A minimum wage increase does not automatically reduce your SSDI payment, but it can trigger work incentive rules that change how much you keep

When your state or locality raises the minimum wage, your earnings go up if you work. Social Security does not cut your SSDI benefit straightforward because the wage floor rose. However, the higher earnings can push you past the Substantial Gainful Activity (SGA) threshold — the income level Social Security uses to decide whether you are working too much to keep disability status. If your earnings cross that line, Social Security may suspend your benefits, even though the wage increase, not your work effort, caused the problem.

The good news: Social Security has built-in protections for people who work. The Plan to Achieve Self-Support (PASS) and the Impairment Related Work Expenses (IRWE) deduction can reduce your countable earnings and keep you under the SGA threshold. Understanding how these tools work before a wage increase takes effect gives you time to set them up and protect your benefits.

Key Takeaways

  • The SGA threshold for 2024 is $1,550 per month; if your earnings exceed this, Social Security will review whether you can keep your SSDI benefits.
  • A minimum wage increase raises your hourly pay but does not automatically trigger a benefit cut — only earnings above SGA do.
  • IRWE lets you deduct work-related costs (transportation, assistive devices, medications needed to work) from your gross earnings before Social Security counts them.
  • PASS lets you set aside income and resources for a work goal without losing benefits, and it can shelter earnings for months or years.
  • You must report earnings to Social Security within the month they occur; waiting until a review catches you can result in overpayment and a debt you owe back.

What the SGA threshold means when your wage goes up

The SGA threshold is the monthly income level Social Security uses to measure work. For 2024, it is $1,550 per month for people under 65 who receive SSDI. (The threshold is higher for people who are blind.) If your monthly earnings stay below this amount, Social Security assumes you are not working at a substantial level and your benefits continue without interruption.

When your state or locality raises the minimum wage, your hourly rate increases. If you work the same number of hours, your monthly earnings rise. If that new total crosses $1,550, Social Security will send you a notice that your case is under review. You do not lose benefits when ready — Social Security will ask for proof of your earnings and may request medical evidence that your condition has not improved. But if your earnings stay above SGA for nine consecutive months, your benefits will end.

The threshold itself changes each year. Social Security announces the new SGA amount in December for the following year. If a wage increase happens in the middle of the year, you may have a few months before the higher earnings fully affect your benefit status, but you should not count on this. Report all earnings to Social Security as soon as they occur.

How IRWE reduces your countable earnings

Impairment Related Work Expenses (IRWE) are costs you pay because of your disability and need to work. Social Security subtracts these costs from your gross earnings before deciding whether you have crossed the SGA threshold. Common IRWE deductions include transportation to and from work, attendant care or personal information services, medications or medical devices needed to work, and specialized equipment or tools your disability requires.

Here is how IRWE works in practice: suppose you earn $2,000 per month after a minimum wage increase, which is above the $1,550 SGA threshold. But you pay $300 per month for a paratransit service because you cannot use public transportation due to your disability. You also pay $150 per month for a prescription medication that lets you focus at work. Social Security subtracts $450 from your $2,000 gross earnings, leaving $1,550 in countable earnings — exactly at the threshold and safe from benefit suspension.

IRWE is not automatic. You must tell Social Security which expenses may have access to and provide proof — receipts, invoices, or statements from the provider. Social Security has a form (the SSA-545) to document IRWE, and you can file it with your local Social Security office or by mail. The deduction applies only to the months you actually pay the expense, so if you stop using a service, you must report that change.

Using PASS to shelter earnings and work toward a goal

A Plan to Achieve Self-Support (PASS) is a written agreement between you and Social Security that sets aside income and resources for a specific work goal — like getting a degree, starting a business, or buying equipment you need to work. While you are following the PASS, Social Security does not count the money you set aside toward your benefit calculation, and you can keep your full SSDI payment even if your total earnings and resources would normally disqualify you.

PASS is powerful because it can shelter earnings for months or years. For example, if a minimum wage increase pushes your earnings above SGA, you could create a PASS to set aside that extra income for vocational training or a business startup. Social Security excludes the set-aside amount from your countable income, so your benefit continues. Once you complete the goal or the PASS ends, the set-aside money is yours to keep — it does not reduce your benefits retroactively.

PASS requires a detailed plan. You work with a PASS planner (often at a vocational rehabilitation agency or a Work Incentive Planning and information project, called WIPA) to write down your goal, the steps to reach it, the timeline, and how much money you need to set aside each month. Social Security reviews the plan and approves it in writing. If your circumstances change — your goal shifts, your timeline extends, or you earn more than expected — you can update the PASS with Social Security's approval.

Reporting earnings correctly to avoid overpayment

Social Security requires you to report all earnings within the month they occur. This means if you work in January and earn $2,000, you must report it to Social Security by the end of January or early February. If you wait until a Social Security review or a benefit redetermination, you risk creating an overpayment — money Social Security paid you that you were not may have access to to receive.

Overpayments are serious. Social Security will demand the money back, and if you cannot repay it in full, they will reduce your future SSDI payments until the debt is cleared. You can request a waiver of overpayment if you can show you were not at fault and repaying would cause hardship, but waivers are not may provide. The easiest path is to report earnings on time, every time.

You can report earnings by phone (1-800-772-1213), online through your my Social Security account, or in person at your local Social Security office. Keep records of your earnings — pay stubs, invoices if you are self-employed, or a log of hours and pay rate. Social Security may ask for proof, and having it ready speeds up the process.

When to set up IRWE or PASS before a wage increase takes effect

If you know a minimum wage increase is coming and you work, start planning now. Calculate your new monthly earnings at the higher wage and see whether you will stay below $1,550. If you will cross the threshold, talk to your local Social Security office or a Work Incentive Planning and information (WIPA) counselor about IRWE or PASS.

IRWE is faster to set up — you can file the form and provide receipts within a few weeks. PASS takes longer because it requires a detailed plan and Social Security's written approval, which can take 30 to 60 days. If a wage increase is imminent, start the PASS process early. Do not wait until your earnings spike and Social Security sends a review notice.

A WIPA project is a free resource funded by Social Security specifically to help people on SSDI navigate work incentives. You can find your local WIPA by visiting the WIPA website or calling 1-866-968-7842. WIPA counselors know the rules inside out and can help you decide whether IRWE, PASS, or another work incentive is right for your situation.

Other work incentives that may help

IRWE and PASS are the most direct tools for managing earnings, but Social Security offers other work incentives. The Student Earned Income Exclusion (SEIE) excludes earnings for students under 22, up to $2,110 per month (2024). If you are a student and your wage increase pushes you above SGA, SEIE might protect your benefits.

The Earned Income Exclusion excludes the first $65 of earnings per month, plus half of remaining earnings. This is less powerful than IRWE or PASS but applies automatically — you do not have to file anything. If your wage increase is modest, the Earned Income Exclusion alone might keep you under the SGA threshold.

The Trial Work Period (TWP) lets you work and earn any amount for nine months without losing benefits. However, the TWP counts months, not consecutive months, and it applies only once per disability onset. If you have already used your TWP, it will not help with a new wage increase. Check your Social Security records to see whether you have months remaining.

Frequently Asked Questions

Does Social Security automatically adjust my benefits if the minimum wage goes up?

No. Social Security does not cut your SSDI payment because the minimum wage increased. Your benefit changes only if your earnings cross the SGA threshold and Social Security determines you are working at a substantial level. A wage increase alone does not trigger a benefit cut.

What if I work part-time and the wage increase pushes my monthly earnings above SGA?

Report the new earnings to Social Security right away. Then explore IRWE (if you have work-related disability costs) or PASS (if you have a work goal). Both can reduce your countable earnings and keep your benefits intact. Do not assume your benefits will end — these tools exist to help you keep working.

Can I use IRWE and PASS at the same time?

Yes. You can have an active PASS and claim IRWE deductions in the same month. Social Security subtracts IRWE costs from your gross earnings first, then excludes your PASS set-aside amount. This combination can shelter a significant portion of your earnings.

How long does it take Social Security to approve a PASS?

Approval typically takes 30 to 60 days after you submit a complete plan. Working with a WIPA counselor speeds this up because they know what Social Security requires and can help you write a plan that passes review on the first submission. Do not wait until a wage increase happens — start the process early.

What happens if I report earnings late?

Late reporting can create an overpayment — money you must repay. Social Security will reduce your future benefits to recover the debt. Report all earnings within the month they occur. If you miss a month, contact Social Security when ready and explain. Honesty and quick correction reduce the risk of a large overpayment.