What Counts as Earnings for the Social Security Test

Gross wages and net earnings from self-employment only¹. Investment income, pensions and retirement-account withdrawals are outside the test entirely, however large they are, and they never reduce a Social Security benefit.

The earnings-test calculator takes one earnings figure, and this page is what belongs in it.

The formula Social Security uses

POMS RS 02505.001 states the whole calculation: earnings for the test are “Gross wages for services rendered in taxable year (TY); plus All net earnings from self-employment (NESE) for that TY; minus Any net loss from self-employment (SE) for that TY.”

Gross means before deductions. Wages counted for the test are not reduced by income-tax withholding, by health-insurance premiums taken from pay, or by contributions into a 401(k). A self-employment loss reduces the total; that is the one subtraction in the formula.

Counted and not counted

Type of income	Counts for the earnings test	Wording in POMS RS 02505.240
Wages from a job	Yes	gross wages for services rendered in the year
Net earnings from self-employment	Yes	added in full for the taxable year
Pensions	No	“Do not count bona fide pension payments”
Retirement pay	No	“Do not count payments statutorily excluded”
Interest and dividends	No	“Do not count dividends and interest”
Capital gains	No	“Do not count capital gains”
Rental income from real estate	No	“Do not count rental income from real estate”
IRA, 401(k) or 403(b) withdrawals	No	“Do not count payments from the plan”
Jury duty fees	No	“Do not count jury duty fees, meals, or lodging”

The exceptions in that section are narrow: rental income can count for real-estate dealers and for some farm arrangements, and sick pay counts in the first six months after the employee last worked.

When wages count: the year the work was done

This is the rule that surprises people who retire mid-year. POMS RS 02505.010: “We consider wages earned in the taxable year (TY) for services performed, regardless of when the employer actually paid the wages.”

A paycheck that lands in January for work performed in December is December’s earnings for the test. The rule runs both ways, so a payment made long after you stop working is not automatically earnings for the year the check arrives.

Self-employment is timed by the work as well. Net earnings belong to the taxable year in which the trade or business produced them.

Special wage payments

POMS RS 02505.025 covers payments made “to employees during periods of absence from work such as vacation pay, sick pay, etc., or make current payment for work previously done such as deferred payments, or make extra payments as a reward for good work such as bonuses.”

The section’s own summary of their treatment is careful, and so is this page: “these payments may not be earnings or, if earnings, they may be earnings for periods different from those in which they were paid.” A bonus or accumulated vacation paid after you retire is therefore assigned to the period the work was done rather than to the month the money arrives, and how each type is assigned is set out in POMS RS 02505.240. Social Security’s own reporting instruction expects them to be identified: POMS RS 02510.005 lists “Any special payments, or earnings to be excluded” among the contents of a current-year work report.

Whose earnings are tested

Only yours. The test measures the earnings of the person whose benefit is being paid, so a spouse’s salary is not added to your figure.

The withholding is a different question. POMS RS 02501.095 says the excess earnings of the number holder — the worker on whose record benefits are paid — are withheld “from the total family benefit”, so “suspensions or deductions apply to both the NH and the auxiliaries”. An auxiliary’s own excess earnings are withheld only from that person’s benefit.

Do 401(k) withdrawals count against the Social Security earnings limit?

No. POMS RS 02505.240 instructs staff to “Do not count payments from the plan” for an IRA, 401(k) or 403(b). A withdrawal is not wages and is not net earnings from self-employment, so it is outside the formula.

Does my pension reduce my Social Security?

Not through the earnings test. The instruction in POMS RS 02505.240 is to “Do not count bona fide pension payments”, so a pension produces no excess earnings and withholds nothing. The test looks only at wages and net earnings from self-employment.

Does my spouse’s income count?

No. Your earnings figure contains only your own wages and net self-employment earnings. If you are paid on your spouse’s record, their excess earnings can still withhold the benefits paid to you, because the worker’s excess is charged against the total family benefit.

Are earnings after full retirement age counted?

No. No earnings test from the month you reach full retirement age². In the calendar year you reach it, only earnings in the months before that month are counted.

Is the limit measured on gross or take-home pay?

Gross. The test counts wages for services rendered before any deduction, so tax withholding, insurance premiums and retirement-plan contributions do not lower the figure compared with the $24,480³ exempt amount for 2026.

Does rental income count if I own several properties?

Generally no — “Do not count rental income from real estate” — but POMS RS 02505.240 carries exceptions for real-estate dealers and for certain farm arrangements, where the income is treated as self-employment instead.