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Annual Exempt Amounts

Excerpted from "Social Security Handbook". See the up-to-date, official Social Security Handbook at ssa.gov.

1803. Annual Exempt Amounts

1803.1 How is the annual exempt amount determined?

There is an annual exempt amount prior to year of FRA (see §723.5) attainment. In the year you reach FRA, you are subject to a different annual exempt amount. The exempt amounts also vary from year to year according to increases in the nationwide earnings level. The exempt amounts are computed each year according to the formula provided in the Social Security Act. This formula takes into account increases in national earnings levels.

1803.2 What are the annual exempt amounts?

The chart below shows the annual exempt amounts for the years 1985 through 2006:


Annual Exempt Amounts

Year

Age 65-69

Under Age 65

1985

$7,320

$5,400

1986

$7,800

$5,760

1987

$8,160

$6,000

1988

$8,400

$6,120

1989

$8,880

$6,480

1990

$9,360

$6,840

1991

$9,720

$7,080

1992

$10,200

$7,440

1993

$10,560

$7,680

1994

$11,160

$8,040

1995

$11,280

$8,160

1996

$12,500

$8,280

1997

$13,500

$8,640

1998

$14,500

$9,120

1999

$15,500

$9,600

Year of Full Retirement Age

Prior to Year of Full Retirement Age

2000

$17,000

$10,080

2001

$25,000

$10,680

2002

$30,000

$11,280

2003

$30,720

$11,520

2004

$31,080

$11,640

2005

$31,800

$12,000

2006

$33,240

$12,480

2007

$34,440

$12,960

1803.3 How do you know which exempt amount applies?

The higher exempt amount applies if you reach full retirement age (65 and 2 months in 2003) (see §723.5) on or before the last day of the taxable year involved. The lower exempt amount applies if you do not turn full retirement age on or before the last day of the taxable year.

Dr. James, who reports his earnings on a calendar year basis, turns age 65 and 2 months on June 18, 2003. The lower exempt amount ($11,280) applies for calendar year 2002, and the higher exempt amount ($30,720) applies January through May for calendar year 2003. The FRA no longer applies from the month of FRA attainment and on.

(See §1808.2 for test used when a beneficiary dies in the year of turning FRA.)

Last Revised: Jul. 30, 2007


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