Retired and substitute teaching in California: the CalSTRS earnings limit fell from $80,245 to $59,565 this school year. What counts toward it and what happens if you go over

If you draw a CalSTRS service retirement benefit and substitute in California public schools, the amount you can earn this school year before CalSTRS takes money back is $59,565. Last year it was $80,245. Both figures are on CalSTRS's limits page, which gives the 2026-27 fiscal year as July 1, 2026, to June 30, 2027. That is $20,680 less room than last year.

This is a California rule, set by California law and run by CalSTRS. Other states do it differently. Illinois counts days and hours, not dollars. Texas lets most service retirees substitute without a cap on days if three conditions are met. Both are covered below, with where to find your own state's rule. We read every page cited here on October 12, 2026.

This post reports what the retirement systems publish. It is not benefits advice. CalSTRS decides how the limit applies to you, and its fact sheet says that where the law and the publication disagree, the law prevails.

Why the limit dropped

The higher figure was temporary. The limits page says that under Senate Bill 765 the limit "temporarily increased from 50% to 70% of the median final compensation" for fiscal years 2024-25 and 2025-26. It then says: "After June 30, 2026, the law reverts to existing law in effect prior to July 1, 2024."

So nothing new was passed to cut the limit. The two-year increase ran out. CalSTRS's working after retirement page says the Teachers' Retirement Board adjusts the limit each year, so the figure to plan around is the one posted for the current fiscal year, not the one you remember.

Does day-to-day subbing count?

Yes. The working after retirement page opens with the question "Want to return to work in the California public school system—including substitute teaching?" and goes on to describe the separation-from-service requirement and the annual earnings limit.

How you are hired does not change it. The 2026 Working After Retirement fact sheet says the restrictions apply to a retired member who "performs retired member activities in the California public school system as an employee, an independent contractor or an employee of a third party." A retiree who subs through a staffing agency is an employee of a third party.

The fact sheet does describe one exclusion for third-party work. It requires both of these:

• Your employment relationship is with a third-party employer "that does not participate in a California public pension system."
• "The activities performed are not normally performed by employees of a CalSTRS employer, and the assignment is performed for 24 months or less."

CalSTRS does not say whether substitute teaching through an agency meets the second condition. The fact sheet tells you to verify eligibility with your employer and with the school district where you work. Do that before you assume agency pay is outside the limit.

What counts toward the $59,565

• Pay for retired member activities in the California public school system. That is the term the fact sheet uses. It suggests you "track your gross earnings," so plan on the figure before deductions.
• Everything in one fiscal year. The limit runs July 1 to June 30, not the calendar year. Summer school in July counts toward the new year.
• Pay from your first 180 days of retirement. The fact sheet says any amount earned in that period "will also count against the annual postretirement earnings limit for the appropriate fiscal year."

What does not count, according to the same fact sheet: work in private industry, private schools, public schools outside California, and the University of California or California State University systems. CalSTRS says retirees can take those jobs "with no earnings limitations or impact on service retirement benefits."

The limit is stated in dollars. The fact sheet gives no cap on days or hours for a service retiree. A higher daily rate or a long-term job reaches the limit sooner than day-to-day work does. Our post on long-term assignments covers how those jobs differ.

The first 180 days are a separate rule

New retirees face a second restriction that works differently. The fact sheet says your benefit "will be reduced dollar for dollar by any compensation earned for performing retired member activities during the first 180 calendar days following your most recent retirement effective date," up to the benefit payable in that period. Its example: earn $1,000 in that window and your benefit is reduced by $1,000.

So in the first 180 days there is no free amount. Every dollar of covered pay comes off the benefit, and the same dollars also count toward the annual limit. CalSTRS describes a "narrow exemption" for a critically needed position. The employer has to request it, and CalSTRS must receive the request before you begin working. The working after retirement page says an approved exemption applies only to the separation-from-service requirement. It does not raise the earnings limit.

What happens if you go over

CalSTRS collects the excess from your benefit. The fact sheet's example: a retiree who earns $60,000 in 2026-27 is over the limit by $435, and "CalSTRS will collect the entire $435 from your benefit payments if your annual retirement benefit is at least $435."

The working after retirement page adds that you "will not receive your full monthly retirement benefit until we collect your excess earnings in full." It says the most CalSTRS can collect is your annual retirement benefit, less anything already taken under the 180-day rule in the same fiscal year.

You may not find out right away. Employers have up to 45 days after the end of a pay period to report a retiree's earnings. CalSTRS says it sends two letters as you get close to the limit, and another letter explaining the deductions if you exceed it. Because of the reporting delay, the fact sheet suggests keeping your own running total.

Two other points from the fact sheet matter to some subs:

• If you retired under the CalSTRS Retirement Incentive Program, you lose the ongoing increase in your benefit if you take any job, "including substitute teaching," within five years of retirement with the employer that offered the incentive. Receiving unemployment benefits within one year of your retirement date has the same result.
• You can end your retirement and return to work "with no earnings limitations." You then pay contributions and earn service credit again. CalSTRS says to talk to a benefits specialist first.

Other states do not work this way

A dollar limit is California's approach. Two other large systems show how much the rule changes at the state line.

Illinois. The Teachers' Retirement System of the State of Illinois limits time, not pay. Its retired member page says "Post-retirement employment limitations are limited to 120 days or 600 hours through June 30, 2029," and that the limits are scheduled to return to 100 days or 500 hours on July 1, 2029. The member guide says work that requires teacher licensure, "including summer school and substitute teaching," is subject to the limit. The pages we read state no dollar limit.

Texas. The Teacher Retirement System of Texas brochure Employment After Retirement, dated September 2025, says a service retiree may substitute "without any limit on the number of hours and days" if the position is not vacant, the pay is no more than the employer's daily rate, and the retiree does no other type of work for a TRS-covered employer in the same calendar month. Substituting in a vacant position is limited to 20 days in a school year. Every retiree must first take a one full, calendar-month break in service. The brochure says service retirees who retired before Jan. 1, 2021, are not subject to these restrictions.

Texas also handles a violation differently. Since May 2021, the brochure says, a service retiree gets a warning the first time, owes a partial repayment the second time, and forfeits the full monthly annuity for each month over the limits after that.

To find your own state's rule, go to your teacher retirement system's website and look for "working after retirement," "post-retirement employment" or "return to work." Then confirm with the system directly. The Texas brochure puts it bluntly: "Do not rely on information provided to you by another retiree, co-worker or even your employer."

What we can't tell you

• Your own total. Only CalSTRS and your employers have your reported earnings. Call CalSTRS at 800-228-5453 or check your account before taking a job that could put you near the limit.
• Every job that counts. The fact sheet uses the term "retired member activities" without listing each role. CalSTRS confirms substitute teaching is covered. For anything else, ask.
• Disability benefits. A CalSTRS disability benefit has different earnings limits, listed on the same limits page. This post covers service retirement only.
• Other California systems. If you also belong to another California public retirement system, the fact sheet says you may be subject to that system's earnings or hourly limits.
• Next year's figure. The board adjusts the limit annually. We do not know the 2027-28 amount and will not guess.
• The other 47 states. We read California, Illinois and Texas. Yours has its own page.

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