefits for the year would be lowered by $8,300, or half of the $23,400 to $40,000 difference, if your 2025 income was $40,000.
The year you attain FRA, the earnings test becomes less stringent: Until you reach the milestone, Social Security withholds $1 in payments for every $3 in earnings over $62,160 (up from $59,520 in 2024). The test is eliminated: No matter how much you make, there is no longer a benefit deduction, and the SSA raises your monthly payment over time to help you recover the previous withholding.
Individuals who receive Social Security Disability Insurance (SSDI) are subject to specific income rules. Disability benefits are meant for those with a significant physical condition that prevents them from working for a long time, so if your earnings show what the SSA refers to as “substantial gainful activity,” you may lose them.
For most SSDI participants, that barrier is $1,620 monthly in 2025, which is $70 more than in 2024. The 2025 income cap for people receiving SSDI due to blindness is $2,700 per month, which is $110 greater than the 2024 cap.
7. Qualifying for benefits:
Having at least 40 Social Security credits is the initial requirement for receiving retirement payments from Social Security. When you work and pay Social Security taxes on your income, you accrue credits, or “quarters of coverage,” as the SSA knows them. Most individuals meet the qualifying criteria after ten years of employment, which means they can earn up to four credits annually.
You receive one credit for $1,810 in 2025 ($80 more than the 2024 level), so when your annual job income hits $7,240, you may bank your maximum of four credits.
