3 Ways Your Side Hustle Could Affect Your Social Security Benefits in 2026

You're claiming Social Security, but you're not quite ready to leave the workforce just yet. You may have dropped your 9-to-5, but you've got a flexible side hustle that lets you work when you've got some free time.

You see this extra income as a supplement to your personal savings and your Social Security benefits. But it can also have some surprising consequences for your future checks. Here are three ways side hustle income can affect your Social Security benefits, for better or worse.

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1. It could boost your future benefits

The government bases your Social Security benefit on your average monthly earnings, indexed for inflation, over your 35 highest-earning years. But your 35 highest-earning years might change over time, especially if you applied for the program with a short work history.

When you sign up with fewer than 35 years in the workforce, the Social Security Administration includes zero-income years in your benefit calculation. But if you're still working a side hustle, those zero-income years should gradually disappear from your benefit calculation.

The government recalculates your benefit each year and increases your checks, if appropriate. This could happen even if you've worked more than 35 years, if your earnings today are higher than your lowest-earning years from decades past.

2. It could put you at risk of running into the earnings test

The Social Security earnings test withholds benefits from workers claiming Social Security before their full retirement age (FRA) -- 67 for most workers today -- if they're earning more than a certain amount of income from a job. In 2026, you lose $1 for every $2 you earn over $24,480 if you'll be under your FRA all year. Those who will reach their FRA this year lose $1 for every $3 they earn over $65,160, assuming they earn that much before their birth month.

If your side hustle is pulling in serious cash, or if you're still working a regular job too, you could face benefit cuts due to the earnings test. Fortunately, this is only temporary. When you reach your FRA, the government will increase your checks to make up for any amount it withheld before.

3. It could increase your risk of owing Social Security benefit taxes

Social Security benefit taxes are still on the books in 2026. If your provisional income -- adjusted gross income (AGI), plus any nontaxable interest from municipal bonds, and half your annual Social Security benefits -- exceeds $25,000 for a single adult or $32,000 for a married couple, you will owe ordinary income taxes on up to 85% of your checks.

Income from your side hustle will increase your AGI, which means it can also increase your provisional income. It's not always possible to avoid this, so the next best step is to budget for it. An accountant can help you figure out how much of your benefits could be taxable and how much of your side hustle income you should earmark for taxes.

None of this is to say that you should stop your side hustle because of its possible consequences for your Social Security benefits. But you should be aware of how it might influence your checks over time, so you're not surprised when you receive a smaller check or a bigger tax bill than normal.

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