Oct. 10 (UPI) — Social Security recipients will get a 2.5% benefits increase in 2025, with more than 68 million people seeing a $50 per month average hike in payments starting in January.
The 2025 annual inflation increase is lower than the 3.2% Social Security cost of living increase in 2024, due to falling inflation.
Social Security Supplemental Income payments will also go up 2.5% for the 7.5 million people in that program
“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, in a statement.
The annual inflation adjustment will also raise the maximum income subject to the social security tax from the current $168,600 to the new January taxable maximum income of $176,100.
Social Security will notify recipients of the increase by mail starting in December. The notice is available online for those who have or want to set up My Social Security accounts at http://www.ssa.gov/myaccount.
The COLA notice this year is redesigned to make it easier to understand.
The Social Security Act pegs the annual benefit adjustment to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) as determined by the Department of Labor’s Bureau of Labor Statistics.
Employees pay a combined Medicare and social security tax of 7.65%. Self-employed people must pay both the employee and employer tax, totaling 15.30% of earnings.
The Medicare portion is 1.45% on all earnings.
The social security portion of the tax is paid only up to the income limit of $168.600 this year and $176,100 in 2025.