The new COLA for 2025 will increase benefits by 2.5%. However, retirement, SSI and SSDI payments will not be the only things that will go up. In fact, there will be a new taxable maximum for 2025.
The taxable maximum is the contribution and benefit base. That is the maximum amount of income subject to payroll taxes, beyond which earnings are not taxed for programs like Social Security. While the quarter of coverage is the minimum amount of earnings needed during a 3-month period to qualify for Social Security benefits.
New taxable maximum unveiled by Social Security after COLA
The Social Security Administration has announced that the taxable maximum for 2025 will be $176,100, up from $168,600 in 2024 and 160,200 in 2023. Note that in just 2 years it has increased by $15,900 after COLA increases.
Do not forget that the taxable maximum is necessary if you would like to earn $5,108 in 2025. Those who have earned the taxable maximum for 35 years in jobs covered by SSA and who file at the age of 70 can get up to $5,108.
So, it is something to take into account if you would like to maximize your Social Security payment after COLA. Now, let’s move on to the new quarter of coverage for workers.
New Quarter of Coverage Unveiled by Social Security after COLA
The Agency will also increase the quarter of coverage amount in 2025. This means that you will need more earnings in 2025 to get one work credit. In 2025, you will be able to earn up to 4 work credits.
The same as in 2024. What will be different is the amount of earnings you will need to get one or 4.
- quarter of coverage in 2022: $1,510
- quarter of coverage in 2023: $1,640
- quarter of coverage in 2024: $1,730
- quarter of coverage in 2025 after COLA: $1,810
For your information, Social Security will require recipients to get $1,810 of earnings to get 1 work credit in 2025 after COLA. So, you will need $7,240 to get 4 work credits next year. That is the maximum allowed per year. To get retirement benefits at 62, you will need at least 40 work credits which are about 10 years of work.