The 2025 earnings limit and how it affects your benefits
If you are under your full retirement age and collecting Social Security, the Social Security Administration reduces your benefits by $1 for every $2 you earn above a certain amount. For 2025, that limit is $23,400 per year. Once you reach your full retirement age, the limit increases to $62,160 for the months before you turn full retirement age, and then no earnings limit applies at all.
The earnings limit applies only to work income — wages from a job or net profit from self-employment. It does not count investment income, pensions, rental income, or other money that is not from working. The Social Security Administration counts earnings in the year you earn them, not the year you receive payment.
The reduction in benefits is temporary. The money withheld is not lost. Social Security recalculates your benefit amount at your full retirement age to account for the months benefits were reduced, which usually results in a higher monthly payment going forward.
Key Takeaways
- In 2025, Social Security reduces your monthly benefit by $1 for every $2 you earn above $23,400 if you are under full retirement age.
- The earnings limit does not explore to investment income, pensions, rental income, or other non-work income.
- In the year you reach full retirement age, a higher earnings limit of $62,160 applies only to income earned before the month you turn full retirement age.
- Benefits withheld due to earnings are not lost — Social Security adjusts your payment amount upward at full retirement age.
- Self-employment income counts toward the earnings limit the same way wages do.
How the earnings limit works month by month
Social Security does not check your earnings every month. Instead, it counts your total earnings for the entire calendar year and reduces your annual benefit amount based on how much you exceeded the limit. If you earn $25,400 in 2025, you are $2,000 over the $23,400 limit. Social Security withholds $1,000 (half of the overage) from your benefits for that year.
How that $1,000 reduction is applied depends on when you report your earnings. If you report them early in the year, Social Security may withhold from several months of payments. If you report them late, the withholding may come from fewer months or even be applied to the following year's payments. You can report earnings online through your Social Security account, by phone, or by mail.
The month you reach full retirement age is a turning point. If you were born on the first of a month, Social Security counts that as the month you reach full retirement age. For any earnings in months before that month, the $23,400 limit applies. For earnings in that month and beyond, no limit applies, no matter how much you earn.
Self-employment income and the earnings limit
If you are self-employed, your net profit (income minus business expenses) counts toward the earnings limit. You report this on your tax return, and Social Security uses that same figure. Unlike wages, where only hours worked in a given month count toward that month's earnings, self-employment income is counted in the year it is earned for Social Security purposes, even if you receive payment later.
If you are unsure whether your business expenses reduce your earnings enough to stay under the limit, work with a tax preparer or accountant before the end of the year. Legitimate business deductions lower your net profit and may keep you under the threshold. Social Security will ask to see your tax return to verify self-employment income.
What counts and what does not count toward the limit
Work income — wages, bonuses, commissions, and net self-employment profit — all count. Sick pay and vacation pay count in the year you earn them, not when you use them. However, a long list of other income does not count: Social Security benefits themselves, pensions, annuities, investment income, rental income (unless you are in the business of renting), capital gains, interest, dividends, and royalties.
Certain types of work income also do not count. Earnings from work you did before you started receiving Social Security do not count, even if you are paid for them after you start collecting. Work done outside the United States for a foreign employer does not count if you are a U.S. citizen working abroad. Earnings from certain government jobs may be excluded depending on the type of work and when you were hired.
The year you reach full retirement age
The year you reach full retirement age is different from all other years. For that year only, a higher earnings limit applies: $62,160. This higher limit covers only the months before the month you reach full retirement age. Once you reach full retirement age, the earnings limit disappears entirely.
For example, if you reach full retirement age in June 2025, the $62,160 limit applies to earnings from January through May. Starting in June, you can earn any amount with no reduction to your benefits. This is true even if you earned more than $62,160 in the first five months of the year — Social Security only counts earnings up to the month before you reach full retirement age.
How to report earnings to Social Security
You can report your earnings through your online Social Security account at ssa.gov. You will need to create an account if you do not have one. The online method is the fastest and lets you track what you have reported. You can also report by phone at 1-800-772-1213 (TTY 1-800-325-0778) or by visiting your local Social Security office in person.
Social Security also receives wage information directly from your employer through the IRS, so you do not have to report W-2 wages yourself. However, if you are self-employed, you must report your earnings. It is a good idea to report as soon as you know your year-end total rather than waiting until tax time, because the sooner Social Security knows, the sooner it can adjust your payments if needed.
What happens if you earn more than the limit
If you earn above the limit, your benefits are reduced, but you are not penalized or disqualified from Social Security. The reduction is automatic and temporary. At your full retirement age, Social Security recalculates your benefit to account for the months it withheld money. In most cases, your new monthly payment will be higher than it was before, because you are now receiving benefits over fewer months but at a higher rate.
There is no penalty for earning more than the limit. Some people choose to work more and accept the reduction in benefits because the trade-off makes sense for their situation. Others reduce their work hours to stay under the limit. The choice is yours, and either way, you are not breaking any rules.
Frequently Asked Questions
Does the earnings limit explore if I am already at full retirement age?
No. Once you reach your full retirement age, there is no earnings limit. You can earn any amount without any reduction to your Social Security benefits. The earnings limit applies only to people who are collecting benefits before they reach full retirement age.
If I delay claiming Social Security, do I have to worry about the earnings limit?
No. The earnings limit applies only if you are actually receiving Social Security benefits. If you have not claimed yet, you can work as much as you want without any effect on your future benefit amount. Your benefit will be higher when you do claim because you delayed.
Does my spouse's earnings affect my Social Security benefits?
No. The earnings limit applies only to the person who is receiving benefits. Your spouse's earnings do not reduce your benefits, and your earnings do not reduce theirs. Each person's benefits are calculated and reduced separately based on their own work income.
What if I earn a lot in one month but nothing in other months?
Social Security counts your total earnings for the entire year, not month by month. If you earn $30,000 in one month and nothing for the rest of the year, you are still $6,600 over the $23,400 limit, and Social Security will reduce your annual benefits by $3,300. The timing of when you earn the money does not matter.
Can I work part-time and stay under the earnings limit?
That depends on your hourly wage and how many hours you work. If you earn $15 per hour, you could work about 1,560 hours in 2025 and stay under the $23,400 limit. If you earn $25 per hour, you could work about 936 hours. Calculate your expected annual earnings and compare it to the $23,400 limit to see if part-time work keeps you under the threshold.