Updated July 28, 2026. Quick answer: Three things change at once, all in your favour. The withholding rate drops from one dollar in two to one dollar in three. The exempt amount rises to a much higher figure. And only earnings before the month you reach full retirement age are counted at all. Most summaries mention the first and skip the other two.
The three changes
| Before the FRA year | In the FRA year | |
|---|---|---|
| Withholding rate | $1 withheld per $2 over | $1 withheld per $3 over |
| Exempt amount | Lower | Substantially higher |
| Which earnings count | The whole year | Only months before you reach FRA |
The third row is the one that gets left out, and it is often the largest effect. Earnings in the months after you reach full retirement age are ignored entirely for the test. Someone reaching FRA early in the year has only a short window of counted earnings, and can earn without limit for the rest of it.
Why this changes when it is worth working
The year you reach full retirement age is by far the most forgiving year of the whole sequence: a higher threshold, a gentler rate above it, and a short counting window. Someone weighing whether to take on work is looking at a very different calculation in that year than in the one before it.
And whatever is withheld is not lost — it comes back as a permanently higher benefit at full retirement age.
Both exempt amounts are wage-indexed under 42 U.S.C. §403(f)(8)(B) and are republished each year, so no figures are printed here.
No dollar amounts appear on this page, deliberately. The earnings-test exempt amounts are wage-indexed under 42 U.S.C. §403(f)(8)(B), the benefit formula bend points reset every year under §415(i), and full retirement age is a schedule that varies by birth year under §416(l). Any figure printed in an article is wrong within a year. Take current figures from the Social Security Administration directly, and take your own numbers from your Social Security statement.
Run your own numbers. Earnings-test calculator — see what working early withholds.
Sources
42 U.S.C. §402(w) (delayed retirement credits); §402(b) and (c) (spousal); §402(e) and (f) (survivor); §402(k)(3) and §402(r) (deemed filing, as amended by the Bipartisan Budget Act of 2015, Pub. L. 114-74 §831); §403(b) and (f) (the retirement earnings test); §416(l) (full retirement age). 20 C.F.R. part 404 as in force July 2026.
This states what the cited authority says. It is not tax advice, and retirement-plan design turns on facts about your business and your other entities that no page can see. Every dollar limit referenced here is indexed and changes annually.