The 2024 SSDI payment increase and what it means for your benefits

In January 2024, Social Security Disability Insurance (SSDI) payments increased by 3.2 percent. This is the annual cost-of-living adjustment, or COLA, which the Social Security Administration calculates each October based on inflation data from the previous months. The 3.2 percent figure was lower than the 8.8 percent increase that took effect in January 2023, but higher than the 2.5 percent increase in January 2022.

The exact dollar amount of your increase depends on what you were receiving in December 2023. If you received $1,000 per month, your January 2024 payment became $1,032. If you received $2,000 per month, it became $2,064. Social Security applied the same 3.2 percent multiplier to every SSDI beneficiary's payment, regardless of age or the reason for your disability.

You did not need to do anything to receive this increase. Social Security deposited the higher amount automatically into your bank account or payment card starting with the January 2024 payment cycle. If you receive SSDI as a family member of a worker (as a spouse or child), your payment increased by the same percentage.

Key Takeaways

  • SSDI payments rose 3.2 percent in January 2024, the annual cost-of-living adjustment that Social Security calculates each October.
  • The increase applied to all SSDI beneficiaries automatically — you received the higher payment without taking any action.
  • Your new payment amount depends on what you received in December 2023, multiplied by 1.032.
  • Family members receiving SSDI as a spouse or child of a disabled worker received the same percentage increase to their own payments.
  • The 2025 COLA will be announced in October 2024 and take effect in January 2025.

How the 2024 COLA was calculated

The COLA is not set by Congress or by the Social Security Administration's leadership. Instead, it is tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a measure of inflation published by the U.S. Bureau of Labor Statistics. Social Security compares the average CPI-W for July, August, and September of one year to the average for the same three months of the previous year. The percentage change becomes the COLA for the following January.

For the 2024 COLA, Social Security used inflation data from summer 2023 compared to summer 2022. Because inflation had cooled from its 2022 peak, the resulting 3.2 percent increase was smaller than the year before. This means your purchasing power did not keep pace with all the inflation that occurred during 2023, but the adjustment did provide some protection against the rising cost of food, housing, and other necessities.

The COLA applies to SSDI, Supplemental Security Income (SSI), and Social Security retirement benefits all at the same time. Veterans' benefits and federal employee pensions also receive the same adjustment. This synchronized increase means that if you receive both SSDI and SSI, both payments went up by 3.2 percent in January 2024.

Changes to the earnings limit and work incentives in 2024

Alongside the COLA, Social Security adjusts the substantial gainful activity (SGA) limit each year. The SGA limit is the amount of monthly earnings that, if exceeded, can cause Social Security to find that you are working at a level that shows you are no longer disabled. In 2024, the SGA limit for non-blind workers is $1,550 per month. For blind workers, the limit is $2,590 per month.

These limits are higher than in 2023 ($1,470 for non-blind workers, $2,460 for blind workers) because they are adjusted for wage inflation, not price inflation. Social Security uses a different index — the National Average Wage Index — to calculate how much wages have grown across the economy. If you are working and earning close to the SGA limit, the 2024 increase gives you a little more room before your benefits are at risk.

The trial work period and extended may be able to access rules did not change in 2024. You still have nine months in which you can test your ability to work without losing benefits, and you still have 36 months of extended may be able to access after the trial work period ends. However, the monthly threshold for the trial work period itself — the amount you can earn in a month and still count it as a trial work month — did increase from $1,050 in 2023 to $1,110 in 2024.

Medicare and Medicaid implications of the 2024 increase

If you receive SSDI, you are automatically covered by Medicare after you have been receiving benefits for 24 months. The 3.2 percent increase to your SSDI payment does not change your Medicare coverage or your may be able to access. You remain enrolled in Medicare Part A (hospital insurance) and Part B (medical insurance) regardless of the payment amount.

However, the increase may affect your out-of-pocket costs under Medicare. If your SSDI payment pushed you above the income limit for Medicaid in your state, you might lose Medicaid coverage even though your SSDI payment increased. This is rare but possible in states that use SSDI payment amount as a factor in Medicaid may be able to access. Contact your state Medicaid office if you are unsure whether the increase affected your coverage.

If you receive both SSDI and SSI, the 3.2 percent increase to your SSDI payment may reduce your SSI payment dollar-for-dollar, because SSI counts SSDI as income. This is called the deemed income rule. If your SSDI increased by $32 per month, your SSI payment may decrease by $32 per month, leaving your total benefit unchanged. Your state SSI supplement, if you receive one, may also be affected.

Tax treatment of the 2024 SSDI payment increase

SSDI payments are not taxable income for federal income tax purposes. The 3.2 percent increase does not change this rule. You do not report SSDI on your federal tax return, and you do not owe federal income tax on the increase.

However, if you have other income — such as wages from work, interest, or retirement account distributions — a portion of your SSDI may become taxable. This happens when your combined income (SSDI plus other income) exceeds certain thresholds: $25,000 for a single filer or $32,000 for a married couple filing jointly. The increase to your SSDI payment may push you closer to or over these thresholds, making some of your SSDI taxable for the first time. If you are close to these limits, consult a tax professional or contact the IRS to determine whether the increase affects your tax liability.

State income tax treatment of SSDI varies. Most states do not tax SSDI, but a few do in certain circumstances. Check your state tax authority's website or consult a tax professional if you live in a state with an income tax and are unsure whether the increase is taxable at the state level.

When to expect the 2025 COLA announcement

Social Security will announce the 2025 COLA in October 2024. The announcement will come from the Social Security Administration's official website and will be reported by major news outlets. The 2025 COLA will take effect in January 2025 and will be applied to all SSDI, SSI, and Social Security retirement payments automatically.

You can monitor inflation trends throughout 2024 to get a rough sense of what the 2025 COLA might be. The CPI-W is published monthly by the Bureau of Labor Statistics, and financial news outlets often discuss whether inflation is rising or falling. However, the exact COLA will not be known until October, because it depends on the average of three specific months (July, August, and September 2024).

Frequently Asked Questions

Do I need to report the 2024 payment increase to Social Security?

No. Social Security applied the increase automatically, and you do not need to report it or take any action. If you are working and tracking your earnings to stay under the SGA limit, remember that the limit increased to $1,550 per month for non-blind workers in 2024, so you have a bit more room than in 2023.

Will the 2024 increase affect my Medicaid coverage?

Probably not. Most states do not use SSDI payment amount as a factor in Medicaid may be able to access for SSDI beneficiaries. However, if your state has a strict income limit for Medicaid and your SSDI increase pushed you above it, you could lose coverage. Contact your state Medicaid office if you are concerned.

What if I receive both SSDI and SSI?

Your SSDI increase will reduce your SSI payment by the same amount, because SSI counts SSDI as income. Your total monthly benefit (SSDI plus SSI) will remain roughly the same. Your state SSI supplement, if you receive one, may also decrease.

Can I use the 2024 increase to earn more money without losing benefits?

The increase to your SSDI payment itself does not change the SGA limit or the trial work period rules. However, the SGA limit did increase from $1,470 to $1,550 per month for non-blind workers, so you can earn up to $80 more per month before your benefits are at risk. The trial work period threshold also increased to $1,110 per month.

When will I know the 2025 COLA?

Social Security announces the COLA each October. The 2025 COLA will be announced in October 2024 and will take effect in January 2025. You can check the Social Security Administration's website in early October for the official announcement.