Public Benefits & Tax Updates for 2025

How have the benefit programs that impact older adults changed their payouts for 2025? This article gives you a quick recap of the major changes to the public benefit programs our clients interact with most and the tax updates that impact our clients the most.

Social Security Benefits Increase in 2025

Social Security and Supplemental Security Income (SSI) benefits for more than 72.5 million Americans will increase 2.5 percent in 2025.

The 2.5 percent cost-of-living adjustment (COLA) will begin with benefits payable to nearly 68 million Social Security beneficiaries in January 2025. Increased payments to nearly 7.5 million SSI recipients began on December 31, 2024. (Note: some people receive both Social Security and SSI benefits.)

Of note, the 2024 increase was 3.2%. This year's COLA is the lowest increase beneficiaries have seen since a 1.3% increase in 2021, reflecting a decrease in the pace of inflation.

Federal benefit rates increase when the cost-of-living rises, as measured by the Department of Labor’s Consumer Price Index (CPI-W). The CPI-W rises when inflation increases, leading to a higher cost-of-living. This change means prices for goods and services, on average, are higher. The cost-of-living adjustment (COLA) helps to offset these costs.

If you receive Social Security benefits, you should have already received your COLA notice. They were mailed throughout the month of December to retirement, survivors, and disability beneficiaries, SSI recipients, and representative payees. If you have misplaced your COLA letter and want to know your new benefit amount, you can securely obtain your Social Security COLA notice online using the Message Center in your personal account, which can be created through ssa.gov.

Read more about the 2025 COLA here.

VA Aid & Attendance Benefits Increased December 1

Benefits related to VA Pension with an Aid & Attendance allowance increased on December 1, 2024.

VETERAN WITH A DEPENDENT:

Basic Improved Pension - $1,851 monthly | $22,216 annually

Housebound - $2,165 monthly | $25,982 annually

Aid and Attendance - $2,795 monthly | $33,548 annually

SINGLE VETERAN:

Basic Improved Pension - $1,413 | $16,965

Housebound - $1,727 | $20,732

Aid and Attendance - $2,358 | $28,300

SURVIVING SPOUSE:

Basic Improved Pension - $948 | $11,380

Housebound - $1,159| $13,908

Aid and Attendance - $1,515 | $18,187

HEALTHY VETERAN WITH ILL SPOUSE: $1,851 monthly | $22,216 annually

MARRIED VETERANS (if both are in need of A&A): $3,740 monthly | $44,886 annually

FOR EACH ADDITIONAL DEPENDENT: $241 monthly | $2,902 annually

This section of the Kimbrough Law website explains more about these benefits.

Federal Estate Tax Limit & Gift Tax Exclusion Limit Increasing in 2025

The estate and gift tax exemption will be $13.99 million per individual for 2025 gifts and deaths, up from $13.61 million in 2024. This increase means that a married couple can shield a total of $27.98 million without having to pay any federal estate or gift tax. The table below summarizes the new exclusion amounts for each type of tax.

Year	Estate Tax Lifetime Exemption	Gift Tax & GST Tax Annual Exclusion per Donee
Previous Year (2024)	$13,610,000	$18,000
This Year (2025)	$13,990,000	$19,000

Medicare Updates in 2025

Monthly Medicare Part B premiums go up

Monthly Medicare Part B premiums — which are often deducted directly from Social Security checks — may affect just how much of a bump beneficiaries see in their 2025 benefit payments. Medicare Part B covers physician, outpatient hospital and certain home health services, as well as durable medical equipment.

In 2025, the standard monthly Part B premium will be $185 per month — a $10.30 increase from $174.70 in 2024.

Part B deductibles will also rise, to $257, in 2025 — a $17 increase from the $240 annual deductible for 2024.

Medicare Part B premiums are based on a beneficiary’s modified adjusted gross income, or MAGI, from their tax returns from two years prior. In 2025, beneficiaries who had less than or equal to $106,000 in MAGI in 2023 will pay the standard monthly Part B premium, as will married couples with less than or equal to $212,000.

Beneficiaries with higher incomes will be subject to income-related adjustment amounts, or IRMAA, that increase their monthly premium payments.

Medicare $2,000 prescription drug cap goes into effect

Annual out-of-pocket Medicare Part D drug costs will now be capped at $2,000, as changes enacted with the Inflation Reduction Act go into effect.

Beneficiaries with Medicare Part D drug plans that have a deductible will pay out-of-pocket costs until that threshold is met. In 2025, the highest deductible for those plans is $590.

Once beneficiaries pay their full deductible, they will owe 25% of the cost of coinsurance until their out-of-pocket spending on both generic and brand-name drugs reaches $2,000. After that, those beneficiaries will have what’s known as catastrophic coverage, which means they won’t be on the hook to pay out-of-pocket Part D costs for the rest of 2025.

However, beneficiaries will also have the option to pay out-of-pocket costs monthly over the course of the year, instead of all at once.

Notably, insulin costs have also been capped at $35 per month, both under Medicare Part D covered treatments and Medicare Part B covered insulin used with pumps.

Questions about public benefits that impact you? Kimbrough Law can help. Give us a call at 706.850.6910.