Social Security is not a fixed program; it goes through changes and updates every year. Some of these changes are more obvious than others, but it is important for beneficiaries to know about all of them so they can plan their finances correctly and avoid making mistakes.
Social Security benefits will get a cost-of-living adjustment (COLA) in 2025
This is the most anticipated update each year. Benefits are modified to reflect cost-of-living increases, ensuring seniors maintain spending power. The COLA is computed by comparing the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the previous year’s third quarter (July-September) to the current year. The resultant percentage yields the COLA.
In 2025, the outcome of this comparison is 2.5%, which will be applied to all benefits beginning in January. The table below illustrates how it will effect benefits.
| Beneficiary Type | Average Benefit (Before COLA) | Average Benefit (After COLA) | Additional Income |
| Retired workers | $1,924 | $1,972 | $48 |
| Spouses | $910 | $933 | $23 |
| Survivors | $1,509 | $1,547 | $38 |
| Disabled workers | $1,542 | $1,581 | $39 |
The maximum Social Security benefit will increase in 2025
Social Security has maximum payments depending on age, which fluctuate annually with the COLA.The longer you wait to claim benefits (till age 70), the bigger your benefit will be. However, to obtain any of the maximum sums in the table below, you must have worked for at least 35 years earning the maximum taxable income (in 2024, this was $168,000).
| Claim Age | Maximum Social Security Benefit |
| 62 | $2,831 |
| 65 | $3,374 |
| 66 | $3,795 |
| 67 | $4,043 |
| 70 | $5,108 |
The taxation of Social Security benefits will likely continue in 2025 and beyond
Unlike common assumption, Social Security payouts are not taxed by the federal government.Beneficiaries are taxed on their combined income, which includes AGI, nontaxable interest, and one-half of Social Security benefits.
This formula was introduced in 1984 to prevent another Social Security shortfall. However, the amounts of combined income that are taxed have not been changed in years. As a result, the initial 10% of beneficiaries taxed has not increased to 50%.
Although Social Security payouts have increased with inflation, taxation thresholds have not, leading to an increase in the number of pensioners paying taxes. Proposals to eliminate Social Security taxes, including one by Rep. Angie Craig (D-Minn.), have appeared, but remain unlikely to pass due to the program’s $22.6 trillion financial shortfall through 2098.
Even President-elect Donald Trump stated throughout his campaign that seniors should not pay Social Security taxes. This goes against the policies of his own party, which has blocked any attempts to increase Social Security benefits for everyday Americans.
They are only willing to look at solutions that would decrease the stress on the program, not shore it up or strain it further, such as raising the retirement age or cutting benefits.
Major modifications are likely closer to the trust fund’s estimated depletion in 2035, as Congress has typically postponed resolving such concerns until required (as happened in the 1980s when the last shortage was rectified a week before the programme failed).
In any scenario, even if taxes are required on some portions of payments, there are still thresholds that limit the amount beneficiaries would pay:
| Taxable Portion of Benefits | Single Filers | Joint Filers |
| 0% | $25,000 or less | $32,000 or less |
| 50% | $25,000 to $34,000 | $32,000 to $44,000 |
| 85% | $34,000 or more | $44,000 or more |
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