Do Capital Gains and Dividends Count Toward Social Security’s Earnings Limit?

Only income from employment or self-employment counts toward the earnings limit, which reduces monthly payments for some beneficiaries who continue to work after claiming Social Security. Capital gains and dividends do not apply.

Capital gains are the profits you make when you sell capital assets for more than you paid for them. Capital assets are things you own for investment purposes or personal use, such as stocks, bonds, homes, cars or furniture.

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For example, if you invest $5,000 in a stock and sell it for $7,500, the capital gain is $2,500. But since it didn’t come from a job or self-employment, that profit doesn’t count toward the earnings limit.

It’s the same with the dividends that some corporations pay to their shareholders annually. Dividends are typically paid in cash and do not constitute earnings from work.

When does the earnings limit apply?

The earnings limit only applies if you start receiving Social Security benefits before reaching full retirement age (FRA), the age when you qualify to collect 100 percent of the benefit amount calculated from your lifetime earnings history. If you collect benefits before FRA and continue to work, Social Security will temporarily withhold a portion of your benefits if you exceed the annual earnings limit.

In 2026, the cap for most affected beneficiaries is $24,480, and Social Security will deduct $1 in benefits for every $2 in earnings above it. When you reach FRA, Social Security adjusts your benefit so that over time, you recoup the amount withheld.

Keep in mind

• Numerous other types of nonwork income don’t count toward the earnings limit. The Social Security Handbook, an online guide to the program published by the Social Security Administration, has a full list.
• Income from all sources, including capital gains and dividends, goes into determining whether your Social Security benefits are taxable. That’s a different calculation from the Social Security earnings limit.