The Social Security Administration (SSA) uses the Consumer Price Index (CPI-W) to calculate the 2025 COLA. All SSA needs is the CPI-W from the third quarter of 2023 through the third quarter of 2024.
As a result of this calculation, there will be a COLA increase of just 2.5%, slightly lower than the 2.6% average COLA for the last decade. Tax rates are something workers worry about. Both employee and self-employee tax rates remain unchanged at 7.65% and 15.30% respectively.
Highlights of the 2025 COLA increase for Social Security
One of the things high earners are always eager to know is the maximum taxable earnings. It has increased again and it will be $176,100 in 2025, up from $168,00. So, once you reach that amount of earnings, you will not have to pay taxes for any exceeding earnings.
To get Social Security, a worker needs 40 work credits (ten years of work). To get one credit you will need $1,810 in earnings in 2025, up from $1,730. Thus, the 2025 has also affected the quarter of coverage.
Another thing Social Security has updated is the Retirement Earnings Test Exempt Amounts. Under Full Retirement Age (FRA), the new limit will be $23,400 per year, up from $22,320. The amount for the year a retiree reaches FRA will soon be $62,160 per year.
2025 COLA and the Social Security Disability Thresholds
Social Security has also increased the Substantial Gainful Activity (SGA) thresholds. For the non-blind, it will be $1,620/mo in 2025. For blind people, it will be $2,700/mo, up from $2,590. The Trial Work Period limit has gone up to $1,160 per month.
The maximum amount at Full Retirement Age is $3,822 in 2024. After the 2025 COLA, it will become $4,018 per month. SSI maximum payment have also increased.
- SSI maximum amount for a single person: $967 after the cost-of-living adjustment
- SSI maximum amount for a married couple: $1,450 after COLA
- Resource limits for SSI: $2,000 (individual) and $3,000 (couple)
- SSI student exclusion: $2,350 (monthly limit)
- SSI student exclusion: $9,460 (annual limit)