Tax season is around the corner: Prepare with tax and savings limits changes, Social Security deductions and more
The New Year is almost here. Prepare by taking a few minutes to review 2020 Social Security deductions and contribution limit increases, then see tax rates and how much you’ll be able to save for retirement, health care and childcare.
Social Security deductions and contribution limit increases
- Social Security will resume Jan. 1, 2020 for employees who earned more than $132,900 in 2019. Remind employees who fall into this category, as January 2020 paychecks will reflect resumed contributions.
- The Social Security tax rate will remain 6.2 percent, and the maximum taxable earnings for Social Security will increase to $137,700, at which point the withholdings will stop.
- Medicare will continue to be withheld at 1.45 percent on all earnings. Employees with earnings in excess of $200,000 for single filers and $250,000 for married couple filing together, will also be subject to an additional 0.9 percent Medicare tax.
2020 tax rates and savings limits
|Social Security and Medicare||CU 401a Mandatory Retirement Plan|
|Social Security maximum taxable earnings:
Social Security tax rate for employees and employers:
Social Security withholding maximum:
Medicare tax rate for employees and employers:
Additional Medicare Tax on salaries above $200,000 (single)
or $250,000 (married filing jointly):
|PERA Mandatory Retirement Plans||Voluntary Retirement Plans|
10.4% (Jan. - June 2020)
10.9% (July – Dec. 2020)
8.7% (Jan. – June 2020)
10% (July – Dec. 2020)
|CU 403(b), PERA 457 and PERA 401k maximum contribution:
CU 403(b), PERA 457 and PERA 401k catch up contribution for employees over 50:
|Health Savings Account Limits||Dependent Care Flexible Spending Account Limit|
Catch up contributions (age 55+):
|Health Care Flexible Spending Account Limit|
To see additional year-end information, dates and deadlines, visit the Employee Services website.