Everything is going to change in Social Security in 2025: Benefit increases and more changes affecting seniors

The Social Security Administration distributes monthly benefits to more than 72 million citizens in the US, so new modifications or changes could significantly affect the future of beneficiaries, especially seniors who rely on these payments to cover their expenses and enjoy their golden years. Even though this may not seem like a lot of money, Social Security has been crucial in supporting seniors’ bill-paying needs and strengthening their financial bases. Check here for the upcoming changes and how they will affect you, depending on the program you qualify for.

Everything is going to change in Social Security in 2025

To keep seniors from losing purchasing power, benefits are intended to be increased in proportion to rises in the cost of goods and services. Perhaps one of the most important changes that could affect all Social Security beneficiaries is the cost of living adjustment (COLA), which, according to recent estimates was set between 2.6% and 3.2%. However, the official increase will be determined at the end of this year.

Social Security changes that retired workers can expect in 2025

High-earners will probably owe more in payroll tax

High earners will pay Social Security’s 12.4% payroll tax on all earned income between $0.01 and $168,600 starting in 2025; this will fund more than 90% of the program. On the other hand, any wages and salaries that exceed the $186,00 maximum taxable earnings cap are free from taxes. High earners’ tax gap is predicted to increase as a result of this adjustment. However, except in years when there is no COLA and deflation, the maximum taxable earnings limit often adjusts in lockstep with the National Average Wage Index (NAWI). The maximum taxable earnings limit is expected to rise above $168,600 in 2025 due to rising prices for goods and services as measured by the NAWI. Finally, it is important to consider that every dollar earned by 94% of working Americans earning less than $168,600 goes into Social Security, but 6% of high earners who are exempt from payroll taxes may owe more in payroll taxes next year.

The Social Security payment amount is likely to increase once again

In 2025, high-earners might see higher payroll taxes, but their maximum monthly benefit as a retired worker should rise as well. Benefits at full retirement age are capped under the program at $3,822, an increase of $195 from 2023. It is anticipated that the rise in 2025 will be slight. Only approximately 2% of retired worker beneficiaries are eligible for this maximum payment, and they must meet three criteria:

1. Retirees should have worked for at least 35 years.
2. Workers must have met or exceeded the maximum taxable earnings cap for the last 35 years
3. Retirees must wait until their FRA to claim benefits.

Eligibility requirements to receive Social Security benefits may be more challenging

Social Security benefits are earned through work credits and are not determined by place of birth or citizenship. Forty-lifetime work credits more than four credits per year—are required to qualify for a retired worker benefit. You will have earned the maximum four-lifetime credits if your wages and salaries total $6,920 this year, as the minimum earnings level for these credits is $1,730 in 2024. This threshold is expected to increase slightly next year.

Social Security changes that disabled people can expect in 2025

Disability benefits income thresholds should increase

Approximately 7.25 million workers were receiving Social Security long-term disability benefits as of April. Disabled workers are only permitted to take home a specific amount of their monthly earnings to keep these benefits. Workers who are disabled but are not blind will be able to make up to $1,550 per month in 2024 without having their benefits revoked, an increase of $80 from 2023. Without their benefits ending, blind-impaired workers can earn $2,590 per month, which is $130 more than they would in 2023. Assuming a slight decrease in inflation from the previous year, the Social Security disability income level for non-blind claimants may exceed $1,600 per month in 2025, and the threshold for blind beneficiaries may approach $2,700 per month.