Tax

2020 FICA Increase

The Social Security wage base has increased from $132,900 to $137,700 for 2020, which increases the maximum individual contribution by $297.60.

The Medicare tax rate for 2020 remains at 1.45% of all covered earnings for employers and employees.
The Additional Medicare Tax of 0.9% applies to earned income of more than $200,000 ($250,000 for married couples filing jointly).
Employers are required to withhold the additional 0.9% on covered wages in excess of $200,000, but there is no employer matching contribution.

2019 vs. 2020
Social Security and Medicare Contributions

DESCRIPTION	2019	2020	INCREASE
Social security tax rate for employers	6.20%	6.20%	0
Social security tax rate for employees	6.20%	6.20%	0
Social security wage base	$132,900	$137,700	$4,800
Maximum social security tax for employees	$8,239.80	$8,537.40	$297
Medicare tax rate for employers	1.45%	1.45%	0
Medicare tax rate for employees	1.45%	1.45%	0
Medicare tax rate on employee’s wages over $200,000*	2.35%	2.35%	0
Medicare wage base	No Limit	No Limit	N/A

*Employers are required to withhold an additional 0.9% from employee wages in excess of $200,000, but there is not a matching increase on the employer contribution.

View the 2020 Social Security Administration Fact Sheet here.

This information in this communication is general in nature, and is not intended, nor should it be construed, as legal, accounting, tax or other professional advice rendered by GreenSlate, LLC. The reader should contact his or her attorney, CPA, or tax professional prior to taking any action based upon this information.

Topics: Tax 2020 Updates Industry News