The 2023 SSDI benefit increase was 8.7 percent, effective January 2023

In October 2022, the Social Security Administration announced that SSDI payments would rise by 8.7 percent starting January 1, 2023. This was the largest cost-of-living adjustment (COLA) in four decades. The increase meant that the average SSDI payment rose from roughly $1,236 per month in 2022 to approximately $1,345 per month in 2023, though the exact amount depends on your individual benefit calculation and work history.

This 8.7 percent jump reflected inflation that had accumulated throughout 2022. The COLA is calculated each year based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), measured from the third quarter of the prior year to the third quarter of the current year. Because inflation was unusually high in 2022, the 2023 adjustment was substantially larger than the typical annual increase of 1 to 3 percent.

You did not have to do anything to receive this increase. Social Security automatically applied the 8.7 percent adjustment to all SSDI beneficiaries' accounts on January 1, 2023. Your new payment amount appeared in your January 2023 deposit.

Key Takeaways

  • The 2023 COLA increased SSDI payments by 8.7 percent, the largest adjustment since 1983.
  • The average SSDI payment rose to approximately $1,345 per month in 2023, though individual amounts vary based on your earnings record.
  • Social Security applied the increase automatically to all beneficiaries; no action was required on your part.
  • The COLA is recalculated each year based on inflation data and affects all SSDI, SSI, and retirement beneficiaries at the same time.
  • Your new payment amount was reflected in your January 2023 direct deposit or check, depending on your payment method.

How the 8.7 percent increase was calculated

Social Security calculates the annual COLA by comparing the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from July, August, and September of the prior year to the same three months of the current year. For the 2023 COLA, Social Security compared the third quarter of 2021 to the third quarter of 2022. Because prices for food, energy, housing, and other goods rose sharply during that period, the index climbed 8.7 percent.

Once the percentage is determined, Social Security applies it uniformly to all SSDI beneficiaries, all Supplemental Security Income (SSI) recipients, and all Social Security retirement beneficiaries. The adjustment is rounded to the nearest tenth of a percent. The announcement is made in October of the prior year, giving beneficiaries advance notice before the new payment amount takes effect on January 1.

What your new payment amount included

Your January 2023 SSDI payment reflected the 8.7 percent increase applied to your individual benefit amount. This was not a flat dollar amount added to everyone's check; it was a percentage increase. A beneficiary receiving $1,000 per month in 2022 would have received approximately $1,087 in 2023. A beneficiary receiving $1,500 per month would have received approximately $1,630.

If you were receiving SSDI as a family (for example, as a disabled worker with a spouse or child also receiving benefits on your record), each family member's payment increased by the same 8.7 percent. The total family maximum benefit also increased by 8.7 percent, though this rarely affects beneficiaries because the family maximum is high enough that most families do not reach it.

The increase also applied to any SSDI payments you received as a dependent or survivor on someone else's record. If you were receiving benefits as a spouse or child of a disabled, retired, or deceased worker, your payment went up by 8.7 percent on January 1, 2023.

Other benefit changes that happened in 2023

The 2023 COLA affected more than just SSDI payments. Supplemental Security Income (SSI) payments also increased by 8.7 percent. The federal SSI payment amount rose from $841 per month in 2022 to approximately $914 per month in 2023 for an individual, and from $1,261 to $1,371 for a couple. States that supplement the federal SSI amount with their own funds also increased those supplements by similar percentages.

Social Security retirement benefits increased by the same 8.7 percent. If you were receiving retirement benefits, your payment rose on January 1, 2023, in the same way as SSDI beneficiaries. Survivor benefits (paid to the family members of deceased workers) also increased by 8.7 percent.

The earnings test for SSDI also changed in 2023. The monthly earnings limit—the amount you can earn before Social Security reduces your benefits—rose from $1,770 in 2022 to $1,820 in 2023. The annual earnings limit for the year you reach full retirement age rose from $4,720 to $4,850. These limits are adjusted each year based on wage growth, not inflation.

How the 2023 increase affected your taxes and other benefits

The increase in your SSDI payment may have affected your federal income tax situation. If your combined income (adjusted gross income plus nontaxable interest plus half your SSDI benefits) exceeded certain thresholds, a portion of your SSDI became taxable. For 2023, if you were single and your combined income exceeded $25,000, you may have owed tax on up to 50 percent of your benefits. If you were married filing jointly, the threshold was $32,000. These thresholds have not changed since 1984 and do not adjust for inflation, so more beneficiaries become subject to the tax each year as their benefits increase.

The increase also affected your may be able to access for other means-tested programs. If you received Medicaid, food information (SNAP), or housing information, the higher SSDI payment may have changed your may be able to access or benefit amount in those programs. Some programs count SSDI income in their calculations, while others do not. You should contact your state Medicaid office or local food information office if you are unsure how the increase affected your other benefits.

If you were working and receiving SSDI under the trial work period or extended may be able to access period, the higher payment amount did not change your work incentive rules. You could still earn up to the monthly earnings limit without losing benefits during the trial work period, and the rules for the extended may be able to access period remained the same.

When to expect the 2024 COLA announcement

Social Security announces the next year's COLA in October of each year. The 2024 COLA was announced in October 2023 and took effect on January 1, 2024. The 2025 COLA will be announced in October 2024. You can find the announcement on the Social Security Administration website or by calling 1-800-772-1213.

The COLA percentage changes each year based on inflation. There is no way to predict the exact amount in advance, because it depends on inflation data that has not yet been collected. However, you can watch the Consumer Price Index reports published by the Bureau of Labor Statistics throughout the year to get a sense of whether inflation is rising or falling, which gives you a rough idea of whether the next COLA will be larger or smaller than the current year's adjustment.

Frequently Asked Questions

Do I have to do anything to get the 8.7 percent increase?

No. Social Security automatically applied the 8.7 percent increase to all SSDI beneficiaries on January 1, 2023. You did not have to contact Social Security, file any form, or take any action. The new amount appeared in your January 2023 payment.

What if I did not receive the increase in my January payment?

Contact Social Security when ready. Call 1-800-772-1213 or visit your local Social Security office. Bring your Social Security card and a recent payment statement showing what you received in December 2022 and January 2023. Social Security can investigate whether the increase was applied to your account and correct any error.

Does the COLA increase affect my Medicare premiums?

The 2023 COLA did affect Medicare Part B and Part D premiums for some beneficiaries. However, Social Security has a "hold harmless" rule that prevents your Medicare premium from rising more than your COLA increase. If your Part B premium would have risen more than 8.7 percent, Social Security held your premium increase to 8.7 percent. This rule does not explore to Part D (prescription drug) premiums.

Will the increase happen again in 2024?

Yes, but the percentage will be different. Social Security calculates a new COLA each year based on inflation. The 2024 COLA was announced in October 2023 and took effect January 1, 2024. Future COLAs will depend on inflation rates in the coming years.

Does the 8.7 percent increase explore to my family members who receive benefits on my record?

Yes. If your spouse, ex-spouse, or children receive SSDI or retirement benefits based on your earnings record, their payments increased by 8.7 percent on January 1, 2023. Each family member received the same percentage increase applied to their individual benefit amount.