5 big Social Security changes for 2025 — how many will impact you personally?

5 big Social Security changes for 2025

As of 2024, almost 68 million Americans were collecting Social Security. Of those, a little more than 51 million people were retired workers. For those 65 and older, Social Security is a major source of income, with 12% of men and 15% of women relying on those monthly benefits for at least 90% of their income.

Even though the program has been around for almost a century, Social Security can undergo changes from one year to the next. Here are five big changes to gear up for in 2025.

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1. A cost-of-living adjustment of 2.5%

In 2025, Social Security benefits will rise by 2.5%. For context, benefits are eligible for a cost-of-living adjustment (COLA) every year, which is tied to inflation.

Since there was a lower rate of inflation in 2024, benefits are getting a modest lift in 2025. Once this change takes effect, the average monthly retirement benefit is expected to increase from $1,927 to $1,976.

Unfortunately, 2025's cost-of-living adjustment may only do retirees so much good. And it's not just because it's a fairly small raise. Rather, it's because the program's yearly increases tend to fall short of meeting seniors' financial needs. The Senior Citizens League reports that as of 2023, Social Security recipients had lost 36% of their buying power since the year 2000.

2. A taxable maximum of $176,100

Workers help fund Social Security through a separate payroll tax. These taxes are different from federal and state taxes — which apply to all income, but for Social Security, there’s a limited amount of income that’s taxable each year.

In 2025, workers are on the hook for Social Security taxes on their first $176,100 of wages. That’s an increase from $168,600 in 2024. Salaried workers get to split that tax obligation evenly with their employers, while the self-employed pay it in full. Those facing higher taxes in the new year can help offset that burden by increasing traditional IRA contributions, which exempt a portion of income from taxes.

Read more: Economists weigh in on Donald Trump's pitch to eliminate Social Security taxes for seniors — here's how to bolster your retirement fund now

3. An increase in earnings test exempt amounts

Recent data from T. Rowe Price’s Retirement Saving and Spending study found that about 20% of current retirees are working in some capacity. And among working retirees, 48% are holding down a job for financial reasons while 45% are doing so for social and emotional benefits.

Social Security will continue to pay benefits to seniors who work. But recipients in this boat who haven’t reached their full retirement age are subject to an earnings test.

In 2025, the earnings test exemption is $23,400, up from $22,320 in 2024. This means beneficiaries can earn up to $23,400 without losing a portion of their Social Security checks. From there, $1 in Social Security benefits will be withheld per $2 of earnings.

The earnings test exemption will be higher, though, for seniors who reach their full retirement age later in 2025. In that case, it’s possible to earn up to $62,160 without losing any Social Security benefits, up from $59,520 in 2024. From there, $1 in Social Security benefits is withheld per $3 of earnings. Withheld benefits are then repaid once recipients reach full retirement age.

4. A maximum monthly benefit of $4,018 at full retirement age

Since there’s only so much income the Social Security Administration will tax each year to fund the program, there’s only so much money it will pay to beneficiaries in return. In 2025, the maximum monthly benefit Social Security will pay at full retirement age is $4,018, up from $3,822 in 2024.

That said, seniors don’t have to settle for the program’s maximum monthly benefit at full retirement age. It’s possible to accrue delayed retirement credits up until age 70 for delaying Social Security benefits. Those boost benefits by 8% per year, so it’s possible to collect more than $4,018 a month in 2025.

5. A higher earnings requirement for work credits

Social Security doesn’t automatically award seniors benefits for reaching a certain age. Rather, benefits are earned by paying taxes on wages and earning credits for doing so.

The Social Security Administration allows workers to earn up to four credits a year, which would fully insure you under the program, but the amount of earnings associated with a single credit can change over time. In 2025, a single work credit will be worth $1,810 of earnings, up from $1,730. Those who work on a very part-time basis should be mindful of their income if they’re looking to secure four credits for the year.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.