Breaking: The $168,600 Social Security Tax Limit Is Gone in 2025 – Here’s What You Need to Know

The Social Security Administration has announced that the amount of earnings subject to taxes will increase in 2025. An increase in the cost-of-living adjustment (COLA) for recipients is announced annually by the SSA.

This yearly increase in Social Security benefits is meant to prevent them from declining in value as a result of inflation from year to year. The COLA is also used to determine the portion of a contributor’s income that is subject to Social Security taxes.

Social Security earnings limit will increase as the SSA confirmed

While the 12.4 percent tax on workers’ wages remains in effect, the maximum amount of labor income subject to taxation will increase in 2025.

For Social Security to get 12.4% of workers’ wages, both must contribute 6.2%. The maximum amount of income subject to taxes has risen throughout time and will do so once more in 2025, while the rate has stayed constant since 1990. In 2025, the highest income that can be taxed under Social Security will be $176,100. Social Security taxes do not apply to income over this amount. The chart below shows that the maximum sum has been rising gradually over the past ten years:

Year	Amount
2015	$118,500
2016	$118,500
2017	$127,200
2018	$128,400
2019	$132,900
2020	$137,700
2021	$142,800
2022	$147,000
2023	$160,200
2024	$168,600
2025	$176,100

It is important to highlight that employers who employ multiple people in a given year are required to deduct Social Security taxes from their employees’ paychecks. This implies that more taxes than the maximum amount could be withheld overall. Employees who file tax returns and have more than the maximum amount of Social Security taxes withheld may be eligible for a refund from the Internal Revenue Service (IRS). 

Social Security beneficiaries could earn up to $4,995 in monthly checks this year.

According to the Social Security Administration, this year all beneficiaries from the retirement, survivor, and disability insurance (RSDI) and Supplemental Security Income (SSI) programs will receive a 2.5% increase due to the cost of living adjustment that was recently confirmed on October 10th. Based on this new COLA increase, retirees will receive up to $4,995 in monthly benefits if they delay benefits until reaching 70 years old and have paid payroll taxes based on the maximum taxable earnings. 

Beneficiaries should be aware that to qualify for these maximum benefits, they must meet all requirements from the SSA; thus, it is recommended to check your financial circumstances with a financial advisor or Social Security expert so you can increase your chances of becoming eligible for this payment. Lastly, as Social Security goes beyond retirement benefits, other beneficiaries such as survivors, disabled people, and recipients of the Supplemental Security Income (SSI) program will also receive their 2.5% increase as of January 3rd.  To learn more about the new payment amounts available for 2025, please read the information below: 

Survivor benefits	Monthly benefits	2.5% COLA increase	Extra income
On average	$1,505	$1,543	$38
Individual	$1,773	$1,817	$44
2 Children	$3,653	$3,744	$91

Disability benefits	Monthly benefits	2.5% COLA increase	Extra income
On average	$1,537	$1,575	$38
Blind recipients	$2,590	$2,655	$65
Maximum payment	$3,822	$3,918	$96

SSI benefits	Monthly benefits	2.5% COLA increase	Extra income
On average	$698	$715	$17
Individuals	$943	$967	$24
Couples	$1,415	$1,450	$35
Essential person	$472	$484	$12

When will Social Security beneficiaries receive their first increased payments this month?

As the SSA announced in the new Social Security payment schedule for 2025, all beneficiaries will start to receive their increased benefits as of January 3rd. On this day, recipients of the RSDI program who applied for their first check before May 1997 will receive their benefits. After this payment date, the federal agency will deliver the remaining payments on the following dates: 

• On January 8th, for survivors, retirees, and disabled Americans who were born between the 1st and the 10th and have additionally claimed benefits after May 1997 
• On January 15th, for survivors, retirees, and disabled Americans who were born between the 11th and the 20th and have additionally claimed benefits after May 1997 
• On January 22nd, for survivors, retirees, and disabled Americans who were born between the 21st and the 31st and have additionally claimed benefits after May 1997 
• On January 31st, for eligible SSI recipients, since the first of February falls on a weekend. 

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