Social Security’s COLA gets all the attention, but retirees and workers will encounter other changes in 2025 that will affect their checks.
The government announced the biggest Social Security news of the year — the 2025 cost-of-living adjustment (COLA) — on Oct. 10, and it was a bit underwhelming. Retirees will only get 2.5% more next year, which will add about $49 more to the average monthly benefit.
But that’s not the only big change Social Security is getting next year. Four other changes will affect beneficiaries and workers paying Social Security payroll taxes.
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1. Workers will have to work harder to qualify for Social Security
You must earn 40 work credits to qualify for Social Security retirement benefits when you turn 62. A work credit is defined as $1,730 in earnings in 2024, and you can earn a maximum of four credits per year.
Next year, workers will need $1,810 in annual earnings to secure a Social Security credit. They’ll need at least $7,240 in annual earnings to get the maximum four credits in 2025.
Fortunately, even many part-time workers earn this much, so it shouldn’t have a significant effect on most people’s Social Security eligibility. If you’ve already earned 40 work credits in previous years, this change won’t affect you at all.
2. The government will tax more earnings than ever
Most people pay Social Security payroll taxes on all of their earnings, but this isn’t true for some wealthy workers. There’s a ceiling on income subject to Social Security tax — $168,600 in 2024. Anything over this amount isn’t subject to this tax and won’t help you qualify for a larger Social Security benefit in retirement.
This tax ceiling is indexed to inflation and rises to $176,100 in 2025. That will force some high earners to pay more in Social Security taxes than they’re used to. But for the average person, it won’t make a difference.
High earners should brace themselves for this change every year as the tax ceiling will continue to rise. Some politicians have even proposed raising it or eliminating it entirely to help resolve Social Security’s funding crisis. However, the government has yet to agree on this or any other solution.
3. Earnings-test limits are increasing
The earnings test withholds some benefits from seniors who are working while claiming Social Security if they haven’t reached their full retirement ages (FRA). That’s 66 to 67 for today’s workers, depending on their birth year.
In 2024, you’ll lose $1 from your checks for every $2 you earn over $22,320 if you’ll be under your FRA all year. If you’ve reached or will reach your FRA this year, you’ll only lose $1 for every $3 you earn over $59,520 if you earn this much before your birthday.
These limits will rise to $23,400 and $62,160, respectively, next year. Workers subject to the earnings test will be able to make a little more money before they have to worry about the government holding back some of their checks.
In case you’re wondering, money withheld due to the earnings test isn’t gone forever. The government will increase your benefit when you reach your FRA to account for what it previously withheld. Those funds will come back to you, just in a different way.
4. The maximum benefit is increasing
For the first time, Social Security’s richest retirees will take home over $5,000 per month — $5,108, to be exact. However, most people won’t earn anywhere close to this amount.
To claim the largest possible Social Security checks, you must pay the maximum amount in Social Security payroll taxes in at least 35 years and delay your Social Security application until age 70. Most people can’t afford to do this, so they get less. For comparison, the average 2025 benefit is only expected to be about $1,968 per month.
The above changes may not all be relevant to you right now but are worth keeping in mind for the future, especially if you have a high income or are facing the earnings test. The Social Security Administration typically adjusts the above factors annually, so expect to see them change again in 2026 and beyond.