How does social security penalize for making more money than allowed?

Social Security penalizes individuals who earn above certain income thresholds while receiving benefits through a process called the "earnings test." If beneficiaries under full retirement age earn more than the allowed limit, a portion of their benefits is withheld; specifically, $1 is deducted from their benefits for every $2 earned above the limit. This penalty is temporary, as the withheld benefits may be restored once the individual reaches full retirement age, adjusting future payments accordingly.