What income doesn't count against Social Security earnings limit? Confused about the rules

Great question! Only your wages from employment or net earnings from self-employment count toward the earnings test limit. The following types of income do NOT count against your earnings limit: - Investment income (dividends, interest, capital gains) - Pension payments - Rental income (unless you're in the business of real estate) - Annuities - IRA distributions - Other government benefits So your rental income from the duplex, dividends, and pension are all safe and won't trigger benefit reductions. Just be careful with that contract work - that will count toward the $21,240 limit for 2025 if you're under Full Retirement Age.

CAREFUL! This earnings limit thing is SUPER strict and they DO NOT mess around!!! My brother-in-law got hit with a HUGE overpayment notice because he didn't report some side income. The SSA computers automatically match with IRS records and they WILL catch you eventually! Make sure EVERYTHING is reported!

I went thru this last year. The rental income is fine don't worry about that part. Passive income doesn't count. Good luck!

Something nobody mentioned yet - if you're going to hit Full Retirement Age (FRA) during the year, the rules change. For the months before your FRA in that year, the limit is higher ($56,520 in 2025) and only earnings in those months count. Then after you reach FRA there's no limit at all. Also, they only withhold $1 in benefits for every $3 you earn over the limit in that year you reach FRA, not the usual $1 for $2. Worth considering if you're close to FRA!

I had the EXACT same question last yr when I filed! My financial advisor told me that IRA withdrawals don't count either, so if you need extra money, taking from retirement accounts won't affect your SS. I'm taking SS early at 62 and doing some consulting work staying under the limit, then using IRA money to fill the gap. Works great!

I've been trying to reach SSA for weeks to ask similar questions about the earnings test. Finally got through yesterday using Claimyr (claimyr.com). They connected me to a real person at SSA in under 20 minutes instead of the hours I was spending on hold. There's a video showing how it works: https://youtu.be/Z-BRbJw3puU The agent confirmed exactly what others are saying - passive income doesn't count toward the earnings test. Just your wages and self-employment earnings matter. She also mentioned that if you go over the limit, they don't cut off benefits entirely - they reduce them proportionally based on how much you exceed the limit.

ive been on ss for 3 yrs now and was so confused about all this at first. the website is terrible. basicly what everyone said is right - work income counts and everything else doesnt. but heres the thing - if ur self employed they look at ur NET income after expenses not gross. so keep track of all ur business expenses to lower what counts!!!!!

Didn't someone ask this exact question a few days ago? I swear I just saw this same topic.

Thank you all for the helpful responses! This clarifies things a lot. I think I'll go ahead and apply now that I understand rental income, dividends, and my small pension won't count toward the earnings limit. I'll just need to carefully track my contract work income to stay under $21,240 this year. I appreciate everyone taking the time to explain!

Just fyi the earnings limit goes up every year with inflation so next year it'll probably be higher than $21,240 which gives you more breathing room for your contract work

One last thing to consider: any benefits withheld due to excess earnings aren't permanently lost. When you reach Full Retirement Age, SSA recalculates your benefit amount to give you credit for months when benefits were withheld. It's not a simple 1:1 return, but you do eventually recoup some of what was withheld. Many people don't realize this aspect of the earnings test!