SSA Limit 2020

2020 Social Security Wage Base Increased from $132,900 to $137,700 an increase of $4,800 for the new year.

2020 Social Security Wage Base Increases to $137,700

The Social Security Administration (SSA) has announced that the maximum earnings subject to Social Security (OASDI) tax will increase from $132,900 to $137,700 in 2020 (an increase of $4,800) [SSA Press Release,  Social Security Announces 1.6 Percent Benefit Increase for 2020, 10/10/19].

The Federal Insurance Contributions Act (FICA) imposes two taxes on employers, employees, and self-employed workers — one for Old Age, Survivors and Disability Insurance (OASDI, commonly known as the Social Security tax), and the other for Hospital Insurance (HI, commonly known as the Medicare tax).

For 2020, the FICA tax rate for both employers and employees is 7.65% (6.2% for OASDI and 1.45% for Medicare).

For 2020, an employer must withhold:

  1. 6.2% Social Security tax on the first $137,700 of employee wages (maximum tax is $8,537.40; i.e., 6.20% × $137,700), plus;
  2. 1.45% Medicare tax on the first $200,000 of employee wages, plus;
  3. 2.35% Medicare tax (regular 1.45% Medicare tax + 0.9% additional Medicare tax) on all employee wages in excess of $200,000 (see Payroll Guide ¶4055 for further information on the 0.9% additional Medicare tax).

Social Security and Supplemental Security Income (SSI) benefits will increase by 1.6% in 2020. The average monthly Social Security benefit will increase from $1,479 to $1,503, and the maximum federal SSI monthly payment to an individual will increase from $771 to $783. The maximum federal SSI monthly payment to a couple will increase from $1,157 to $1,175 in 2020. The amount of earnings that is required in order to be credited with a quarter of Social Security coverage will increase from $1,360 to $1,410.

The retirement earnings test remains in effect for individuals below normal retirement age (age 65 to 67, depending on year of birth) who continue to work while collecting Social Security benefits. For affected individuals, $1 in benefits will be withheld for every $2 in earnings above $18,240 in 2020 (up from $17,640 in 2019). For working individuals collecting benefits who reach normal retirement age (NRA) in 2020, $1 in benefits will be withheld for every $3 in earnings above $48,600 (up from $46,920 in 2019), until the month that the individual reaches NRA. After that month, there is no limit on earnings.

The SSA has a 2020 Fact Sheet on the changes.

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