Cost-of-Living Increase and Other Determinations for 2025

SUPPLEMENTARY INFORMATION:

Because of the 2.5 percent cost-of-living increase, the following items will increase for 2025:

(1) The maximum Federal Supplemental Security Income (SSI) monthly payment amounts for 2025 under title XVI of the Act will be $967 for an eligible individual; $1,450 for an eligible individual with an eligible spouse; and $484 for an essential person.

(2) The special benefit amount under title VIII of the Act for certain World War II (WWII) veterans will be $725.25 for 2025.

(3) The student earned income exclusion under title XVI of the Act will be $2,350 per month in 2025, but not more than $9,460 for all of 2025.

(4) The dollar fee limit for services performed as a representative payee will be $55 per month ($103 per month in the case of a beneficiary who is determined to be disabled, has an alcoholism or drug addiction condition, and is incapable of managing benefits) in 2025.

(5) The assessment (or “user fee”) dollar limit on the administrative cost charged when the agency pays authorized representative fees directly out of a claimant's past due benefits will be $120, beginning in December 2024.

The national average wage index for 2023 is $66,621.80. This index affects the following amounts:

(1) The Old-Age, Survivors, and Disability Insurance (OASDI) contribution and benefit base will be $176,100 for remuneration paid in 2025 and self-employment income earned in tax years beginning in 2025.

(2) The monthly exempt amounts under the OASDI retirement earnings test for tax years ending in calendar year 2025 will be $1,950 for beneficiaries who will attain their Normal Retirement Age (NRA) (defined in the Retirement Earnings Test Exempt Amounts section below) after 2025 and $5,180 for those who attain NRA in 2025.

(3) The dollar amounts (bend points) used in the primary insurance amount (PIA) formula for workers who become eligible for benefits or who die before becoming eligible, in 2025, will be $1,226 and $7,391.

(4) The bend points used in the formula for computing maximum family benefits for workers who become eligible for retirement benefits, or who die before becoming eligible, in 2025, will be $1,567, $2,262, and $2,950.

(5) The taxable earnings a person must have in 2025 to be credited with a quarter of coverage will be $1,810.

(6) The “old-law” contribution and benefit base under title II of the Act will be $130,800 for 2025.

(7) The monthly amount of earnings deemed to constitute substantial gainful activity (SGA) for statutorily blind people in 2025 will be $2,700. The corresponding amount of earnings for non-blind people with a determined disability will be $1,620.

(8) The earnings threshold establishing a month as a part of a trial work period will be $1,160 for 2025.

(9) Coverage thresholds for 2025 will be $2,800 for domestic workers and $2,400 for election officials and election workers.

According to section 215(i)(2)(D) of the Act, we must publish the benefit increase percentage and the revised table of “special minimum” benefits within 45 days after the close of the third calendar quarter of 2024.

We must also publish the following by November 1: the national average wage index for 2023 (215(a)(1)(D)), the OASDI fund ratio for 2024 (section 215(i)(2)(C)(ii)), the OASDI contribution and benefit base for 2025 (section 230(a)), the earnings required to be credited with a quarter of coverage in 2025 (section 213(d)(2)), the monthly exempt amounts under the Social Security retirement earnings test for 2025 (section 203(f)(8)(A)), the formula for computing a PIA for workers who first become eligible for benefits or die in 2025 (section 215(a)(1)(D)), and the formula for computing the maximum benefits payable to the family of a worker who first becomes eligible for old-age benefits or dies in 2025 (section 203(a)(2)(C)).

Cost-of-Living Increases

General

The cost-of-living increase is 2.5 percent for monthly benefits under title II and for monthly payments under title XVI of the Act. Under title II, OASDI monthly benefits will increase by 2.5 percent for individuals eligible for December 2024 benefits, payable in January 2025 and thereafter. We base this increase on the authority contained in section 215(i) of the Act.

Pursuant to section 1617 of the Act, Federal SSI benefit rates will also increase by 2.5 percent effective for payments made for January 2025 but paid on December 31, 2024.

Computation

Computation of the cost-of-living increase is based on an increase in a Consumer Price Index (CPI) produced by the Bureau of Labor Statistics. At the time the Act was amended to provide automatic cost-of-living increases starting in 1975, only one CPI existed, namely the index now referred to as CPI for Urban Wage Earners and Clerical Workers (CPI-W). Although the Bureau of Labor Statistics has since developed other CPIs, we follow precedent by continuing to use the CPI-W. We refer to this index in the following paragraphs as the CPI.

Section 215(i)(1)(B) of the Act defines a “computation quarter” to be a third calendar quarter in which the average CPI exceeded the average CPI in the previous computation quarter. The last cost-of-living increase, effective for those eligible to receive title II benefits for December 2023, was based on the CPI increase from the third quarter of 2022 to the third quarter of 2023. Therefore, the last computation quarter is the third quarter of 2023. The law states that a cost-of-living increase for benefits is determined based on the percentage increase, if any, in the CPI from the last computation quarter to the third quarter of the current year. Therefore, we compute the increase in the CPI from the third quarter of 2023 to the third quarter of 2024.

Section 215(i)(1) of the Act states that the CPI for a cost-of-living computation quarter is the arithmetic mean of this index for the 3 months in that quarter. In accordance with 20 CFR 404.275, we round the arithmetic mean, if necessary, to the nearest 0.001. The CPI for each month in the quarter ending September 30, 2023, the last computation quarter, is: for July 2023, 299.899; for August 2023, 301.551; and for September 2023, 302.257. The arithmetic mean for the calendar quarter ending September 30, 2023, is 301.236. The CPI for each month in the quarter ending September 30, 2024, is: for July 2024, 308.501; for August 2024, 308.640; and for September 2024, 309.046. The arithmetic mean for the calendar quarter ending September 30, 2024, is 308.729. The CPI for the calendar quarter ending September 30, 2024, exceeds that for the calendar quarter ending September 30, 2023, by 2.5 percent (rounded to the nearest 0.1). Therefore, beginning December 2024, a cost-of-living benefit increase of 2.5 percent is effective for benefits under title II of the Act.

Section 215(i) also specifies that a benefit increase under title II, effective for December of any year, will be limited to the increase in the national average wage index for the prior year if the OASDI fund ratio for that year is below 20.0 percent. The OASDI fund ratio for a year is the ratio of the combined asset reserves of the OASI and DI Trust Funds at the beginning of that year to the combined cost of the programs during that year. For 2024, the OASDI fund ratio is reserves of $2,788,463 million divided by estimated cost of $1,483,116 million, or 188.0 percent. Because the 188.0 percent OASDI fund ratio exceeds 20.0 percent, the benefit increase for December 2024 is not limited to the increase in the national average wage index.

Program Amounts That Change Based on the Cost-of-Living Increase

The following program amounts change based on the cost-of-living increase: (1) title II benefits; (2) title XVI payments; (3) title VIII benefits; (4) the student earned income exclusion; (5) the fee for services performed by a representative payee; and (6) the appointed representative fee assessment.

Title II Benefit Amounts

In accordance with section 215(i) of the Act, for workers and family members for whom eligibility for benefits (that is, the worker's attainment of age 62, or disability or death before age 62) occurred before 2025, benefits will increase by 2.5 percent beginning with benefits for December 2024, which are payable in January 2025. For those first eligible after 2024, the 2.5 percent increase will not apply.

For eligibility after 1978, we determine benefits using a formula provided by the Social Security Amendments of 1977 (Pub. L. 95-216), as described later in this notice.

For eligibility before 1979, we determine benefits by using a benefit table. The table is available at www.ssa.gov/oact/ProgData/tableForm.html or by writing to: Social Security Administration, Office of Public Inquiries and Communications Support, 1100 West High Rise, 6401 Security Boulevard, Baltimore, MD 21235.

Section 215(i)(2)(D) of the Act requires that, when we determine an increase in Social Security benefits, we will publish in the Federal Register a revision of the range of the PIAs and maximum family benefits based on the dollar amount and other provisions described in section 215(a)(1)(C)(i). We refer to these benefits as “special minimum” benefits. These benefits are payable to certain individuals with long periods of low earnings. To qualify for these benefits, an individual must have at least 11 years of coverage. To earn a year of coverage for purposes of the special minimum benefit, a person must earn at least a certain proportion of the old-law contribution and benefit base (described later in this notice). For years before 1991, the proportion is 25 percent; for years after 1990, it is 15 percent. In accordance with section 215(a)(1)(C)(i), the table below shows the revised range of PIAs and maximum family benefit amounts after the 2.5 percent benefit increase.