The Social Security Administration (SSA) recently announced starting Jan. 1, 2020 the maximum earning subject to payroll tax will increase by $4,800 to $137,700 – up from $132,900 in 2019. The SSA fact sheet summarizes all the 2020 changes, however here are some of the quick highlights:
- The maximum Social Security tax employees and employers will each pay in 2020 is $8,537.40, an increase of $297.60.
- Benefits for nearly 69 million Americans will increase 1.6 percent in 2020. The cost of living adjustment is based on the annual increase in the consumer price index through the third quarter of 2019.
- There continues to be no limit to the wages subject to the 1.45% Medicare tax.
- The FICA tax rate, which is the combination of Social Security tax and Medicare tax, will be 7.65% in 2020.
- Self-employed individuals will pay a 15.3% self-employment tax rate, up to $17,074.80.
