The federal cost of living increase for 2025 refers to the projected percentage adjustment in salaries and benefits for federal employees, military members, and Social Security recipients to keep pace with the rising cost of living. This adjustment is determined by the Bureau of Labor Statistics’ Employment Cost Index (ECI) and is typically announced in the fall of the preceding year.
The federal cost of living increase is important because it helps to ensure that federal employees and retirees are able to maintain their standard of living in the face of inflation. It also helps to attract and retain qualified workers in the federal workforce. Historically, the federal cost of living increase has been relatively modest, but it has varied depending on the rate of inflation. In recent years, the federal cost of living increase has been around 2%, but it could be higher in 2025 if inflation continues to rise.
