Cost-of-Living Adjustment, or COLA, is an annual increase to VA disability compensation and other federal benefits that helps protect the purchasing power of veterans and their families against inflation. The adjustment is tied to the Consumer Price Index (CPI), which measures changes in the cost of goods and services.

The Social Security Administration (SSA) calculates the COLA each year, and the VA is required by law to apply the same percentage increase to veterans' disability compensation and other related benefits. The COLA is based on the percentage increase in the CPI-W, which measures changes in the prices of goods and services. The SSA uses the previous year's third-quarter data to set the COLA rates for the following year.

• COLA is typically applied every January to VA disability compensation, Social Security benefits, and military retirement pay.

• The percentage increase is announced by the Social Security Administration, and Congress must pass legislation for the VA to adopt the change.

• The adjustment affects monthly compensation rates, including Special Monthly Compensation (SMC) and Dependents’ benefits.

Example: The COLA for 2025 is 2.5%. A veteran receiving $1,000 per month in compensation would begin receiving $1,025.

Note: The amount and timing of COLA changes vary by year. Not all benefits are affected equally.

At Greene & Marusak, we help veterans understand how annual adjustments like COLA impact their monthly benefits. If you believe your payment is incorrect or didn’t reflect a recent increase, our VA-accredited team is here to help.

Give us a call at (844) 483-8737