The 2025 earnings limit and how it affects your payment
If you receive Social Security before your full retirement age, the Social Security Administration reduces your payment by $1 for every $2 you earn above a set threshold. For 2025, that threshold is $23,400 per year. The reduction applies only to wages and self-employment income — not to pensions, investments, or other money you receive.
The earnings limit changes each year based on national wage trends. Once you reach your full retirement age, the limit no longer applies, and you can earn as much as you want without any reduction to your benefit. The month you turn full retirement age, a different rule takes over: Social Security deducts $1 for every $3 you earn above $62,400 (also for 2025), but only for earnings before the month you reach full retirement age.
This is not a tax in the traditional sense. Social Security is not withholding money from you permanently. Instead, the agency adjusts your monthly payment downward during the years you work. You may receive some or all of your benefit back later through higher payments after you reach your full retirement age, because the agency recalculates your benefit amount at that point.
Key Takeaways
- If you are under full retirement age in 2025, you lose $1 in benefits for every $2 you earn above $23,400 per year.
- The earnings limit applies only to wages and self-employment income, not to pensions, investments, rental income, or annuities.
- Once you reach your full retirement age, the earnings limit disappears and you can work without any reduction to your benefit.
- Your full retirement age depends on your birth year and ranges from 66 to 67 for people born between 1943 and 1960.
- Social Security recalculates your benefit amount after you reach full retirement age, which may result in a higher monthly payment going forward.
What counts as earnings under the limit
Social Security counts only wages from employment and net self-employment income toward the earnings limit. If you are an employee, your wages are what you report on your W-2 form. If you are self-employed, it is your net profit after business expenses, not your gross revenue.
Money that does not count toward the limit includes: pension payments (whether from a former employer or military service), investment income, interest, dividends, capital gains, rental income, annuities, and withdrawals from retirement accounts like IRAs or 401(k)s. Bonuses, commissions, and vacation pay all count as wages if they are paid by an employer.
If you work part-time or seasonally, only the income from those jobs counts. If you have multiple jobs, add all wages together to see whether you exceed the limit. Social Security uses the income you report to the IRS on your tax return, so the numbers should match.
How the reduction works month by month
Social Security does not wait until the end of the year to reduce your payment. The agency estimates your annual earnings when you report them and adjusts your monthly benefit accordingly. If you earn less than expected, you may receive a refund. If you earn more, you may owe money back.
The reduction happens in the month you earn the income, not the month you receive the payment. If you are paid on the 15th of each month, Social Security counts that income in the month you earned it, even if the check arrives in the next month. This matters if you are close to the earnings limit and want to time your income carefully.
Once you reach your full retirement age, the earnings limit stops applying. If you turn 67 in June 2025, for example, the limit applies to your earnings from January through May. Starting in June, you can earn any amount without a reduction. The $62,400 limit (for those reaching full retirement age in 2025) applies only to earnings in the months before you reach full retirement age.
Full retirement age by birth year
| Birth Year | Full Retirement Age |
|---|---|
| 1943–1954 | 66 |
| 1955 | 66 and 2 months |
| 1956 | 66 and 4 months |
| 1957 | 66 and 6 months |
| 1958 | 66 and 8 months |
| 1959 | 66 and 10 months |
| 1960 and later | 67 |
Your full retirement age is the age at which Social Security considers you to have reached retirement for benefit calculation purposes. It is not the same as the age you must stop working or the age you can claim benefits. You can claim Social Security as early as 62, but if you claim before your full retirement age, your monthly payment is permanently reduced, and the earnings limit applies.
The table above shows the exact age based on your birth year. If you were born on January 1st of any year, use the previous year's row. Social Security uses your birth date to determine which rule applies to you, so knowing your exact full retirement age matters when you are close to the threshold.
Reporting your earnings to Social Security
You are responsible for telling Social Security about your earnings. You can report them online through your my Social Security account, by phone at 1-800-772-1213, or by mail. Social Security also receives wage information from the IRS, so if your report does not match your tax return, the agency will follow up.
Report your earnings as soon as you know your annual total, or estimate them if you are still working. If you underestimate and earn more than you reported, Social Security will adjust your payment and may ask you to repay the difference. If you overestimate and earn less, you will receive a refund or credit toward future payments.
You do not need to report earnings month by month. Social Security looks at your total earnings for the calendar year. If you earn $25,000 in 2025 and the limit is $23,400, you will lose $800 in benefits for the year ($25,000 minus $23,400 equals $1,600, divided by 2 equals $800).
How the recalculation works after full retirement age
When you reach your full retirement age, Social Security recalculates your benefit amount. The agency removes the months in which your payment was reduced due to earnings and recalculates your benefit as if you had not claimed it during those months. This can result in a higher monthly payment going forward.
The recalculation is automatic — you do not need to do anything. Social Security will send you a notice explaining the new amount. The increase is not a refund of the money you lost; it is a permanent adjustment to your benefit rate. The longer you worked and had your benefit reduced, the larger the potential increase at full retirement age.
This recalculation is one reason some people choose to claim Social Security early even if they plan to keep working. The reduction during working years is offset by a higher benefit later. Whether this strategy makes financial sense depends on your life expectancy, total lifetime earnings, and other income sources.
Frequently Asked Questions
Do I have to report my earnings every month?
No. Social Security looks at your total earnings for the calendar year. You can report once you know your annual total, or estimate if you are still working. The agency receives wage information from the IRS, so your report should match your tax return.
What if I am self-employed — do I count gross income or net profit?
Count net profit after business expenses, not gross revenue. This is the amount you report on Schedule C of your tax return. Deductible business expenses reduce your earnings for Social Security purposes.
Can I work part-time and stay under the earnings limit?
Yes, if your total wages from all jobs stay below $23,400 in 2025. Add up income from every employer. Once you reach full retirement age, the limit no longer applies.
If I turn full retirement age in July, when does the earnings limit stop?
The limit applies to earnings from January through June. Starting in July, you can earn any amount without a reduction. The $62,400 limit applies only to earnings before the month you reach full retirement age.
Will I get back the money Social Security withheld due to earnings?
Not as a refund. When you reach full retirement age, Social Security recalculates your benefit and increases your monthly payment going forward. The increase reflects the months your payment was reduced, but you do not receive a lump sum for past reductions.