How Is Substantial Gainful Activity Calculated?

Substantial Gainful Activity (SGA) is a concept used by the Social Security Administration (SSA) to evaluate disability claims for Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). It measures if an individual’s earnings and work activities demonstrate an ability to perform significant work despite a medical condition, playing a central role in eligibility.

Understanding Substantial Gainful Activity

Work is considered “substantial” if it involves performing significant physical or mental activities, or a combination of both. This assessment considers the type of tasks undertaken and the level of effort required.

Work is deemed “gainful” if it is performed for pay or profit, or if it is the type of work generally performed for pay or profit, even if the individual is not currently receiving remuneration. The SSA evaluates whether the work performed is typically remunerated in the open market.

SGA Thresholds

The Social Security Administration establishes specific monthly dollar amounts that define the Substantial Gainful Activity (SGA) level. These thresholds are updated annually to reflect changes in the national average wage index and cost-of-living adjustments. For 2025, the monthly SGA threshold for non-blind individuals is $1,620. For individuals who are statutorily blind, the monthly SGA threshold is $2,700.

Earning income above these thresholds generally indicates an individual is engaging in SGA, which can impact eligibility for disability benefits. Conversely, earnings below these amounts typically suggest an individual is not performing SGA. These monetary limits serve as a benchmark in the SSA’s evaluation.

Calculating Countable Earnings for Employees

When assessing Substantial Gainful Activity (SGA) for employees, the Social Security Administration (SSA) does not simply consider an individual’s gross wages. Instead, the SSA calculates “countable earnings” by adjusting gross income with certain allowed deductions. These deductions account for expenses directly related to a disability that are necessary for an individual to work.

One deduction is for Impairment-Related Work Expenses (IRWE). These are out-of-pocket costs for items or services a disabled individual needs to work because of their impairment. Examples include payments for specialized transportation, medical devices, attendant care services, or certain medications required for job duties. To qualify as an IRWE, the expense must be paid by the individual, not reimbursed, and be reasonable for the item or service. The SSA subtracts approved IRWEs from gross monthly earnings to arrive at the countable earnings figure.

Another adjustment involves subsidies or special conditions provided by an employer. If an employer provides a special allowance or reduces productivity demands due to an employee’s disability, the value of that subsidy is deducted from gross earnings. This acknowledges that the employee’s earnings might not fully reflect their actual productivity without such accommodations. By deducting IRWEs and subsidies, the SSA determines a more accurate representation of the employee’s gainful activity, which is then compared against the SGA threshold.

Calculating Countable Earnings for Self-Employed Individuals

Assessing Substantial Gainful Activity (SGA) for self-employed individuals is more complex than for employees, considering both earnings and the nature of the work performed. The Social Security Administration (SSA) applies a series of tests to determine if a self-employed individual is engaging in SGA.

The first evaluation is the Significant Services and Income Test. This test determines if the individual provides “significant services” to their business and if their net earnings from self-employment are above the SGA threshold. If an individual is the sole owner or operator of a business, their services are generally considered significant. For businesses with multiple owners or employees, the SSA assesses the individual’s time contribution and management responsibilities; for instance, contributing more than half the total time or working over 45 hours a month can indicate significant services.

Next, the SSA may apply the Comparability Test. This test evaluates whether the self-employed individual’s work activity, including hours, skills, responsibilities, and earnings, is comparable to that of unimpaired individuals in the same community performing similar work. If the individual’s work is comparable in level and value to non-disabled workers earning above the SGA level, it suggests engagement in SGA. The SSA determines if the individual’s work efforts and income reflect typical gainful employment for someone without a disabling condition.

Finally, the Worth of Work Activity Test considers whether the individual’s work is worth more than the SGA threshold, even if their actual net earnings fall below it. This can occur if the individual is not drawing full pay from their business, but the services they provide would typically command wages or profits exceeding the SGA amount in an open market. For all self-employment assessments, the SSA considers “ordinary and necessary” business expenses, similar to those allowed by the Internal Revenue Service for tax purposes, when calculating net earnings. Disability-related expenses incurred to operate the business, like Impairment-Related Work Expenses for employees, can also be deducted from gross income before determining countable earnings.