FERS Supplement 2027 Earnings Limit Is $25,560: Each $2 Over Cuts $1, From July 2028

Which year’s pay is tested, and when the cut lands

The regulation defines the “test year” as “the calendar year immediately before the one in which any reductions required by 5 U.S.C. 8421a and § 842.505 are applied” (5 CFR 842.502). The statute says the excess is “50 percent of so much of such individual’s earnings for the immediately preceding year as exceeds the applicable exempt amount for such preceding year” (5 U.S.C. 8421a(b)(2)(A)). In practice the 2027 limit is the yardstick for what you earn in calendar 2027, and the bill arrives mid-2028.

Dates in the third column follow 5 U.S.C. 8421a(b)(5) (our arithmetic). OPM’s survey form, RI 92-22, asks retirees who earned more than the limit, or whose supplement is already reduced, to report; the 2021 edition, the latest on OPM’s site we could read, asked for it “no later than June 30, 2022”, and said “By law, this reduction is effective July 1, 2022.” Check the date on the survey you receive.

Because the cut falls on a later year, two things follow. If the supplement has already ended, there is nothing to cut: OPM’s handbook says that if “no annuity supplement is payable in the year following” the earnings year, “there is no reduction for excess earnings since the reduction can only be applied to the retiree annuity supplement.” And in the first year of retirement the cut is capped by what was paid that year: the handbook’s example is a retiree who stops work at the end of September 2020 with a $500 supplement; her 2020 supplement payments total $1,500, so any 2021 reduction “cannot exceed $1,500”.

The 2027 limit beside every year since 1987

The supplement began with FERS in 1987. The table lists the Social Security exempt amount for each earnings year from SSA’s tables: for 1987 to 1999 the “under age 65” column of SSA’s historical table, and for 2000 on the lower amount in SSA’s current table. OPM’s earnings-report form quotes these figures for the years it was printed ($15,720 for 2016, $16,920 for 2017, $18,960 for 2021, $19,560 for 2022), which matches SSA’s lower amount in every case.

The 2027 limit is 62.6% above the 2016 figure of $15,720 (our arithmetic). The amount stayed at $14,160 for 2009, 2010 and 2011 and at $15,720 for 2015 and 2016; the largest one-year jump in the series was $1,680 for 2023, 8.59% (our arithmetic). The higher SSA amount, $67,920 for 2027, applies to people in the year they reach full retirement age; the supplement ends by age 62, so it is not the figure for this test. The same $25,560 also governs Social Security benefits for people claiming early; that side of the rule, including what counts for rental and K-1 income, is in our Social Security earnings test guide and the rest of SSA’s 2027 announcement is in our 2027 Social Security guide.

What each earnings level costs: worked cuts (our arithmetic)

The statute divides the excess earnings by 12 and charges that to each supplement month, never more than that month’s supplement, and never more in total than the supplement payable for the earnings year (5 U.S.C. 8421a(b)(1)-(2)). The table applies that to the 2027 limit for two supplement sizes. $750 a month is OPM’s own worked supplement (see the next section); $1,500 is a larger illustration, not an average. Cuts are for the July 2028 to June 2029 payments.

Reading the table: earnings of $20,000 or exactly $25,560 cost nothing. The cut grows $0.50 a year for each extra dollar earned, so each $1,000 of earnings above the limit removes $500 from the year’s supplement, or $41.67 a month. Earnings of $50,000 in 2027 would cut a $750 supplement to zero from July 2028, because the $12,220 half-excess is larger than the $9,000 of supplement payable in a year. For a $1,500 supplement ($18,000 a year) the supplement reaches zero at $61,560 of earnings. After the cut, the rest of the retirement is untouched: OPM says “your remaining FERS employee annuity will not otherwise be reduced.”

Second case (our arithmetic): a retiree who retires on September 30, 2027 with a $750 supplement is paid for October to December 2027, which is $2,250. If she then earns $60,000 from consulting between October and December 2027, the half-excess would be $17,220, but the cut cannot exceed the $2,250 paid for 2027, so $187.50 a month is taken for 12 months and the supplement is not reduced below zero in any month. This mirrors the handbook’s $500 example above.

What the supplement is, so you can size the cut

OPM states the formula in its own example: “if your estimated full career Social Security benefit would be $1,000 and you had worked 30 years under FERS, OPM would divide 30 by 40 (.75) and multiply ($1,000 × .75 = $750).” The statute builds the Social Security amount as the benefit payable at 62, with the maximum early-claiming reduction for the retiree’s birth year; for anyone born in 1960 or later that is 30 percent (5 U.S.C. 8421(b)(2); 5 CFR 842.504(b)(1)(iv)). The fraction is years of FERS service, rounded to the nearest whole year and capped at 40, over 40, and military service is not counted (5 U.S.C. 8421(b)(3)-(4)). Two more rules matter for planning: the handbook says the supplement “is not increased by cost-of-living adjustments”, and the statute ends it “not later than the last day of the month in which such individual attains age 62” (5 U.S.C. 8421(a)(3)(B)), earlier if Social Security entitlement would have begun sooner. So the dollar amount of the supplement in your award does not rise with the January COLA.

Who is tested, and from when

OPM’s handbook says: “The reduction for excess earnings does not apply to employees who retire under the special provisions for law enforcement officers, firefighters, air traffic controllers, and military reserve technicians (see Chapter 46) until they reach the MRA.” The statute states the matching rule for retirements under sections 8412(d)(1) and (e) and 8414(c): earnings “attributable to a period before attaining the applicable retirement age” are not considered. A retiree also needs at least one full calendar year of civilian service under FERS computation rules to receive any supplement (Handbook 51A1.1-3 D), including a retiree whose annuity is partly CSRS.

What counts as earnings, and what does not

OPM’s definition: “Your FERS employee annuity is not considered earnings when determining your earnings for the earnings test. Earnings for the year consist of the sum of wages for service performed in the year, plus all net earnings from self-employment for the year, minus any net loss from self-employment for the year.” The statute ties the meaning to section 203 of the Social Security Act (5 U.S.C. 8421a(b)(4)(A)), so the detailed sorting of rent, K-1 and flipping income in our Social Security earnings test guide applies here as well.

Two cautions from OPM’s own words. The form says that “Regardless of what income is called or who receives it, if it is actually wages for services you performed or net earnings from self-employment you secured, it must be included.” And it warns: “Your earnings for 2021 will be verified through a computer match with the Social Security Administration's earning file.” The regulation lets OPM suspend the supplement if a retiree does not furnish earnings: “Failure to furnish earnings and estimated earnings in the form or at the times prescribed by OPM is cause to suspend payment of the supplement” (5 CFR 842.505(d)).

The 2025 law: proposed in the House, not enacted

The House-passed text of H.R. 1 (engrossed May 22, 2025) had a Title IX, “Committee on Oversight and Government Reform”, whose Section 90001 was titled “Elimination of the FERS annuity supplement for certain employees”. It inserted “separated from service under section 8425 or entitled to an annuity under subsection (d) or (e) of section 8412 of this title” into 5 U.S.C. 8421(a)(1) and (2), and its applicability clause read: the amendments “shall begin to apply on January 1, 2028, and shall not apply with respect to any individual entitled to an annuity supplement under section 8421 of title 5, United States Code, prior to such date.” The same title also proposed an at-will employment election with lower FERS contributions (Section 90002), a filing fee for Merit Systems Protection Board appeals (Section 90003) and “FEHB protection” (Section 90004).

The law that was signed is different. Public Law 119-21 was approved July 4, 2025, and its Title IX is “Committee on Homeland Security and Governmental Affairs”: border and homeland security provisions in Subtitle A, and in Subtitle B only “FEHB improvements” (Section 90101), the Pandemic Response Accountability Committee (Section 90102) and an appropriation for the Office of Management and Budget (Section 90103). Searching the full enacted text, the words “annuity supplement” occur zero times and “8421” occurs zero times.

What that means for a 2027 retirement is limited to what the documents show: the eligibility rules in the statute are the ones in force today. A future bill could change them, and the 2025 House text shows the form such a proposal has taken.

What a reader can do with this

• Pull the 2027 number against your own plan. If you expect part-time pay or consulting income in 2027, compare it with $25,560 and use the cut table above with the supplement amount in your own OPM paperwork.
• Separate wages from everything else before you decide. The test counts W-2 wages and net self-employment profit. TSP and IRA withdrawals, dividends, interest, capital gains and passive rent are outside it on OPM’s lists, though they may matter for taxes; see how the TSP Roth in-plan conversion works and rolling a 401(k) to an IRA.
• Mind the calendar, not only the year. Because the cut arrives July 1 of the following year, a one-year consulting gig in 2027 shows up in your supplement in July 2028 and runs for 12 months, and the cut is capped by the supplement you were paid for 2027.
• Check which retirement type you are. Special-provision retirees are not tested before their MRA; early-out and discontinued-service retirees start receiving the supplement at the MRA; MRA plus 10 and disability retirees do not receive it.
• Keep the paperwork OPM may ask for. The form tells retirees to retain evidence of their earnings, and OPM checks them against Social Security records.

This is analysis of public documents, not investment, legal or tax advice.

More for federal retirees, read from the same kind of primary documents: the 2027 FERS and CSRS COLA by retirement month, FEHB and PSHB 2027 premiums, plan by plan, FEGLI Option B premiums after 65, FLTCIP premium increases since 2010, OPM's retirement backlog, month by month, keeping the TSP or rolling it to an IRA and the TSP L Funds' allocations and glide paths.

FAQ

Sources, read and saved on November 11, 2026: 5 U.S.C. 8421 and 8421a and 5 CFR 842.501 to 842.505 (Cornell Legal Information Institute); OPM, “Types of Retirement” (FERS annuity supplement section) and OPM’s CSRS and FERS Handbook, Chapter 51, Retiree Annuity Supplement (March 2022 edition); OPM form RI 92-22, Annuity Supplement Earnings Report (editions revised March 2017 and March 2022); SSA Office of the Chief Actuary, “Exempt Amounts Under the Earnings Test” (2027 table, Wayback capture of November 2, 2026) and its 1975-1999 historical table; H.R. 1 (119th Congress) as engrossed in the House and Public Law 119-21 (govinfo.gov). OPM’s own web page and handbook do not yet show a 2027 figure; the 2027 amount is SSA’s.