Earnings Test
How Are Annual and Monthly Earnings Tests Different in Social Security?
Verified against SSA POMS as of September 15, 2026
The short answer
Annual Earnings Test (AET) deducts $1 for every $2 earned over $24,480 for those under full retirement age (FRA) in 2026. In the year of attaining FRA, $1 is deducted for every $3 over $65,160. Monthly Earnings Test (MET) allows beneficiaries to receive full benefits in non-service months where earnings do not exceed $2,040.
Overview of Earnings Test Rules
The Earnings Test (ET) applies to beneficiaries who have not yet attained full retirement age (FRA). It includes two primary forms: the Annual Earnings Test (AET) and the Monthly Earnings Test (MET). Both tests determine how much, if any, Social Security payments will be reduced based on earnings over prescribed amounts. According to RS 02501.021 and 20 CFR 404.430, the application of these tests depends on the beneficiary's age and earnings.
RS 02501.021 View source ›Annual Earnings Test (AET) Details
The Annual Earnings Test (AET) reduces benefits by deducting $1 for every $2 of earnings above $24,480 if a beneficiary is under the FRA for the entire year. In the year the beneficiary reaches FRA, $1 is deducted for every $3 of earnings over $65,160 prior to the month of FRA attainment. These thresholds adjust in line with changes in the national average wage index, as described in RS 02501.025 and RS 02501.001.
RS 02501.025 View source ›Monthly Earnings Test (MET) Overview
The Monthly Earnings Test (MET) pertains specifically to non-service months within the beneficiary's grace year. A non-service month is one where earnings do not exceed the monthly exempt amount of $2,040. Beneficiaries can receive full benefits for these months, assuming no substantial services are performed. The MET is primarily applicable in the grace year, as defined in RS 02501.030 and HBK 1807.
RS 02501.030 View source ›Applicability and Operation of MET
The MET is significant for beneficiaries in their grace year, which is usually the first year a non-service month occurs after retirement or upon first becoming entitled to benefits. The grace year ensures that full benefits are payable for non-service months within this period. RS 02501.030 and HBK 1807 clarify that an individual cannot choose to apply MET in years other than the grace year.
HBK 1807 View source ›Frequently asked
What happens if my earnings exceed the AET limit?
If your earnings exceed the annual exempt amount of $24,480 in 2026, $1 will be deducted from your benefits for every $2 earned over the limit.
When do I receive full benefits under the MET?
You receive full benefits for any month in the grace year where your earnings are below the monthly exempt amount of $2,040 and no substantial work services are performed.
Can MET apply if I've had a grace year before?
Typically, the MET applies only during the initial grace year with non-service months post-entitlement.
How are earnings tested in the year I reach full retirement age?
Only earnings before the month you reach FRA count, and $1 is deducted for every $3 in earnings over $65,160 for 2026.
Do MET and AET exemptions change yearly?
Yes, both exemption amounts are adjusted annually based on changes in the national average wage index.