The start of a new year is a time of change. Many people switch jobs or healthcare coverage around now, and they may also be trying to navigate New Year's resolutions they've set to improve their own lives.
In the midst of all that, they also have to get used to changes the government makes to laws about taxes, retirement accounts, and Social Security. For retirees and workers, some of the most important details to pay attention to this year are the five Social Security changes listed below.
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1. 2.5% cost-of-living adjustment (COLA)
Technically, the Social Security Administration first applied the 2.5% cost-of-living adjustment (COLA) to the December 2024 benefit. But since the Social Security Administration pays benefits in the month after the month they're due, beneficiaries will see their first checks with the new amount arriving this month.
When you'll get your January check depends on the day of the month you were born on:
- Born on the 1st through the 10th: Jan. 8, 2025
- Born on the 11th through the 20th: Jan. 15, 2025
- Born on the 21st through the 31st: Jan. 22, 2025
If you're receiving Supplemental Security Income (SSI) as well, you should have already received your first check on Dec. 31, 2024. These benefits are normally paid on the first of the month, unless that day falls on a weekend or holiday as is the case with New Year's Day.
2. Higher Social Security work credit requirements
Workers will have to earn a little bit more in order to earn their 2025 Social Security work credits. You need at least 40 of these in order to qualify for retirement benefits, and you can only earn a maximum of four credits per year.
In 2024, you received one credit for every $1,730 you earned. But in 2025, it'll take $1,810 in earnings to get one credit. However, this shouldn't pose a significant challenge to most workers, as even many part-time employees will earn the $7,240 needed to get their four credits for 2025.
3. Higher ceiling on Social Security payroll taxes
Some workers could lose more money to Social Security payroll taxes in 2025 because the taxable wage base has gone up. In 2024, you only paid these taxes on your first $168,600 in earnings. But in 2025, you'll owe them on the first $176,100 you earn.
Most of us already pay Social Security taxes on all our income, so this isn't a huge issue. But high earners could find themselves paying an extra $465 per year in taxes if they're traditionally employed or $930 per year if they're self-employed.
4. Higher earnings test limits
Retirees who are working while claiming Social Security under their full retirement age (FRA) will be able to earn a little more in 2025 before the government withholds any money from their checks. Those at or over their FRA never have to worry about having money withheld, regardless of their annual income.
In 2024, those under their FRA all year lost $1 for every $2 they earned over $22,320. Those who reached their FRA in 2024 only lost $1 for every $3 they earned over $59,520 if they earned that much before their birthday. In 2025, these limits have risen to $23,400 and $62,160, respectively.
5. A higher full retirement age for those born in 1959 versus those born in 1958
Full retirement age reaches 66 and 10 months this year for those born in 1959. It's been gradually increasing over the last few years and will finally stop next year when it reaches 67 for those born in 1960 and later.
You're still free to claim as early as 62 regardless of your FRA. But claiming under your FRA can reduce your checks by up to 30%. It's important to weigh all your options before claiming to avoid shortchanging yourself, unless you have a serious health or financial issue that makes delaying impossible.
The above Social Security changes are new to 2025, but they're also common changes that happen every year. Whether you're working or claiming Social Security, it's important to keep the relevant rules in mind for the future as you will see them again in 2026 and beyond.
