The Social Security Administration (SSA) announced that the maximum amount of wages subject to the old age, survivors, and disability insurance (OASDI) tax will increase to $142,800 in 2021 from $137,700 in 2020. The OASDI tax rate is 6.2%, so an employee with wages up to or above the maximum in 2021 will pay $8,853.60 in tax, with the employer paying an equal amount. Self-employed individuals pay tax at a 12.4% rate up to the limit, for a $17,707.20 maximum amount of OASDI tax.
The Medicare hospital insurance tax of 1.45% each for employees and employers, or 2.9% for the self-employed, has no wage limit.
For more information, contact Gail Iverson at (770) 287-7800 or firstname.lastname@example.org. Stay tuned for more tax tips or follow them on our social media accounts every #TaxTipTuesday!