Social Security COLA To Increase 2.5% For 2025

WASHINGTON, D.C. - Social Security and Supplemental Security Income (SSI) benefits for more than 72.5 million Americans will increase 2.5 percent in 2025, the Social Security Administration announced.

The 2.5 percent cost-of-living adjustment (COLA) will begin with benefits payable to nearly 68 million Social Security beneficiaries in January 2025. Increased payments to nearly 7.5 million SSI recipients will begin on December 31, 2024.

The maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $176,100.

The earnings limit for workers who are younger than "full" retirement age will increase to $23,400. 

The earnings limit for people reaching their “full” retirement age in 2025 will increase to $62,160. 

There is no limit on earnings for workers who are "full" retirement age or older for the entire year.

How Social Security Cost-Of-Living Adjustments Are Calculated

The purpose of the COLA is to ensure that the purchasing power of Social Security and Supplemental Security Income (SSI) benefits is not eroded by inflation. 

It is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the last year a COLA was determined to the third quarter of the current year. If there is no increase, there can be no COLA.

The CPI-W is determined by the Bureau of Labor Statistics in the Department of Labor.