Tax Tip #234
Social Security Benefit Increase in 2025
If you are receiving Social Security benefits, you may be happy to know that there is a 2.5 percent increase in benefits in 2025 compared to 2024.
Why 2.5 percent? This is the cost of living (COLA) adjustment that the Social Security Administration (SSA) determined was needed. However, this is down from 3.2 percent last year and 8.7 percent in 2023.
Up to 85 percent of social security benefits are taxable for a single income over $25,000 or married filing jointly (MFJ) taxpayers with an income over $32,000.
Example: MFJ taxpayers with an income of $100,000 in the 22% federal income tax bracket received $20,000 in Social Security benefits in 2024. In 2025, this amount will increase to $20,500.
After taxes, a total of $406 of the $500 increase remains, and $94 goes to Uncle Sam ($20,500 x .85 x .22).
Here’s some good news — NY and NJ are among many states that do not tax Social Security benefits.
