Social Security Increases by 2.8%
Published October 24, 2025
The Social Security Administration recently announced the cost-of-living adjustment (COLA) for 2026. The announcement was delayed from the originally scheduled release date of October 15 to October 24. The 2.8% increase was in line with economists’ estimates. The cost-of-living increase was 8.7% for 2023, 3.2% for 2024 and 2.5% for 2025. According to The Senior Citizens League, the Social Security cost-of-living increase average over the past 20 years is 2.6%. Almost 71 million Americans receive Social Security and will enjoy an increased benefit payment in January of 2026.
Social Security Administration Commissioner Frank J. Bisignano stated, “Social Security is a promise kept, and the annual cost-of-living adjustment is one way we are working to make sure benefits reflect today’s economic realities and continue to provide a foundation of security. The cost-of-living adjustment is a vital part of how Social Security delivers on its mission.”
The average retired individual’s Social Security payment in 2025 is $1,976 per month and will increase by approximately $56. Social Security recipients with larger payouts will receive a greater increase.
Social Security recipients will receive a one-page notice with the cost-of-living increase in straightforward language and with personalized information for the individual related to the new monthly benefit amount. Individuals can also access the notice early by creating an online Social Security account. Alerts can also be delivered via text or email if the individual has set that up as a notification preference.
Military retirees will also receive a 2.8% cost-of-living increase, effective December 1, 2025. Veterans’ benefits for disability pay and dependents’ compensation will also benefit from the 2.8% increase.
Government Shutdown Impacts Taxpayers
As the federal government shutdown continues, the United States Tax Court issued a press release on October 14, 2025. The release announced that all in-person and remote trials for the weeks of October 20 and October 27 would be canceled. The announcement noted that future weeks of trials may be impacted. Future cancellations will be announced on the Tax Court website no later than one week before the scheduled trial session.
The Tax Court Clerk’s Office remains open for filings. Special sessions scheduled for October 22 and 29 were not canceled and will be held as scheduled. The Tax Court similarly suspended operations during the December 22, 2018 to January 25, 2019 government shutdown, with a 31-day closure.
In addition to Tax Court trials, the Internal Revenue Service (IRS) support is reduced for taxpayers. Approximately half of the IRS workforce is furloughed. During the first week of the shutdown, the IRS remained fully operational. As the shutdown continues, the IRS has moved to limited operations and reduced personnel. The IRS revised its shutdown plan on October 8 to reflect the reduction in workforce.
The IRS enforcement divisions are the most heavily impacted by furloughs. Additional services such as nonautomated collections, taxpayer services related to responding to questions at call sites during non-filing season and processing non-disaster relief transcripts will be placed on hold until the shutdown is over.
Taxpayer Assistance Centers are closed, and all appointments are canceled until the shutdown ends. Taxpayer Advocate Services are impacted, with fewer than 100 employees retained under the revised shutdown plan.
“Please be aware that due to the lack of an approved federal budget, all Taxpayer Advocate Service offices across the country are closed,” TAS said in a statement on its website. “No staff will be available to assist you during this time. Please check your local media for news about when our offices will reopen. We apologize for the inconvenience.”
Tax Court Denies Two Summary Judgments
In Kellum Resources LLC v. Commissioner, T.C. No. 2585-23, the U.S. Tax Court denied two partial summary judgments related to whether the taxpayer was entitled to a jury trial in connection with IRS civil tax penalties and the validity of IRC Reg. 1.170A-13(c)(5)(ii).
Kellum Resources, LLC (Kellum), a partnership, filed two motions for partial summary judgment in Tax Court after the IRS assessed penalties under IRC Sec. 6663(a) for civil fraud. Kellum subsequently filed a motion challenging the substantive and procedural validity of Reg. 1.170A-13(c)(5)(ii) under the Administrative Procedure Act.
Kellum contended that the Tax Court’s administrative structure and the nature of the IRS penalties are sufficiently similar to the SEC’s enforcement process at issue in SEC v. Jarkesy, 144 S. Ct. 2117 (2024). Therefore, according to the taxpayer, the Seventh Amendment’s right to a jury trial should apply.
The Tax Court noted that it denied a similar motion for partial summary judgment related to Sec. 6663(a) civil fraud penalties in Silver Moss Properties, LLC v. Commissioner, 165 T.C. No. 3 (2025). Tax Court proceedings stem from the authority vested in the IRS for the delegation of tax enforcement. In Silver Moss, the Court noted it is well settled law that Tax Court related matters do not afford the right to a jury trial and are an exception to the Seventh Amendment.
The Court explored that neither party explained how deciding the validity of Reg. 1.170A-13(c)(5)(ii) would reduce the length of the trial or how the resolution of the legal issue is required for this case. In the interest of judicial restraint, the Tax Court declined to decide the matter at this point. The Tax Court invited both parties to address the validity issues in briefings in the context of the trial record.
The Court denied Kellum’s petition for the reasons more fully stated in Silver Moss. Based on the doctrine of judicial restraint, the Tax Court declined to decide the validity of Reg. 1.170A-13(c)(5)(ii). Both motions for partial summary judgment were denied.
Editor’s Note: At this time, the Tax Court remains closed due to the government shutdown. New Tax Court opinions will remain on hold until the government is reopened.
Applicable Federal Rate of 4.6% for November: Rev. Rul. 2025-21; 2025-45 IRB 1 (15 October 2025)
The IRS has announced the Applicable Federal Rate (AFR) for November of 2025. The AFR under Sec. 7520 for the month of November is 4.6%. The rates for October of 4.6% and September of 4.8% also may be used. The highest AFR is beneficial for charitable deductions of remainder interests. The lowest AFR is best for lead trusts and life estate reserved agreements. With a gift annuity, if the annuitant desires greater tax-free payments the lowest AFR is preferable. During 2025, pooled income funds in existence less than three tax years must use a 4.0% deemed rate of return. Charitable gift receipts should state, “No goods or services were provided in exchange for this gift and the nonprofit has exclusive legal control over the gift property.”
