Each year, the Social Security Administration (SSA) adjusts benefits to help keep up with inflation. This annual increase is called the cost-of-living adjustment (COLA), and it’s meant to make sure rising prices don’t shrink the value of people’s payments.
But this year, it’s not only about the COLA bump—two other changes are also coming that could impact millions of recipients across the country.
1. A Higher-than-expected COLA increase
The Senior Citizens League (TSCL) now predicts a 2.6% COLA increase for 2025. That’s slightly higher than last month’s 2.5% forecast, marking the fifth straight month the prediction has gone up due to continued inflation.
The COLA is calculated by looking at the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for July, August, and September. Those figures are compared to the same months from the previous year, and the difference determines the increase.
This change will affect over 72.5 million people who receive Social Security. The official announcement typically comes in early October, and the higher rate could mean more money in monthly checks starting in January.
2. A new bonus tax deduction for seniors
Many seniors will soon receive an additional tax break due to the One Big Beautiful Bill Act, which was signed into law by former President Donald Trump.
- Seniors 65 and older who file taxes individually and make less than $75,000 can claim an extra $6,000 tax deduction starting in the 2025 tax year.
- Married couples filing jointly with a combined income under $150,000 can claim a $12,000 deduction.
Those earning above these amounts will see the deduction reduced until it phases out completely.
The SSA estimates that around 90% of recipients will no longer need to pay taxes on their Social Security benefits because of this law.
Social Security Commissioner Frank Bisignano called it a step toward protecting retirees:
“By significantly reducing the tax burden on benefits, this legislation reaffirms President Trump’s promise to protect Social Security and helps ensure that seniors can better enjoy the retirement they’ve earned.”
However, TSCL says more help is still needed, especially for the 7.3 million seniors living on less than $1,000 per month, which is below the federal poverty line.
3. Going fully paperless
Starting September 30, the SSA will stop mailing paper cheques to beneficiaries. All payments will be made electronically, either by direct deposit or through the Direct Express prepaid debit card.
While most people already receive payments electronically, a small number will still be able to request a waiver to continue getting paper checks in special cases.
The SSA says the change is about security and cost savings:
“Paper checks are 16 times more likely to be lost or stolen compared to electronic payments,” the agency noted. “Electronic payments provide a safer, more secure way to receive benefits.”
When payments arrive
The dates for Social Security payments are determined by an individual’s birth date:
- Second Wednesday – Birthdays between the 1st and 10th
- Third Wednesday – Birthdays between the 11th and 20th
- Fourth Wednesday – Birthdays between the 21st and 31st
The bigger challenge ahead
Even with these changes, Social Security faces a long-term funding problem. According to the Committee for a Responsible Federal Budget (CRFB), the trust funds that pay for benefits could run out in just over seven years.
Should Congress fail to take action, retirees may face a 23% reduction in benefits, which would amount to approximately $18,100 annually for the average household.
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The CRFB warns:
“Fortunately, there is still time for policymakers to enact pro-growth solutions that protect the long-term viability of the program.”
For now, seniors can look forward to a slightly higher COLA, new tax deductions, and safer, faster payments — but the bigger fight to protect Social Security for the future is far from over.
