Disability Benefits for the Self-Employed

If you've paid self-employment taxes (SECA taxes) for many years, you'll be eligible for Social Security disability insurance (SSDI), just as if you worked for an employer who paid FICA taxes on your behalf. Self-employment includes freelance work, contract work, or any other work you do for a business you own.

But if you still own a business or do some type of work, the Social Security Administration (SSA) won't grant you disability benefits if it considers you to be doing "substantial gainful activity" (SGA). For wage earners, Social Security uses an earnings cutoff amount—$1,620 per month in 2025—to determine whether you're doing SGA. (Read our article on SGA for wage earners for more information.)

For the self-employed, Social Security knows that income isn't necessarily a good measure of how much you're working. Instead, to assess whether your work is SGA, Social Security will consider your activities and the value they add to your business.

To do this, Social Security will use either the "Countable Income Test" or the "Three Tests," depending on whether you're just applying for benefits, just starting to receive benefits, or have received benefits for over two years.

The Three Tests

If you're just applying for disability benefits or if you've been on SSDI disability for less than 24 months, Social Security will use one of the following three tests to evaluate whether your self-employment work is substantial gainful activity.

The first test Social Security will use is the "Significant Services and Income" test (discussed in detail just below). This test is based on the amount of time you spend on business activity and the income it brings in. If Social Security finds that your self-employment is SGA, you'll be denied disability benefits or your monthly benefits will be terminated.

If this first test doesn't show that your self-employment is SGA, Social Security will then use the "Comparability Test" and "Worth of Work Test.". (404 C.F.R §1575.) In these last two tests, Social Security evaluates your work activity based on the value of your services to the business regardless of how much income your business makes.

Test One: The Significant Services and Substantial Income Test

If you provide "significant services" to your business and you earn substantial income from it, Social Security will find that your self-employment is substantial gainful activity. Whether or not your services are significant depends on what kind of business you have.

What Are Significant Services?

If you're the sole owner or worker in your business, your services are automatically considered significant. If this is your situation and your income from the business is more than $1,620 in 2025, you're doing SGA and you won't be considered for disability benefits.

If you have employees or co-owners, Social Security will find that your services are significant if you either contribute more than half of the total time needed to manage the business each month or you manage the company for more than 45 hours in a month.

If you rent your land to someone else for farming, but you manage or help produce the farm's crops or livestock, your services will be considered significant if your participation is "material."

What Counts as Substantial Income?

In considering your self-employment income under the Test One, the SSA first determines your "countable income." Social Security uses your average monthly income to determine your countable income because earnings from self-employment generally change from month to month.

Countable income. Social Security will deduct your normal business expenses from your average gross income to determine your net income and will then subtract some additional items. For instance, Social Security will subtract the value of the following items from your business revenue before considering whether you're making substantial income:

• unpaid help you're getting from others (for instance, from family members)
• free rent, equipment, or other items (for instance, from a rehabilitation agency), and
• disability-related expenses that you pay so you can work (for instance, taking a taxi to work).

The result after subtracting these costs is your countable income.

Substantial income. Income from self-employment is considered "substantial" if your average countable income is more than $1,620 a month. But even if your income is less than that amount per month, it can still be considered substantial if the income you earn from your self-employment is:

• similar to what you earned before your disability began, or
• similar to what non-disabled people in your community make when they are self-employed in the same kind of business as you.

Combining the two. To recap, under Test One, if you're contributing significant services to the business by working 45 hours or more per month (or contributing more than half of the time the business needs), and your income is more than $1,620 per month (or considered substantial in one of the other two ways), your self-employment is SGA.

If you're not doing significant services or making substantial income under the first test, Social Security will perform the second test.

Test Two: The Comparability Test

The comparability test compares the work you do with that of an unimpaired person in your community whose business is similar to yours. If Social Security determines that the work is comparable, then your work is SGA, regardless of your earnings. Social Security looks at the following factors for this test:

• job duties
• job skills used
• work efficiency
• time worked, and
• energy spent working.

This test only compares your work activity and not the value of the work performed. If your work isn't comparable to a similar business person's work activity, Social Security will perform the third test.

Test Three: Worth of Work Test

The worth of work test measures the value of what you do for your business. Your work is SGA if the value of what you do is clearly:

• worth more than $1,620 a month, or
• worth more than $1,620 a month compared to what it would cost you to hire an employee to do your job.

The Countable Income Test

If you start your own business or begin to do contract or freelance work more than 24 months after your benefits began, Social Security will use the "Countable Income Test" to see if your work is SGA.

First, Social Security comes up with your countable income, as discussed above under Test One. If your countable income is less than $1,620, your benefits will not be terminated, no matter how much you're working.

If your countable income is more than $1,620 per month, your benefits will stop unless you can prove that you didn't provide "significant services" to your business during that month. Whether you're doing significant services for your business is determined as discussed above under Test One.

If you can show that your services aren't significant, your benefits won't be terminated under this test (the Countable Income test), no matter how much money you make.

The Countable Income Test is based solely on your countable income and whether you're providing significant services to the business. Social Security can't compare your work to what you used to do or to what business people in your community do (as in the Comparability Test above). Nor can the SSA decide what your work is actually worth (as in the Worth of Work test above).

The Trial Work Period

If one of the above tests says that your self-employment work is over the substantial gainful activity level, the SSA won't terminate your disability benefits right away. You have nine months in which you can make over the SGA amount and not have your Social Security disability benefits reduced at all.

Of course, you must let Social Security know whether you're no longer disabled during this time—if you're no longer disabled, your benefits will be terminated. For more information, see Nolo's article on the trial work period for disability recipients.