7 New Social Security Changes for 2025

The U.S. Social Security Administration (SSA) announces its annual changes to the Social Security program for the following year every October. The 2025 changes consist of a 2.5% cost-of-living adjustment (COLA) to the monthly benefit amount, an increase in the maximum earnings subject to the Social Security tax, and a rise in disability benefits.

1. COLA Increase

More than 72.5 million Social Security recipients will receive a 2.5% COLA increase to their monthly benefits in 2025.

The adjustment helps benefits keep pace with inflation and is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) that's calculated by the U.S. Bureau of Labor Statistics (BLS).

2. Higher Maximum Monthly Payout

The youngest age at which individuals can claim Social Security retirement benefits is 62. Claiming before full retirement age (FRA) will result in a permanently reduced payout, however.

Congress passed a law in 1983 increasing the full retirement age by two months each year from 2000 to 2022 until it hit 67. Anyone born in 1960 or later will not reach full retirement age until they're 67 as of 2024.

Those who wait to claim Social Security past full retirement age earn delayed retirement credits and collect more. The maximum payout of a worker retiring at full retirement age will be $4,018 in 2025.

Earning income above a certain threshold will temporarily reduce your benefits before your full retirement age. That threshold is $23,400 in 2025, up from $22,320 in 2024. You can work as much as you like and your benefits won't be reduced when you reach full retirement age. You'll still receive your full Social Security benefits.

3. Earnings Limits Increase

All or part of their benefits will be temporarily withheld, depending on how much they earn, for recipients who work while collecting Social Security benefits. Before reaching full retirement age, Recipients who haven't reached full retirement age can earn up to $22,320 in 2024, increasing to $23,400 in 2025. One dollar will be deducted from their payment for every $2 that exceeds the limit.

Individuals who reach full retirement age in 2025 can earn $62,160, an increase from $59,250 in 2024. Your Social Security benefits will be reduced by $1 for every $3 you earn over the limit in the months before you reach your full retirement age. No benefits will be withheld if you continue to work after you reach full retirement age.

4. Taxable Earnings Increase

Employees paid the 6.2% Social Security tax on income of up to $168,600 in 2024. Their employers matched that payment. The maximum taxable earnings increase to $176,100 in 2025. The Social Security tax rate remains at 6.2% and 12.4% for the self-employed.

5. Disability Benefits and Income Thresholds Increased

Social Security Disability Insurance (SSDI) provides income for those who can no longer work due to a disability. People in the United States who are receiving Social Security disability benefits receive a 2.5% increase in 2024.

Disabled workers receive on average $1,542 per month in 2024. This will increase to $1,580 in 2025. Disabled workers with a spouse and one or more children can expect an average of $2,826 in 2025. Blind workers have a cap of $2,700 per month in 2025.

6. Higher Credit Earning Threshold

You must earn at least 40 credits or a maximum of four per year over your working life to qualify for Social Security benefits. The amount it takes to earn a single credit goes up each year. It will take $1,810 in earnings per credit as of 2025.

7. Increase in Medicare Part B Premiums

Premiums for Medicare Part B are determined according to the Social Security Act. They rose in 2024. The standard monthly premium for Medicare Part B is $174.70 in 2024. The annual deductible for Medicare Part B is $240 in 2024.

The Centers for Medicare and Medicaid Services is expected to announce 2025 premiums by December 2024.

Program Funding Through 2035

The Social Security and Medicare programs face future financing issues, according to the 2024 Social Security and Medicare Boards of Trustees annual report. The Old-Age and Survivors Insurance (OASI) Trust Fund and the Disability Insurance (DI) Trust Fund are combined to create the OASDI that's used to indicate the status of the Social Security program.

OASDI is projected to pay 100% of total scheduled benefits until 2035. The projected fund's reserves will be depleted at that point and the continuing total fund income will pay 83% of expected benefits.

The Old-Age and Survivors Insurance (OASI) Trust Fund is projected to pay 100% of scheduled benefits until 2033. The fund's reserves will be depleted and continuing program income will be able to pay 79% of benefits after that time. The Disability Insurance (DI) Trust Fund is projected to support 100% of benefits through 2098.

The Bottom Line

Social Security benefits increase annually with a COLA based on inflation. The ideal time to take retirement benefits depends on your financial situation and retirement goals.