When people think about the possible changes Social Security will bring in January 2025, they mainly think about the cost-of-living adjustment increase. However, these changes are not just about the COLA boost in your payment.
Of course, from December 31, 2024, all benefits will increase by 2.5%. This is the COLA increase figure that the Administration announced on October 10, 2024. The first recipients to enjoy this boost will be those on the Supplemental Security Income (SSI) program. After them, retirees and SSDI recipients will get it on January 3, 8, 15, and 22.
Social Security Changes for January 2025
Apart from receiving 2.5% extra after the COLA increase, there will be a new maximum amount of earnings subject to taxes. That is, Social Security has updated the taxable maximum (contribution and benefit base) for 2025. It will be $176,100, up from $168,600.
Besides, the earnings threshold for workers who have not reached Full Retirement Age (FRA) will go up to $23,400, up from $22,320. For your information, Social Security deducts 1 dollar from retirement benefits for each 2 dollars earned over the limit (23,400 dollars).
Apart from this increase, the earnings threshold for seniors reaching Full Retirement Age next year (2025) will be $62,160, up from $59,520. The deduction here is just 1 dollar from each 3 dollars you get over the $62,160 limit until the month the worker turns FRA. No limits if you have reached FRA though!
Social Security and the Quarter of Coverage
The quarter of coverage is the earnings you need to get 1 work credit. Work credits allow you to get Social Security retirement or disability benefits. To get retirement benefits at 62 you need to have at least 40 work credits.
In one year, you can only get 4 work credits, so you will need to work for ten years to get the minimum number of years of work to get Social Security. The amount of earnings covered by SSA to get 1 work credit will go up to $1,810, up from $1,730.
This means that to get the same number of work credits, you will need to have more covered earnings. For example, in one year, you will need $7,240 in covered earnings in 2025, up from $6,920 in 2024. SSDI (disability) thresholds have also increased to:
Non-Blind: $1,550/mo. in 2024, $1,620/mo. in 2025
Blind: $2,590/mo. in 2024, $2,700/mo. in 2025
Trial Work Period (TWP): $1,110/mo. in 2024, $1,160/mo. in 2025