What are the new changes in social security in 2025?

Next year, there will be changes in the social security system that will have an impact on the financial situations of many Americans, with some facing significant consequences. Legislators are expected to debate and further modify different proposals in the coming year, which will also affect our wallets and bank accounts.

The tax of 12.4% levied on employee income remains in effect, shared by both employees and employers. This situation has remained unchanged since 1990, but the maximum taxable income thresholds have changed annually over the past 10 years and will change again in 2025.

The maximum taxable income for Social Security in 2025 is $176,100. Income exceeding this threshold is not subject to taxation.

Gallup has been conducting an annual poll to determine the extent of retirees’ reliance on Social Security benefits. 80% to 90% of respondents, including 88% in the April 2024 survey, cite Social Security benefits as an important source of income. Nine out of ten seniors believe they would face financial hardship without the program.

Former President Donald Trump proposed on his platform “Truth Social” in July last year that seniors should not pay taxes for Social Security. In essence, Trump’s suggestion is to end this welfare tax and allow retirees to retain more income. Understanding the conditions under which one must pay Social Security taxes and the nature of these taxes is crucial, depending on your filing status and total taxable income.

To determine if your benefits are taxable, add half of the Social Security benefits you received during the year to all other income sources (wages, interest, dividends, etc.). If you are single and your total exceeds $25,000, you must pay Social Security taxes.

For married couples filing jointly, if your provisional income falls between $32,000 and $44,000, you may need to pay income tax on up to 50% of benefits. If your total income surpasses the $44,000 threshold, up to 85% of benefits could be subject to taxation.

According to a recent analysis by the Committee for a Responsible Federal Budget (CRFB), Social Security is heading towards a financial cliff, which could result in substantial benefit cuts for 70 million Americans, with a typical couple facing a $16,500 payment reduction by 2033.

The CRFB analysis report indicates that the trust fund for these benefits will be exhausted by 2033. Afterward, an automatic 21% reduction in monthly checks will occur regardless of filing or income status. Many retirees are already financially strained, with four out of ten seniors relying solely on an average monthly check of $1,783.55 to get by.

Eliminating welfare taxation would deprive Social Security of a vital source of income by 2035. However, there are other proposals that are expected to reduce the plan’s asset reserves and/or decrease actual revenues, such as:

Deciding when to start receiving Social Security benefits is a personal decision based on various factors including financial status, health, and retirement plans. Consulting a financial advisor before making a decision can be a prudent move.

Concerns about the future solvency and potential benefit cuts of Social Security are understandable, but the best thing we can do is stay informed about legislative changes that may affect our benefits.

Where we have genuine control is in understanding how work will impact our benefits before reaching full retirement age. Balancing Social Security with other retirement income sources and choosing the right retirement timing are crucial factors in financial planning. Factors to consider include:

The original article entitled “What’s New in 2025 for Social Security?” was published on the English version of the Epoch Times website. Copyright © 2024 The Epoch Times. This article represents the author’s viewpoints and opinions and is for general informational purposes only, not intended as recommendations or solicitations. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or other personal financial advice. The Epoch Times does not guarantee the accuracy or timeliness of article content.