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