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Can rental income reduce Social Security benefits?

No. Social Security only counts income from employment towards the retirement earnings test. Other kinds of income — including income from rental properties, lawsuit payments, inheritances, pensions, investment dividends, IRA distributions and interest — will not cause benefits to be reduced.

In 2023, Social Security withholds $1 in benefits for every $2 earned above the annual limit of $21,240 for people who claimed benefits before reaching full retirement age, which is 66 and 4 months for people born in 1956 or 66 and 6 months for those born in 1957 and is gradually rising to 67. Earnings made as an employee, net earnings from self-employment, and work-related bonuses and awards count toward the limit. 

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Keep in mind

  • different formula applies for the year in which a beneficiary will reach full retirement age — the earnings limit is $56,520, and $1 in benefits is withheld for every $3 in income exceeding the cap. 
  • The earnings test goes away once a beneficiary reaches full retirement age. From then on, income level has no effect on Social Security benefits.

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