Millions of Americans depend on Social Security and Supplemental Security Income (SSI) benefits, and with the 2025 cost-of-living adjustment (COLA), there are some notable updates that both recipients and new applicants should know.
The Social Security Administration (SSA) calculates the annual COLA using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). For 2025, the COLA increase is 2.5%, slightly below the average 2.6% increase over the past decade.
Let’s look into how this adjustment impacts everything from benefits to earnings thresholds.
COLA
The SSA uses the CPI-W from the third quarter of 2023 through the third quarter of 2024 to calculate the COLA. This year’s modest 2.5% increase will result in slight boosts in monthly payments for Social Security and SSI recipients, even though it’s lower than the average from previous years.
This adjustment may feel small, but it helps recipients maintain their purchasing power, especially with inflation. For example, the maximum monthly Social Security payment for someone at full retirement age will rise to $4,018 in 2025, compared to $3,822 in 2024.
Tax Rates
For workers, tax rates remain unchanged. Employees will continue to pay 7.65%, while self-employed individuals will pay 15.30%. Although the rates stay the same, the wage base has increased, meaning high earners will pay Social Security taxes on a larger portion of their income.
Taxable Earnings
One question on many people’s minds, especially high-income earners, is how much of their earnings will be subject to Social Security taxes. For 2025, the maximum taxable earnings threshold has been raised to $176,100, up from $168,000 in 2024. Once you reach this cap, you no longer have to pay Social Security taxes on additional earnings, offering some tax relief for those with higher incomes.
Work Credits
Earning Social Security benefits requires 40 work credits, which is equivalent to about ten years of employment. In 2025, the earnings required to gain one work credit will increase to $1,810, up from $1,730 in 2024. This means that in order to earn four credits in 2025, an individual must earn at least $7,240 throughout the year.
Retirement Earnings Test
For those who choose to work while receiving Social Security benefits, the Retirement Earnings Test Exempt Amounts have also increased. Individuals under Full Retirement Age (FRA) can now earn up to $23,400 per year before their benefits are reduced, up from $22,320 in 2024. If you reach FRA in 2025, you can earn up to $62,160 that year without impacting your benefits.
Changes
People receiving Social Security Disability Insurance (SSDI) will see changes in the Substantial Gainful Activity (SGA) thresholds. For non-blind individuals, the SGA limit will rise to $1,620 per month in 2025, while blind individuals will see their threshold increase to $2,700 per month, up from $2,590.
The Trial Work Period (TWP) amount, which allows SSDI recipients to test their ability to work without losing their benefits, will also rise to $1,160 per month.
Payment Updates
SSI benefits will see a boost following the 2025 COLA. The maximum federal SSI benefit for an individual will be $967 per month, while a married couple can receive up to $1,450. These amounts represent modest increases, which can provide much-needed financial relief to the country’s most vulnerable citizens.
Additionally, SSI’s resource limits remain at $2,000 for individuals and $3,000 for couples, but the student exclusion amounts have been updated. Students receiving SSI can exclude up to $2,350 per month from their income, with an annual exclusion cap of $9,460.
| Category | 2024 Amount | 2025 Amount |
|---|---|---|
| Social Security Max (FRA) | $3,822/month | $4,018/month |
| SSI Individual Max | $914/month | $967/month |
| SSI Couple Max | $1,371/month | $1,450/month |
| Maximum Taxable Earnings | $168,000/year | $176,100/year |
| Work Credit Earnings | $1,730/credit | $1,810/credit |
| SGA (Non-Blind) | $1,470/month | $1,620/month |
| SGA (Blind) | $2,590/month | $2,700/month |
Although the changes might seem incremental, every small adjustment plays a vital role in keeping Social Security and SSI beneficiaries financially secure.
The updates for 2025 ensure that millions of Americans continue receiving the support they need, whether through increased monthly benefits, higher earnings limits, or adjusted thresholds for SSDI and SSI programs. It’s crucial to stay informed and plan accordingly to make the most of these benefits in the coming year.
FAQs
How much is the 2025 COLA increase?
The 2025 COLA increase is 2.5%.
What is the new maximum Social Security payment?
At FRA, it will be $4,018/month in 2025.
What is the SSI maximum payment for individuals?
It will be $967 per month in 2025.
How much can high earners make before taxes stop?
In 2025, the maximum taxable earnings cap is $176,100.
What is the new work credit requirement for 2025?
One credit requires $1,810 in earnings.
