Social Security will turn 90 years old in 2025, and a lot has changed during that time. Every year, the government makes adjustments to the program that help it take in greater tax revenue and increase benefits available to retirees, among other things.
Next year is no different. There are five major changes coming your way in just a few short weeks. They may not all apply to you, but even one can have a significant effect on your benefits now or in the future.
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1. 2.5% cost-of-living adjustment (COLA)
The big Social Security news from the last couple of months has been the 2025 COLA, which came in at 2.5%. This is under the 3.2% increase retirees saw last year. It’s set to bump the average monthly check from $1,927 to $1,976, giving the typical beneficiary $588 more to spend during the year.
However, some people may get more than this if their current benefits are above average. The Social Security Administration is sending out personalized COLA notices to all beneficiaries this month with their exact 2025 benefit amount so keep an eye out for this. If you have a my Social Security account, you can also view this notice in your Message Center.
2. Changing definition of a Social Security credit
You must earn 40 Social Security work credits throughout your career to be eligible for retirement benefits. A credit is a certain dollar amount of income that you pay Social Security taxes on throughout the year.
In 2024, you earn one credit for each $1,730 of income, and you can earn a maximum of four credits per year. This will rise to $1,810 in 2025. Most people shouldn’t notice this change, though. Even many part-time workers earn the $7,240 they’d need to claim their four work credits for 2025.
3. Higher ceiling on Social Security payroll taxes
Right now, you only pay Social Security payroll taxes on the first $168,600 you earn in a year. The high limits mean that most people pay these taxes on all of their income, but that’s not true for some of the wealthiest Americans.
In 2025, these individuals will have to pay a little more as the ceiling on Social Security payroll taxes rises to $176,100. This could result in an additional $930 in taxes for self-employed individuals who pay both the employee and employer portions of the 12.4% Social Security tax. Traditionally employed workers who only pay 6.2% could see as much as a $465 increase in their tax bill next year due to the increased limits.
4. Increased full retirement age (FRA)
Your full retirement age (FRA) is the age at which you qualify for your full Social Security benefit. The government assigns this to you based on your birth year. For adults born between 1943 and 1954, it’s 66. But the government has been raising FRA by two months per year for the last several years.
In 2024, FRA is 66 and 8 months, but it will rise to 66 and 10 months in 2025. You’ll see the same thing in 2026 when FRA reaches 67 for those born in 1960 and later. But after this, FRA will remain steady, at least for the foreseeable future.
Note that you don’t have to wait until your FRA to claim benefits. You can apply as early as 62 regardless of your FRA. But claiming early reduces your benefits significantly, so it’s worth weighing all possible claiming ages before deciding which is best for you.
5. Higher earnings test limits
The Social Security earnings test withholds benefits from workers under their FRA who claim checks while earning an income over a certain threshold. In 2024, you lose $1 for every $2 you earn over $22,320. Those who reach their FRA in 2024 lose $1 for every $3 they earn over $59,520 if they reach this amount before their birthday.
These limits will rise to $23,400 and $62,160, respectively, for 2025. This means these workers can earn a little more before having money withheld from their checks.
And in case you’re worried, you should know that anything the government takes from your checks due to the earnings test isn’t gone forever. You’ll get it back when you reach your FRA and the government increases your benefit to make up for what it withheld before.
Keep these Social Security changes in mind for the future as you’ll see them again next year, too. The amount of the changes varies from year to year based on inflation, but it’s a pretty safe bet you’ll see most of the numbers mentioned above rise again in 2026.
