In October the Social Security Administration (SSA) announced that Social Security beneficiaries, as well as those who receive Supplemental Security Income and Social Security Disability Insurance (SSDI), would see their benefits increase by 2.5 percent in 2025, thanks to the annual Cost-of-living Adjustment, or COLA as it is often called.The 2025 COLA, calculated using the Consumer Price Index for Urban wage earners and clerical workers (CPI-W), came out to 2.5 percent—lower than the 3.2 percent increase offered in 2024 and the 8.7 percent boost in benefits applied in 2023.
The lower COLA is reflective of an economic environment where inflation is slowing, and prices are rising less quickly than they were in 2022 and 2023. However, the most recent CPI report for January, published by the Bureau of Labor Statistics (BLS) is a warning that inflation could be taking hold of the economy once again. In January, prices, according to the CPI-W rose by 0.68 percent.
What the January CPI numbers tell us about 2026 COLA
The 2026 calculation will be made by comparing the average of the CPI-W for July, August, and September of this year to that from the same period in 2024.
In 2024, the average was 308.729, and in January the CPI-W was determined to be 311.172, an increase of 0.79 percent. It is very early to be able to predict with real accuracy how high the 2026 COLA could reach, especially considering the large cloud of economic uncertainty plaguing the US economy at the moment.
The February CPI report will be released on Wednesday, March 12, 2025, and will show whether inflation is continuing to pick up, as it did in January, or retreat. The Senior Citizen League, a senior rights organization, that publishes a COLA forecast, estimates that the 2026 increase will be around 2.3 percent, less than what was offered this year. However, the estimate related on February 12, is an update to the previous projection of 2.1 percent that had been released in mid-January, based on the December consumer price reports. The League will continue to update its forecast as economic data becomes available, but long story short: high inflation means a higher COLA.
Tax Refunds in 2025: What’s Changing and What It Means for You
Tax season might not spark joy, but for millions of Americans, that refund check is a silver lining. As we roll into 2025, though, the IRS is shaking things up—your refund could look a little different. From new rules to economic shifts, here’s what’s on deck and how it might hit your wallet.
Refunds Are Still a Thing, But…
Good news first: tax refunds aren’t going anywhere. Last year, the IRS dished out an average of $2,850 per filer, and 2025 should keep that ball rolling for most. But don’t bank on the same exact payout. Inflation, updated tax brackets, and policy tweaks mean your numbers might shift—up or down—depending on your situation.
Bracket Creep and Inflation Adjustments
The IRS isn’t letting inflation run wild on your taxes. For 2025, they’ve bumped up income brackets by about 2.8%, a nod to rising costs. Translation? You might keep more of your paycheck before crossing into a higher tax rate. Standard deductions are climbing, too—$15,000 for singles, $30,000 for joint filers—which could juice your refund if you don’t itemize. But if your income spiked faster than inflation, don’t be shocked if your refund shrinks a bit.
Credits and Deductions: Wins and Losses
Tax credits are the real refund boosters, and 2025 has some updates. The Earned Income Tax Credit (EITC) is getting a modest bump—think $7,830 max for families with three kids—helping low-to-middle earners pocket more. The Child Tax Credit stays at $2,000 per kid, but whispers of expansion are still just that—whispers. Meanwhile, energy-efficient home upgrades (solar panels, anyone?) still snag you a 30% credit, capped at certain limits.
Deductions? The state and local tax (SALT) cap holds at $10,000, a bummer for high-tax state residents. And if you’re self-employed, those business expense write-offs are safe but double-check the fine print—new rules on digital payments might tighten what counts.
Timing and Tech Upgrades
Filing early could mean cash sooner. The IRS kicks off 2025 returns on January 27, promising refunds within 21 days for e-filers with direct deposit—assuming no hiccups. Paper filers, brace for delays. Oh, and heads-up: the IRS is cracking down on fraud with beefed-up ID verification—expect more hoops like facial recognition if your return raises a flag.
Economic Vibes Matter
Bigger-picture stuff—like interest rates and job growth—plays a role, too. If the economy cools, fewer overtime hours or bonuses could trim your taxable income, potentially fattening your refund. On the flip side, a hot market might mean more income (and taxes owed). It’s a roll of the dice, but either way, the IRS isn’t waiting for your crystal ball—file with what you’ve got.
Get Ahead of It
Want to max out your refund? Adjust your W-4 now—too little withholding could leave you owing, too much means you’re giving Uncle Sam an interest-free loan. Stash some cash for emergencies instead of banking on a big refund windfall. And if you’re freelancing or side-hustling, quarterly payments are your friend—skip ’em, and penalties could eat into your return.
Tax season 2025 isn’t a revolution, but it’s not business as usual either. Stay sharp, file smart, and that refund could still be your midwinter treat.
