As predicted, the Social Security benefit cost of living adjustment (COLA) will increase by 2.5% in January, according to the Social Security Administration.
Over the last 10 years, the COLA increase has averaged about 2.6 percent. The COLA was 3.2 percent in 2024.
“Social Security benefits and SSI payments will increase in 2025, helping tens of millions of people keep up with expenses even as inflation has started to cool,” said Martin O’Malley, commissioner of Social Security.
The increase is based on the government’s inflation readings for July, August and September. Some other adjustments that take effect in January of each year are based on the increase in average wages.
Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) is slated to increase to $176,100 from $168,600.
Social Security recipients will be formally notified of their new benefit payment sometime in December.
Newly designed COLA notice
This year, for the first time, Social Security recipients will get a newly designed COLA notice that makes it easier for customers to find the information they need most. The simplified COLA notice is now only one page, uses plain and personalized language, and provides exact dates and dollar amounts of a person’s new benefit amount and any deductions.
Retirees who have a personal mySocialSecurity account can view their COLA notice online. Recipients may also set up text or email alerts when there is a new message--such as their COLA notice--waiting for them in their account.