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1Repair Windows errors before they cause bigger problems2Scan for outdated or missing drivers - takes under a minute3Clear out junk files and repair common Windows errorsFor Social Security’s retirement earnings test, count wages from a job and net earnings from self-employment. Bonuses, commissions and vacation pay are wages. Pensions, annuities, investment returns, interest, veterans benefits, capital gains and other government or military retirement benefits generally do not count. The test applies to people who claim retirement benefits before full retirement age (FRA), and its dollar limits change each year.
For 2026, someone under FRA for the entire year can earn $24,480 before benefits are withheld; in the year they reach FRA, the higher $65,160 limit applies only to earnings before the month FRA is reached. Starting with that FRA month, there is no retirement earnings-test limit. The Social Security Administration (SSA) explains the current rules in its retirement-benefits work FAQ.
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What the retirement earnings test actually covers
The “earnings limit” in this article means the retirement earnings test. It is a rule that can withhold part of a current retirement benefit when a beneficiary works before FRA. It is not the Social Security taxable wage base, an SSI income test, or the separate work rules for disability benefits.
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SSA’s calculation focuses on work income. Its FAQ puts the rule this way: When we figure out how much to deduct from your benefits, we count only the wages you make from your job or your net earnings if you’re self-employed.
The test is separate from income-tax treatment and from whether an item appears in your Social Security earnings record.
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Income that counts toward the limit
Wages from an employee job
Gross wages from employment count. SSA specifically includes:
- Regular salary, hourly pay and other wages;
- Bonuses and commissions;
- Vacation pay; and
- A contribution to a pension plan when that contribution is included in your gross wages.
These amounts are combined for the calendar year that the work was performed. If you have more than one job, wages from all jobs count toward the same annual exempt amount.
When wage income is assigned to a year
SSA assigns wages to when they are earned, not simply when the check arrives. Its guide states: If you work for wages, income counts when it’s earned, not when it’s paid.
An accumulated vacation or sick-pay amount earned in one year but paid in the next belongs to the year it was earned. The same treatment applies to a bonus earned for work in one year and paid later. The SSA Office of the Chief Actuary’s exempt-amount guidance discusses this timing rule.
Net earnings from self-employment
For a sole proprietor, independent contractor or other self-employed worker, SSA generally counts net earnings, not gross business receipts. In broad terms:
Net earnings = gross trade or business income − allowable business deductions − depreciation adjustments.
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The detailed calculation can differ from the amount you think of as taxable income. SSA’s explanation of net earnings from self-employment identifies several items that generally are not included as self-employment earnings unless the business facts create an exception. Examples include dividends and bond interest (except for securities dealers), loan interest (except for a lending business), rental income (except for a real-estate dealer or someone regularly providing services mainly for occupants’ convenience), and limited-partnership income.
Keep records of receipts, deductible expenses and depreciation for the same work period. If your business has a loss or unusual income, use the SSA rules and your tax professional’s analysis rather than treating every line on a tax return as earnings for this test.
Income that does not count
The following categories are excluded from the retirement earnings test under SSA’s published guidance:
| Income type | Counts toward the retirement earnings limit? | Important qualification |
|---|---|---|
| Pension payments | No | Excluded from this work-income test, even though they may be taxable. |
| Annuity payments | No | Do not become countable merely because they are received monthly. |
| Interest and dividends | No | Passive investment income is excluded; special self-employment exceptions can apply to certain businesses. |
| Capital gains | No | Listed by SSA as income not counted for the retirement test. |
| Veterans benefits | No | Not treated as wages or net self-employment earnings. |
| Other government or military retirement benefits | No | Excluded from this test; other program or tax rules may still apply. |
SSA’s retirement work FAQ and its How Work Affects Your Benefits guide list these exclusions. “Not counted” means only that the amount does not trigger withholding under the retirement earnings test. It does not mean the income is tax-free, ignored for Medicare-related calculations, or excluded from every other public-benefit program.
2026 earnings-test limits and withholding rates
SSA publishes separate amounts for people below FRA all year and for people who reach FRA during the year. The 2026 figures are:
| Your FRA status in 2026 | Annual exempt amount | Monthly figure used for the special first-year rule | Benefit withholding above the limit |
|---|---|---|---|
| Under FRA for all of 2026 | $24,480 | $2,040 | $1 in benefits for every $2 of excess earnings |
| Reach FRA during 2026 | $65,160, counting only earnings before the FRA month | $5,430 | $1 in benefits for every $3 of excess earnings |
| FRA month and later | No earnings-test limit | Not applicable | No withholding under the retirement earnings test |
The amounts come from SSA’s 2026 COLA fact sheet and its annual exempt-amount table. FRA depends on your birth year. In the year you reach FRA, only wages and net self-employment earnings before the month you reach FRA are tested; earnings from that month onward are not subject to the limit.
How to calculate the withholding
Subtract the applicable exempt amount from countable earnings, then apply the withholding ratio:
- Under FRA all year: excess earnings ÷ 2 = benefits withheld.
- FRA reached during the year: excess pre-FRA-month earnings ÷ 3 = benefits withheld.
For example, an individual under FRA all year who earns $30,000 in wages has $5,520 of excess earnings ($30,000 − $24,480). The estimated withholding is $2,760 ($5,520 ÷ 2). A person who reaches FRA in 2026 and earns $70,000 before the FRA month has $4,840 of excess earnings ($70,000 − $65,160), producing an estimated $1,613.33 in withheld benefits under the one-third formula. SSA determines the actual payment schedule.
Withholding is not a separate tax and is not a permanent dollar-for-dollar reduction in your benefit. SSA reviews your work record each year. If additional earnings improve the earnings history used to calculate your benefit, SSA says it may increase your monthly benefit after that review.
The special monthly rule in the first year you claim
The annual test can produce an unexpected result when you start benefits partway through a year. SSA’s Special Earnings Limit Rule allows a full benefit check for a whole month considered “retired,” even if your total earnings for that calendar year already exceed the annual limit.
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For 2026, the monthly threshold is $2,040 for someone under FRA all year or $5,430 in the year FRA is reached. The monthly rule applies only to months in which you meet the retirement conditions; it does not erase the annual test for other months.
Self-employment service requirement
A self-employed person must also avoid substantial services during the month. SSA defines substantial services as more than 45 hours in a month, or 15 to 45 hours in a highly skilled occupation, according to its How Work Affects Your Benefits guide. A month with earnings below the threshold can still fail the special rule if your work effort meets that substantial-services definition.
Examples that show what is and is not counted
Employee with a bonus paid the following year
You earn $22,000 in 2026 and receive a $5,000 bonus in January 2027 for work completed in 2026. The bonus belongs to 2026 for earnings-test purposes because it was earned then. Your 2026 countable wages are $27,000, not $22,000 in 2026 and $5,000 in 2027.
Self-employed consultant
A consultant collects $60,000 in client payments and has $15,000 of allowable business deductions and depreciation. The starting point for the retirement earnings test is generally $45,000 of net self-employment earnings, not the $60,000 of receipts. Whether a particular cost is deductible and how depreciation is treated must follow SSA and tax rules.
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Retiree with investments and a pension
A beneficiary receives $18,000 in pension payments, $6,000 in interest and $4,000 in capital gains, plus $20,000 in part-time wages. Only the $20,000 of wages is compared with the annual exempt amount. The other amounts remain relevant to taxes and financial planning but are not retirement-test earnings.
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Do not confuse this test with other Social Security income rules
Social Security taxable wage base
The taxable wage base limits how much employment income is subject to Social Security payroll tax. It is not the same as the retirement earnings-test exempt amount. A wage can be below the retirement-test limit yet still be covered by payroll tax, and the two figures serve different purposes.
Social Security earnings record
SSA separately explains that only earned wages and net self-employment income are covered earnings for the Social Security record; pension payments, annuities, and interest or dividends from savings and investments are not covered earnings. See What Income Is Included in your Social Security Record? That explanation concerns crediting earnings to your record, not the withholding calculation, even though many categories overlap.
SSI and disability programs
SSI has its own income-counting and exclusions rules, and Social Security Disability Insurance has different work-activity tests. The retirement earnings test discussed here applies to retirement benefits claimed before FRA. Do not use these 2026 retirement thresholds to decide whether an SSI payment or disability benefit changes.
Practical steps before and after you work while claiming
- Identify your FRA status for the year. Determine whether you are below FRA all year, reach FRA during 2026, or are already in or past your FRA month.
- Separate work income from other income. List wages, bonuses, commissions and vacation pay. Keep pensions, annuities, investments, interest, capital gains and veterans or government retirement benefits in a separate category.
- Assign wages to the earning year. Review the period the work covered, not merely the date printed on the payment.
- Calculate self-employment net earnings. Start with business income and subtract allowable deductions and depreciation under SSA’s rules. Do not substitute gross receipts.
- Compare with the correct 2026 amount. Use $24,480 for someone under FRA all year, or $65,160 for the year FRA is reached, counting only pre-FRA-month earnings.
- Estimate the withholding. Apply the one-in-two or one-in-three formula to excess earnings. Treat the result as an estimate because SSA controls the withholding schedule.
- Check the special monthly rule. If you started benefits during the year, test each month against the $2,040 or $5,430 monthly amount and, if self-employed, the substantial-services limit.
- Keep documentation and update SSA. Retain pay stubs, bonus statements, vacation-pay records, business ledgers and deduction support. SSA reviews work records annually and can adjust withholding or later benefit calculations.
Common mistakes to avoid
- Counting a pension or investment account withdrawal as wages for the retirement test.
- Using gross self-employment receipts instead of net earnings after allowable deductions.
- Putting a late-paid bonus or accumulated leave in the payment year rather than the year earned.
- Applying the $24,480 limit after the month you reach FRA.
- Assuming that money withheld under the test is a permanent benefit cut or an income tax.
- Using retirement-test figures to answer an SSI or disability-work question.
Because exempt amounts are indexed and can change annually, verify the figure for the year in which you work. The official SSA pages linked above provide the controlling numbers and definitions for 2026.
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