The Social Security Administration (SSA) is preparing a set of updates for 2025 that are expected to affect over 72 million Americans. The planned changes involve an increase in the cost of living adjustment (COLA), an additional tax deduction for eligible seniors, and a complete shift from paper checks to electronic benefit payments.
According to reporting by The Sun, these adjustments are part of the SSA’s annual review process to maintain purchasing power and enhance payment security. While these measures are significant in scope, Social Security advocacy organizations have noted that they do not fully address the needs of all recipients.
Higher Cost of Living Adjustment Expected
The Senior Citizens League (TSCL) now projects a 2.6% COLA for 2025, up from last month’s prediction of 2.5%. This marks the fifth consecutive monthly increase in the forecast, driven by persistent inflationary pressures.
The COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for July, August, and September, compared to the same period in the previous year. The year-over-year difference becomes the new COLA, which the SSA will officially announce in early October. If confirmed, this adjustment will impact the monthly benefits of over 72.5 million Social Security recipients.
Expanded Tax Deduction Under New Legislation
Under the One Big Beautiful Bill Act, signed by former President Donald Trump, seniors aged 65 and older earning less than $75,000 annually will qualify for an additional $6,000 tax deduction starting in tax year 2025. Married couples filing jointly with incomes below $150,000 will receive a $12,000 deduction.
For those earning above these thresholds, the extra deduction will gradually phase out until it is completely eliminated. According to the SSA, about 90% of beneficiaries will no longer pay income taxes on their benefits thanks to the bill.
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 – Social Security Commissioner Frank Bisignano said in a press release.
Despite this, the TSCL says more needs to be done:
The Big Beautiful Bill is a good start on providing financial relief for American seniors – the group said in a statement.
The next priority should be providing support for the estimated 7.3 million American seniors who are living on less than $1,000 per month, which is below the federal poverty line.
TSCL data shows that about 13% of seniors live on less than $1,000 a month, and 93% believe Social Security and Medicare reform should be a top priority for Congress and the President. The group is calling for a more senior-focused COLA calculation and a one-time catch-up payment to address past shortfalls.
Transition to Electronic Payments
Starting September 30, 2025, the SSA will stop issuing paper checks and will make all payments electronically, either through direct deposit or the Direct Express prepaid debit card. Some beneficiaries will be able to apply for waivers to continue receiving paper checks in certain circumstances.
The SSA cites security and cost savings as key reasons for the change.
Paper checks are 16 times more likely to be lost or stolen compared to electronic payments, increasing the risk of fraud – the agency wrote in a blog post.
Electronic payments provide a safer, more secure way to receive benefits.
While these measures provide short-term relief, the Committee for a Responsible Federal Budget (CRFB) warns of deeper issues ahead. The Social Security trust funds could face insolvency in a little more than seven years without congressional action.
If policymakers fail to act, they will effectively be supporting a 23% across-the-board benefit cut for all retirees in just eight years – the CRFB said.
Fortunately, there is still time for policymakers to enact pro-growth solutions that protect the long-term viability of the program.
