As we move into 2025, Social Security is about to celebrate a major milestone—90 years of service to Americans. Over the decades, Social Security has played an essential role in helping retirees and people with disabilities stay financially secure.
But the program is always changing, and new adjustments happen every year. In 2025, five big changes could affect how much you pay in taxes and how much you receive in benefits.
Some of these changes might not apply to you directly, but understanding them could help you make better decisions for your future.
1. A 2.5% Increase in Social Security Benefits (COLA)
One of the most talked-about updates for 2025 is the 2.5% Cost of Living Adjustment (COLA). This is lower than last year’s 3.2% increase but still an important change for Social Security recipients.
The average monthly Social Security check will go up from $1,927 to $1,976. That means an extra $588 per year for most people.
For those who earn more than the average benefit, the COLA increase might be even higher. The Social Security Administration will send out individual COLA notices soon, so keep an eye out for yours.
If you have an online account with Social Security, you can also view your 2025 benefit amount directly in your account.
2. Changes to Social Security Work Credits
To qualify for retirement benefits, you need 40 Social Security work credits. Each year, you earn credits based on your income and Social Security taxes. In 2024, you earn one credit for every $1,730 you make. In 2025, this amount will increase slightly to $1,810.
While many part-time workers earn enough to reach four credits per year, this change may be noticeable for those who are just starting their careers or have irregular incomes.
3. Higher Limits on Social Security Payroll Taxes
Currently, you pay Social Security taxes on income up to $168,600. This means that most people pay taxes on all their earnings, but higher earners may not pay for everything they make. In 2025, the Social Security payroll tax ceiling will increase to $176,100. For high earners, this will result in higher taxes.
Self-employed individuals, who pay both the employee and employer portions of Social Security taxes, will pay more—around $930 more. If you are traditionally employed, your tax increase will be smaller, around $465, because you only pay half of the Social Security tax rate.
4. Full Retirement Age (FRA) Increases Again
Your full retirement age is the age at which you can begin to receive your full Social Security benefits. This age is set based on your birth year. If you were born between 1943 and 1954, your FRA is 66.
However, the government has been increasing the FRA by two months every year, and in 2025, it will increase to 66 years and 10 months. The full retirement age will continue to rise to 67 for those born in 1960 or later.
You don’t have to wait until your FRA to claim benefits, but if you claim early, your benefits will be smaller. It’s important to think carefully about when to start taking Social Security benefits to get the most out of the program.
5. Changes to the Social Security Earnings Test
The earnings test applies to workers under their full retirement age who are still working and receiving Social Security benefits.
If you earn over a certain amount, your Social Security benefits will be reduced. In 2024, the earnings limit is $22,320, meaning you’ll lose $1 for every $2 you earn above that amount.
In 2025, this threshold will rise to $23,400. For workers who are near their full retirement age, the limit will increase from $59,520 to $62,160.
These changes mean that you can earn more before your benefits are reduced. It’s also important to note that any money taken due to the earnings test is not lost forever. You’ll get it back when you reach your full retirement age, and your benefit amount will increase to reflect the amounts withheld earlier.
Looking Ahead: What to Expect?
These changes in 2025 might seem small, but they can make a big difference in your financial planning. From higher taxes to bigger benefits, understanding how these changes affect you can help you plan better for your future. Whether you’re preparing for retirement or just starting to save, these adjustments are important to know.
Keep in mind that these numbers change every year, usually due to inflation, so expect to see some of these limits rise again in the future. By staying updated, you’ll be better prepared to manage your Social Security benefits and taxes in the years to come.
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