A Florida senator’s effort to repeal a Depression-era Social Security rule could let millions of working retirees keep benefits they currently forfeit for earning too much. Under current law, Social Security withholds one dollar in benefits for every two dollars a retiree under full retirement age earns above $24,480 in 2026. Sen. Rick Scott’s newly introduced Senior Citizens’ Freedom to Work Act would eliminate that penalty entirely, though the measure remains parked in committee with no floor vote scheduled in either chamber.
The Earnings Test’s $24,480 Line and the $1-for-$2 Clawback
The retirement earnings test applies to anyone collecting Social Security retirement or survivor benefits before reaching full retirement age while still drawing a paycheck. For 2026, a beneficiary who stays under full retirement age all year can earn up to $24,480 without any reduction. Earn more, and the Social Security Administration deducts $1 in benefits for every $2 earned above that line. A retiree entitled to $9,600 a year in benefits who earns $33,400, which is $8,920 over the limit, would see $4,460 withheld, collecting just $5,140 of the benefit for the year.
A separate, higher limit applies in the calendar year a beneficiary reaches full retirement age: $65,160 for 2026, with $1 withheld for every $3 earned above that amount, counting only earnings before the birthday month. Once full retirement age arrives, the test disappears entirely and earnings no longer reduce benefits at any level. Withheld amounts are not permanently lost; the Social Security Administration recalculates the benefit at full retirement age to credit months reduced by excess earnings, though many beneficiaries retire early without realizing the money eventually returns as a higher monthly check rather than a lump-sum refund. The agency also applies a special monthly rule in a retiree’s first year of benefits, paying a full monthly check for any month it considers a beneficiary retired regardless of that year’s total earnings.
Free retirement updates: Keep more of your Social Security and savings with plain-English updates on the changes, deadlines, and costly mistakes retirees miss. Subscribe free.
S. 4184: Scott and Tuberville’s Senior Citizens’ Freedom to Work Act
Scott, chairman of the Senate Special Committee on Aging, introduced the Senior Citizens’ Freedom to Work Act as S. 4184 on March 24, 2026, with Sen. Tommy Tuberville as a cosponsor. The bill would amend Title II of the Social Security Act to repeal the retirement earnings test outright, removing both the $24,480 and $65,160 thresholds and letting beneficiaries of any age earn unlimited income without any benefit reduction. It was referred to the Senate Finance Committee, where it has not received a hearing or a markup.
Rep. Greg Murphy of North Carolina introduced a companion measure, H.R. 8344, in the House, where it was referred to the Ways and Means Committee. Neither bill has been scheduled for a committee vote or floor action, and repeal would require passage by both chambers and a presidential signature before the earnings test rule changes for anyone currently subject to it.
A Depression-Era Rule Meant to Push Seniors Out of Jobs
Scott announced the bill at a Senate Aging Committee hearing titled “Experience Matters: Seniors and the Workforce,” arguing the earnings test dates to the 1930s and was designed to push older Americans out of the workforce and free up more jobs for younger Americans. The hearing followed an earlier Aging Committee session in December 2025 that examined how retirement-age Americans contribute to the economy through paid work, caregiving, and volunteer service. Scott told the committee the goal was to “get rid of the unfair Retirement Earnings Test so that seniors who want to stay in the workforce can do so without being punished or robbed of their hard-earned benefits.” Witnesses at the hearing included Rachel Greszler of Advancing American Freedom, Society for Human Resource Management chief executive Johnny C. Taylor Jr., and Jason Fichtner, a senior fellow at the National Academy of Social Insurance.
Workers age 55 and older have been the fastest-growing segment of the labor force for more than two decades, according to figures Scott cited at the hearing, climbing from 10 percent of the workforce in 1994 to 24 percent in 2022. The witnesses testified about administrative hurdles that make it difficult for older workers to understand how continued work, or the timing of a benefits claim, affects their eventual Social Security payments, and about the broader contributions older employees make to businesses and communities.
Current Law Still Applies While the Bill Awaits Action
Both S. 4184 and H.R. 8344 remain in the earliest stage of the legislative process, introduced and referred to committee without a hearing or markup scheduled as of late August 2026. Repeal would still need to clear the Senate Finance Committee, the House Ways and Means Committee, both full chambers, and a presidential signature before the $24,480 threshold disappears from law.
Until that happens, the Social Security Administration continues to apply the existing earnings test to every beneficiary who claims retirement or survivor benefits before full retirement age and keeps working. Retirees deciding whether to claim early while still earning income can use the agency’s online earnings test calculator to estimate how much of a specific year’s benefit would be withheld under the $1-for-$2 rule now in effect.
This article was produced with AI assistance and reviewed by The Financial Wire editorial team.
More Financial Reading
- Adding someone to your bank account: tax traps and smart moves
- The ideal retirement withdrawal rate so your savings actually last
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
