Social Security benefits to increase 2.5% in 2025
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The annual COLA increase is the smallest in recent years. Photo illustration: Kevin Dietsch/Getty Images
Social Security retirement and disability benefits for 2025 will increase by 2.5% and about $50 a month starting in January, the government announced Thursday.
Why it matters: The cost-of-living adjustment, known as COLA, is lower than the average of the last decade of 2.6%.
- The adjustment affects more than 72.5 million recipients of Social Security retirement and disability benefits.
Context: The adjustment is much smaller than 2023's historic 8.7% increase, which was the largest hike in more than 40 years and added an average of $140 to benefits.
- The 2022 increase was 5.9% and the 2024 increase was 3.2%.
COLA tied to September CPI
How it works: The COLA is based on the change in Q3 CPI for urban wage and clerical workers compared with a year earlier, Axios' Neil Irwin explains.
- September's CPI, which was released Thursday, was the final data point needed to calculate the cost of living adjustment.
When 2025 Social Security increase starts
Zoom in: Roughly 68 million Social Security beneficiaries will see the increase starting with payments in January 2025.
- Increased payments to nearly 7.5 million people receiving SSI will begin on Dec. 31.
- Some people receive both Social Security and SSI benefits.
Average monthly Social Security benefits for 2025
For all retired workers, the average benefits are estimated to increase to $1,976 in January from the 2024 monthly benefit of $1,927.
Other monthly estimated averages listed on a Social Security Administration fact sheet are:
- Aged couple, both receiving benefits: $3,089 up from $3,014.
- Widowed mother and two children: $3,761 up from $3,669.
- Aged widow alone: $1,832 up from $1,788.
- Disabled worker, spouse and one or more children: $2,826 up from $2,757.
- All disabled workers: $1,580 up from $1,542.
Earnings subject to Social Security tax increases
The inflation adjustment is used to calculate the wage cutoff above which Americans do not owe Social Security tax and the amount of earnings subject to the tax.
- The maximum earnings subject to the Social Security tax, also known as the taxable maximum, will increase to $176,100 from $168,600.
- The earnings limit for workers who are younger than their "full retirement age" increases to $23,400 from $22,320.
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