In 2025, Social Security recipients in Wisconsin will experience several significant changes affecting benefits, contributions, and eligibility criteria. Staying informed about these updates is crucial for effective financial planning.
1. Increase in Cost-of-Living Adjustment (COLA)
To help beneficiaries keep pace with inflation, the Social Security Administration (SSA) has announced a 2.5% COLA increase for 2025. This adjustment will raise the average monthly benefit by approximately $50, from $1,907 to $1,957.
2. Higher Maximum Taxable Earnings
The maximum taxable earnings limit has been raised to $176,100 in 2025, up from $168,600 in 2024. This means that income up to $176,100 will be subject to Social Security payroll taxes. At a tax rate of 6.2%, both employees and employers will each contribute a maximum of $10,918.20 toward Social Security.
3. Adjustments to Earnings Limits
For beneficiaries who have not yet reached full retirement age (FRA), the earnings limit has increased to $23,400 annually.
Earnings above this threshold will result in a reduction of benefits by $1 for every $2 earned over the limit. For those reaching FRA in 2025, the limit is $62,160, with a reduction of $1 for every $3 earned over this amount until the month they attain FRA.
4. Changes in Work Credits Requirement
To qualify for Social Security benefits, individuals must accumulate 40 work credits. In 2025, the earnings required to earn one credit have increased to $1,810, up from $1,730 in 2024. Therefore, earning the maximum of four credits in 2025 will require $7,240 in income.
5. Repeal of Windfall Elimination Provision (WEP) and Government Pension Offset (GPO)
The Social Security Fairness Act, signed into law in January 2025, repeals the WEP and GPO provisions. This change means that public sector workers in Wisconsin, such as teachers and firefighters, will no longer face reductions in their Social Security benefits due to receiving a government pension.
| Change | 2024 | 2025 |
|---|---|---|
| COLA Increase | 3.2% | 2.5% |
| Maximum Taxable Earnings | $168,600 | $176,100 |
| Earnings Limit (Below FRA) | $22,320 | $23,400 |
| Earnings Limit (Year Reaching FRA) | $59,520 | $62,160 |
| Earnings per Work Credit | $1,730 | $1,810 |
These updates to Social Security in 2025 are designed to reflect economic changes and provide fair benefits to recipients. Wisconsin residents should review these changes carefully to understand their impact and plan accordingly for their financial future.
FAQs
How does the 2.5% COLA increase affect my Social Security benefits?
The 2.5% COLA increase will raise the average monthly benefit by about $50, helping beneficiaries keep up with inflation.
What is the significance of repealing the WEP and GPO?
The repeal of the WEP and GPO means that public sector employees who receive a government pension will no longer see a reduction in their Social Security benefits.
How do the new earnings limits impact my benefits if I continue working while receiving Social Security?
If you are below full retirement age and earn more than $23,400 in 2025, your benefits will be reduced by $1 for every $2 earned over the limit. Once you reach full retirement age, there is no earnings limit.
