Three changes to Social Security are already in effect in 2025, and you should be aware of them because they impact your check. One of the main changes is the cost-of-living adjustment (COLA), which has been a topic of discussion since January. Besides COLA 2025, there are other significant changes to be aware of. These changes have had a huge impact on the finances of millions of Americans.
-
The Signing into Law of the Social Security Fairness Act
The enactment of the Social Security Fairness Act in January 2025 has had the most impact. Two provisions, the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), which reduced benefits for public sector employees who also received a pension, were repealed. These rules disproportionately affected police officers, firefighters, teachers, and other government workers.
This means that millions of retirees are now eligible for higher Social Security monthly payments. It’s estimated that about 3 million people could receive increased benefits. If you’re a retired public worker or a spouse to one, you have probably received a larger Social Security deposit. Those who haven’t seen an increase and are eligible following the enactment of this law should check with the Social Security Administration.
-
The Social Security Wage Cap Increased
The Social Security Administration (SSA) increased the wage cap or payroll taxes in 2025. This change means that American workers pay Social Security taxes on their earnings up to a certain limit each year. Currently, the cap has been adjusted to $176,100 from $168,600. Therefore, the higher-income earners are now contributing an additional $7,500 to their Social Security taxes.
The lower- and middle-income workers have not been affected because they don’t earn close to $176,100. Although this change is not good news for many who have to pay more into the system, it has helped to address the looming Social Security funding shortfall. These additional contributions will delay potential benefit cuts and support the sustainability of the program for all beneficiaries.
Note that there are ongoing talks among lawmakers about eliminating the wage cap altogether. If that happens, all American workers will be subject to Social Security taxes regardless of their income. However, it is yet to be determined if this will result in increased benefits.
-
Earnings-Test Limits Went UP
An increase to the earnings-test limits for people who claim benefits before reaching full retirement (FRA) is the third major Social Security change in effect in 2025. Although you can claim your Social Security at age 62, your benefits may be reduced temporarily depending on how much you earn.
However, in 2025, the earnings-test limit will be raised from $22,320 in 2024 to $23,400. For those attaining full retirement age during 2025, the limit rose from $59,520 to $62,160, which allows older workers to earn more before any of their benefits are withheld.
Note that the benefits withheld due to the earnings test are not lost permanently, and once you reach your FRA, your monthly payments will be recalculated and increased to account for the withheld benefits. Therefore, if you working part-time or considering returning to work before reaching full retirement age, this change could allow you to retain more of your monthly income while still working for a larger future check.
Why These Changes are Important for You
The three changes to Social Security in 2025: the elimination of the WEP and GPO, an increase in the wage cap, and the higher earnings test limit have impacted the Social Security benefits for millions of Americans.
If you are already a Social Security beneficiary, or planning to file soon, now is the perfect time to review your income situation, work plan, and benefit amount. You can also seek the help of a financial advisor or use the Social Security Administration’s tools to estimate your future payments based on the changes discussed here.
It is also important to stay informed, especially with the ongoing changes and challenges facing the SSA, such as the laying off of workers and system updates.