Starting Jan. 1, 2021, the maximum earnings subject to the Social Security payroll tax will increase by $5,100 to
$142,800—up from the $137,700 maximum for 2020,
the Social Security Administration (SSA) announced Oct. 13. The
SSA also posted a fact sheet summarizing the 2021 changes.
The taxable wage cap is subject to an automatic cost-of-living adjustment (COLA) each year based on increases in the national average wage index, calculated annually by the SSA.
Payroll Taxes: Cap on Maximum Earnings
|
Type of Payroll Tax
|
2021 Maximum Earnings
|
2020 Maximum Earnings
|
Social Security
|
$142,800
|
$137,700
|
Medicare
|
No limit
|
No limit
|