A new year can bring changes to Social Security benefits, taxes, and regulations. Here’s what’s new for 2025.
One notable change for current benefit recipients is a 2.5 percent cost of living adjustment for 2025, based on changes in the Consumer Price Index between the third quarter of 2023 and the third quarter of 2024.
That increases the average monthly benefit for a retired worker from $1,927 to $1,976, the Social Security Administration says. The amount for a married couple both receiving benefits will increase from $3,014 to $3,089. This is a smaller increase than the 3.2 percent adjustment in 2024, the 5.9 percent of 2022, and the 8.7 percent of 2023.
The tax rate for Social Security and Medicare remains the same. Workers and employers each pay 6.2 percent of the worker’s salary for Social Security and 1.45 percent for Medicare, for a total of 7.65 percent each; self-employed and freelance workers pay the entire 15.3 percent. The cap, however, has increased slightly. In 2024, workers will pay taxes on the first $176,100 (up from $168,600) of their income; anything above that amount is not taxed for Social Security. There’s no cap on Medicare taxes.
The full retirement age — the age at which you’re able to claim full benefits — continues to increase. Under the law passed in 1983, the full retirement age, which started off at 65, has been increasing two months at a time per birth year. Currently, someone born in 1957 reaches full retirement age at 66 years and 6 months. For people born in 1960 or later, it’s 67. It’s currently not scheduled to change, but some Republicans on Capitol Hill have floated the idea of raising it.
You can take benefits starting at age 62, but they’ll be permanently reduced by up to 30 percent a year.
If you’re receiving benefits before you’ve reached full retirement age, the amount of money you can earn before Social Security will begin reducing your benefits rises from $22,320 a year to $23,400 next year. The government will keep $1 for every $2 you make above that amount. If you’re of full retirement age, there’s no cap.
The income level that qualifies as a “quarter of coverage” will increase from $1,730 to $1,810. You need to have worked 40 quarters of coverage to qualify for benefits.
A bipartisan bill on Capitol Hill would also expand Social Security benefits for people who were once government workers.
The Social Security Fairness Act would repeal two federal policies that reduce payments to two groups of Social Security recipients: people who also receive a pension from a job that is not covered by Social Security, and surviving spouses of Social Security recipients who receive a government pension of their own, The Associated Press reports.
The bill has already passed the House, and senators of both parties support it, although some Republicans are balking at the cost.
Office Appointments Encouraged
The Social Security Administration is also highly recommending appointments for SSA office visits. The agency notes that many services can be accessed online, and that, “We want to make clear that we will not turn people away for service who are unable to make an appointment or do not want to make an appointment. For example, members of vulnerable populations, military personnel, people with terminal illnesses, and individuals with other situations requiring immediate or specialized attention may still walk in for service at our field offices. Some of our offices also have minimal to no wait times, and they will still serve customers who walk in.”
Feature image, stock.adobe.com
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