Social Security cost-of-living increase for 2025 could be 2.5% — the lowest since 2021, estimate

Social Security beneficiaries have seen higher cost of living adjustments in recent years prompted by record high inflation yet next year's increase may not be as generous based on new government inflation data beneficiaries may see just a 2.5% increase to benefits in 2025 estimates Mary Johnson an independent Social Security and Medicare analyst in 2024 more than 71 million Americans including Social Security and supplemental security income beneficiaries saw a 3 . 2% cost of living adjustment according to the Social Security Administration a spike in inflation drove the annual benefit boost even higher in 2023 when there was an 88.7% increase the highest in four decades that followed a 5.9% raise in 2022 which at the time also marked a recent high in 2021 the cost of living adjustment was 1.3% if a 2.5% Cola goes into effect in 202 it would be about average according to Johnson importantly the estimate for the 2025 Social Security cost of living adjustment is subject to change the Social Security Administration is poised to announce the official increase to benefits in October that will include new government inflation data for September the current 2.5% estimate has about a 177% chance of increasing and a 133% chance of decreasing according to Johnson the annual Social Security cost of living adjustment is calculated using third quarter data from a subset of the Consumer Price Index known as the Consumer Price Index for urban wage earners and clerical workers or CPI two factors tend to affect the net amount retirees received from Social Security amid High inflation the center for Retirement Research at Boston College has found taxes on benefits and Medicare Part B premiums Trump calls for ending taxes on benefits up to 85% of Social Security benefits may be subject to federal income taxes those taxes are applied to combined income which is the sum of half your Social Security benefits total adjusted gross income and non- taxable interest because those thresholds do not change more beneficiaries are paying taxes on benefits over time former president Donald Trump has called for ending taxes on Social Security benefits as part of his campaign platform Trump re-up his plans to help seniors on fixed incomes with no tax on Social Security benefits in a post on his social media platform truth social on sept