Here we go again! The first of Finance’s mission-critical year-end updates has arrived: the 2021 taxable wage base.
The Social Security Administration (SSA) just released next year’s number. And it’s a significant increase.
For 2021, the taxable wage base will sit at $142,800. That’s a $5,100 boost over this year’s base.
To break that down for budgeting purposes, the maximum amount you as employer will pay per employee is $8,853.60 in 2021. (That’s about $316 more than in 2020.)
Withholding details for Payroll
In its fact sheet discussing the 2021 Social Security tax changes, the SSA also reminds employers about annual Medicare taxes. The 2021 Medicare tax rate will remain 1.45%, and there’s no limit on the amount of employee earnings that can be taxed.
And, just as has been the case for the last several years, employers must withhold an additional 0.9% in Medicare taxes from workers who make over $200,000 a year.
This will be an unprecedented year-end for your Payroll team, with all the changes spurred by the coronavirus pandemic.
So making sure Payroll has this info right away lets them tick off one important thing from their year-end to-do list.