The 2025 COLA increase is 2.5 percent

Social Security announced in October 2024 that the 2025 cost of living adjustment (COLA) is 2.5 percent. This means your monthly SSDI payment will increase by 2.5 percent starting in January 2025. The exact dollar amount of your raise depends on what you received in 2024 — there is no flat dollar amount that applies to everyone.

If you received $1,200 per month in December 2024, your January 2025 payment will be approximately $1,230. If you received $1,500, your new payment will be approximately $1,538. Social Security calculates and applies the increase automatically — you do not need to do anything to receive it.

This is the third consecutive year COLA has been below 3 percent. In 2024, the increase was 3.2 percent. In 2023, it was 8.7 percent, which was the largest increase in four decades. The 2025 figure reflects the current inflation rate used in the government's calculation method.

Key Takeaways

  • Your SSDI payment will increase by 2.5 percent in January 2025, calculated automatically by Social Security with no action required from you.
  • The exact dollar amount of your raise depends on your current payment — a 2.5 percent increase on $1,200 is different from a 2.5 percent increase on $2,000.
  • You will see the new amount on your January 2025 payment stub or in your my Social Security account online.
  • If you receive both SSDI and Supplemental Security Income (SSI), your SSI payment will also increase, but the calculation is different and may be smaller.

When the increase takes effect and how to verify it

The 2.5 percent increase begins with your January 2025 payment. If you receive payments by direct deposit, the new amount will hit your bank account on the third of the month (or the first business day after if the third falls on a weekend or holiday). If you receive a check, it will arrive in the mail with the new amount printed on it.

You can verify your new payment amount in two ways. Log into your my Social Security account at ssa.gov and check your payment history — it will show your December 2024 amount and your January 2025 amount side by side. You can also call Social Security's toll-free number at 1-800-772-1213 and ask a representative to read your new payment amount to you. Wait times are shortest early in the morning on weekdays.

If you notice the increase is not there by mid-January, or if the amount seems wrong, contact Social Security when ready. Errors in COLA process are rare but do happen, and the sooner you report it, the sooner it can be corrected.

How COLA is calculated each year

COLA is not decided by Congress or by Social Security leadership. It is calculated by a formula tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures inflation across food, housing, transportation, medical care, and other goods and services. In September of each year, the government compares the average CPI-W for July, August, and September to the same three months from the previous year. If inflation has occurred, that percentage becomes the COLA for the following year.

The 2025 COLA of 2.5 percent reflects the inflation rate measured between September 2023 and September 2024. Because inflation has slowed from its 2022 peak, COLA has also declined. This is why 2025's increase is smaller than 2024's 3.2 percent, even though both years saw inflation above zero.

COLA applies to all Social Security benefits — retirement, survivor benefits, and disability. It also applies to SSI payments, though SSI has a separate federal payment standard that changes each year. Some states add money to the federal SSI amount, and those state supplements may or may not increase with COLA depending on state law.

What the increase means for your other benefits and work incentives

If you receive SSDI and also use a work incentive program — such as Impairment Related Work Expenses (IRWE), Plan to Achieve Self-Support (PASS), or the Student Earned Income Exclusion — your COLA increase does not change how those programs work. Your countable income for the purposes of these programs is calculated the same way it was before. The increase straightforward raises your total monthly payment.

If you are on SSDI and also receive Medicare, your COLA increase does not affect your Medicare coverage or your premiums. If you are on SSDI and also receive Medicaid, your state's Medicaid program may have income limits that could be affected by the increase, but this varies by state. Contact your state Medicaid office if you want to know whether your COLA increase could change your Medicaid status.

If you are a representative payee — meaning someone else manages your benefits on your behalf — that person will see the increase reflected in the account they manage for you. The payee's responsibilities do not change, and they do not receive any portion of the increase themselves.

COLA and SSI: a different calculation

If you receive Supplemental Security Income (SSI) in addition to SSDI, your SSI payment will also increase in January 2025, but the increase may be smaller than 2.5 percent or may not occur at all. This is because SSI has a federal benefit rate (the maximum monthly payment) that increases by COLA, but your actual SSI payment is reduced by your countable income — which includes your SSDI payment.

When your SSDI payment increases by 2.5 percent, your countable income increases by the same amount. Social Security then subtracts that higher countable income from the federal benefit rate to calculate your new SSI payment. The result is that your SSI payment may stay the same or decrease slightly, even though the federal benefit rate went up. This is called the "hold harmless" rule, which prevents your total combined payment from dropping, but it also means the SSI portion does not always rise with COLA.

If you receive both SSDI and SSI, Social Security will send you a notice in December 2024 or early January 2025 showing your new SSDI amount, your new SSI amount, and your new total combined payment. Read this notice carefully, because it will explain exactly how your SSI was calculated.

Planning for the increase and tax considerations

A 2.5 percent increase on a $1,200 payment is $30 per month, or $360 per year. On a $2,000 payment, it is $50 per month, or $600 per year. If you budget month to month, this extra money may help with rising costs. If you have been receiving SSDI for several years, you may want to review whether your work incentive plan (if you have one) still reflects your current situation and income.

If you work and earn income, the COLA increase does not change the Substantial Gainful Activity (SGA) threshold for 2025 — that is set separately and is announced at the same time as COLA. For 2025, the SGA threshold is $1,550 per month for non-blind beneficiaries and $2,590 for blind beneficiaries. Your SSDI payment increase does not count toward this threshold; only your work earnings do.

If you file taxes, SSDI benefits may be taxable depending on your combined income (SSDI plus other income sources). The COLA increase may push you into a taxable range if you are close to the threshold. Consult a tax professional or call the IRS at 1-800-829-1040 if you are unsure whether your benefits are taxable.

Frequently Asked Questions

Will I get the 2.5 percent increase automatically, or do I need to report it?

Social Security applies COLA automatically. You do not need to report anything or contact Social Security. The increase will appear in your January 2025 payment with no action on your part.

What if I disagree with the 2.5 percent figure or think my payment is wrong?

Contact Social Security at 1-800-772-1213 and ask a representative to review your payment calculation. If you believe an error was made, ask for a detailed breakdown of how your new amount was calculated. You can also request a recalculation in writing by mailing a letter to your local Social Security office.

Does the COLA increase affect my work incentive limits or my ability to work?

No. The increase does not change the SGA threshold, the earnings exclusion, IRWE limits, or any other work incentive rule. Your ability to work and earn money remains the same as it was before the increase.

If I receive both SSDI and SSI, will my SSI payment go up by 2.5 percent too?

The federal SSI benefit rate increases by 2.5 percent, but your individual SSI payment may increase by less, stay the same, or decrease slightly because it is reduced by your countable income (which includes your SSDI payment). Social Security will send you a notice explaining your new SSI amount.

Can I appeal or request a larger increase?

No. COLA is set by formula and applies equally to all beneficiaries. You cannot request a larger increase or appeal the 2.5 percent figure. If you believe your payment was calculated incorrectly, you can request a recalculation, but you cannot challenge the COLA percentage itself.