Everything changes with the start of a new year, and Social Security is no different. The federal agency says that in less than two weeks, there will be two big changes to the Social Security system that will have a direct effect on retirees and other beneficiaries across the country.
Some changes to Social Security only affect certain groups of people, while others affect a lot of people who are already claiming or are thinking about claiming. As 2025 gets closer, there are two big changes to keep in mind about the latter. Even if you are not getting benefits right now, you should still learn about them because they could help you plan for retirement in the future.
The SSA announced two important surprises that will impact retirees in January 2025
Monthly paychecks will increase for more than 72 million beneficiaries
In 2025, Social Security payments should change in a way that is mostly good. All current Social Security recipients will get more money each month thanks to the cost-of-living adjustment (COLA).
It is important to remember that the annual COLA’s job is to fight the effects of inflation. The prices of most goods and services, like food, clothes, and housing, seem to be slowly going up. Also, people who depend on fixed incomes like Social Security are more affected by it.
On the bright side, people who get benefits can look forward to a 2.5% increase in their monthly payments starting in January 2025. Even though a 2.5% rise might be bad, it is less than the average COLA since it started happening every year in 1975. There have been times when benefits stayed the same, but that does not happen very often. Here is a list of the last 10 COLAs:
Year | COLA increase |
2015 | 1.70% |
2016 | 0% |
2017 | 0.30% |
2018 | 2% |
2019 | 2.80% |
2020 | 1.60% |
2021 | 1.30% |
2022 | 5.90% |
2023 | 8.70% |
2024 | 3.20% |
The inflation rates for July, August, and September of the previous year are used by Social Security to figure out the COLA for the following year. The 2.5% COLA makes sense, even though inflation has not been as high as it has been in the past few years. I think a lot of retirees do not mind giving up this comfort.

Beneficiaries will have to pay more taxes on their Social Security paychecks
There are a lot of American workers who pay Social Security payroll taxes their whole lives. You and your spouse each pay 6.2% of the 12.4% Social Security tax if you have a job. You are responsible for the whole 12.4% if you work for yourself. On the plus side, some workers may not have to pay Social Security payroll taxes on their earnings up to a certain amount. This amount is called the wage base limit.
In 2024, the wage base limit was set at $168,600. In 2025, it will go up to $176,100. Because of this, workers with higher incomes will have to pay more into Social Security.
For instance, if you make $175,000 a year in 2024, the SSA will not tax about $6,400 of that. On the other hand, all of that $175,000 will be taxed in 2025 because it is less than the new earnings base limit. Here are the ten most recent US wage limits:
Year | Wage Base Limit |
2015 | $118,500 |
2016 | $118,500 |
2017 | $127,200 |
2018 | $128,400 |
2019 | $132,900 |
2020 | $137,700 |
2021 | $142,800 |
2022 | $147,000 |
2023 | $160,200 |
2024 | $168,600 |
It is important to know about the yearly wage base limit and tax issues if you want to get the biggest monthly benefit ($5,108 in 2025). During the 35 years that Social Security uses to figure out your monthly benefit, you must earn more than the salary base limit.
You must also wait until you turn 70 (the oldest age at which benefits stop growing by waiting) to be able to get the most. Current Social Security claimants are not directly affected by wage base limits, but it is still a good idea to keep up with the yearly changes because they can tell you a lot about the program’s direction and health as a whole.