Social Security benefits are eligible for an annual cost-of-living adjustment (COLA) based on inflation. A 2.5% COLA will increase the average monthly benefit from $1,927 to $1,976. However, the new increase doesn't fully account for an increase in Medicare Part B premiums which will cost beneficiaries about $10 monthly, effectively reducing the impact of this COLA.
Starting 2025, the wage cap is rising to $176,100 for Social Security contributions, an increase from $168,600 in 2024. This means that higher earners will contribute more to the system. Self-employed individuals will pay 12.4% on the first $176,100 of their income, while employees will split the burden with their employers.
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