Social Security Is Getting a Shakeup in 2025. Here’s What to Expect

The program is undergoing a number of key changes you need to know about. Although Social Security has been around for nearly a century, the program’s rules aren’t necessarily set in stone. In fact, in the coming year, Social Security will undergo a number of big changes. And those changes won’t just impact retirees who are already receiving benefits. They could very well affect you even if you’re nowhere close to retirement. Here’s what happening in 2025 that you need to know about.

1. Social Security benefits are rising by 2.5%

Each year, Social Security benefits are eligible for an automatic cost-of-living adjustment, or COLA. The purpose of COLAs is to help recipients maintain their buying power as living costs increase due to inflation. In 2025, Social Security benefits will increase by 2.5%. That’s actually the smallest COLA to arrive in years. However, the news isn’t all bleak. Because inflation is easing, seniors may find that what they lose in the form of a smaller Social Security raise, they gain in the form of less expensive groceries, gas, utilities, and more.

2. Social Security’s earnings-test limit is increasing

Seniors on Social Security are allowed to hold down jobs and earn money from them. And once you reach full retirement age (which is 67 if you were born in 1960 or later), you can earn any amount of income from a job without having a portion of your monthly Social Security payments withheld. But if you’re working and receiving benefits prior to full retirement age, you’ll need to make sure your income doesn’t exceeds the earnings-test limit that applies to you. The general Social Security earnings-test limit in 2025 is $23,400 (up from $22,320 in 2024). You’ll have $1 in Social Security withheld for every $2 you earn above that limit. However, if you’ll be reaching full retirement age at any point in 2025 but aren’t yet at that age at the start of the year, then you get a much higher earnings-test limit. In that case, it’s $62,160 (up from $59,520 in 2024). And you’ll then have $1 in Social Security withheld for every $3 you earn above that limit. You should also know that withheld benefits aren’t lost forever. If you exceed the earnings-test limit in 2025, your monthly checks will be smaller initially. But once you reach your full retirement age, your checks should increase as those withheld benefits are paid back to you.

3. Social Security’s wage cap is rising

It’s not a given that you’ll pay Social Security taxes on your entire salary. Each year, there’s a wage cap put in place that determines how much income is taxed to fund the program. In 2025, that cap is $176,100, up from $168,600 in 2024. So if you earn $200,000 a year, you won’t pay Social Security taxes on your last $23,900 of income. What this also means is that people earning $176,100 in 2025 and people earnings millions of dollars will have the same Social Security tax burden. Some lawmakers feel that’s unfair and are seeking to make changes to the wage cap or even eliminate it entirely. But that’s not such a simple thing to do, since Social Security’s maximum monthly benefit is tied to a limit on taxable wages.

4. Social Security’s work credits will have a higher earnings threshold

To qualify for Social Security as a retiree, you need to earn 40 work credits in your lifetime, at a maximum of four credits per year. In 2025, a single work credit is worth $1,810, up from $1,730 in 2024. So if you want your four work credits for the year, you’ll need to make sure your wages equal at least $7,240. This change generally won’t impact people who work full-time. But if you work part-time or are a gig worker, it’s an important thing to be mindful of. You may be affected by one or more of these Social Security changes in 2025. That’s why it’s important to know about them in advance — and adjust your financial plans if necessary. For example, if you’re a higher earner, you may want to find ways to lower you taxes to offset the higher amount of wages you’ll be taxed on for Social Security purposes. And if you’re retired, it helps to know how much leeway you have to earn money in the new year before having your benefits impacted.