The clock is ticking for politicians in Washington to enact major Social Security reforms. Without changes to the program, the Social Security Board of Trustees expects the trust fund will be depleted by 2033 as outflows continue to outpace inflows. At this point, Social Security tax receipts will only cover 79% of the benefits owed to retirees.

While we haven’t seen any major overhauls to the program yet, 2025 brings some big changes that everyone should be aware of. They can affect you whether you’re retired or still working, and whether you’re already collecting Social Security or have some time left before you apply for benefits.

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1. The cost of living adjustment

Each year, seniors receive an increase in their Social Security benefit, called a cost of living adjustment (COLA). The 2025 COLA of 2.5% was announced in October and takes effect in January.

The COLA is based on a subset of the Consumer Price Index known as CPI-W. The CPI-W tracks a basket of goods representative of the spending habits of a typical urban wage earner or office worker. Each year, the Social Security Administration calculates the annual increase in the average CPI-W score for the third quarter. This reading becomes the COLA for the following year.

Importantly, the COLA affects the benefits of everyone age 62 and older, regardless of whether they are already receiving benefits. Those already receiving benefits will see a 2.5% increase in their monthly check starting in January. Those who have not already done so will see a 2.5% increase in their potential benefits, in addition to the increase for further deferring retirement benefits if they are still under 70.

2. High earners pay more Social Security tax

If you’re a high earner, you may see an increase in tax withholdings from your paycheck starting in January. This is because the government limits the amount of wages subject to Social Security tax. This cap increases every year as living standards increase.

The earning limit for 2025 is $176,100. That’s up from $168,600 in 2024. That means anyone earning above the 2025 limit will have an additional $465 withheld from their total pay this year, about $17.88 per biweekly Salary.

Readers may notice that the earnings cap increase (as a percentage) is higher than the COLA. That’s because the Social Security Administration uses average wage data to calculate tax limit changes. In other words, the discrepancy is a consequence of the increase in the average quality of life, as wages rose faster on average than prices. The SSA uses the same data to adjust your income balance for inflation before calculating your retirement benefit.

3. You can earn more by working and receiving benefits at the same time

If you continue to work in your early 60s while collecting Social Security, you may inadvertently reduce your monthly benefit check. This is due to a rule called the “Social Security Earnings Test.”

Anyone who receives social security before reaching full retirement age is subject to the earnings test. During the audit, $1 in benefits is withheld for every $2 earned above a certain earning limit. (The threshold is higher the year you reach full retirement age, and withholding is reduced to $1 for every $3 above the cap.)

For 2025, you can earn $23,400 ($62,160 in the year you reach full retirement) in wages before benefits are reduced. This limit has increased from US$22,320 (US$59,520) in 2024.

If you find that your benefits are reduced by the earnings test, know that the money isn’t gone forever. Instead, when you reach full retirement age, the Social Security Administration will adjust your benefit to account for the lost payments. For example, if your benefits are reduced by the equivalent of six months’ worth of payments, once you reach full retirement age, it will be as if you had delayed taking your benefits for an additional six months from your original claim date.

The rule can be detrimental to those in their mid-60s who rely on Social Security and their jobs to make ends meet. Those who have applied early, gone back to work and are no longer dependent on pension benefits may see it as an advantage to get more out of the program later. In any case, knowing whether you plan to continue working after applying for Social Security is a very important rule.