What is the FICA Max for 2021?

Young female calculating taxes at table, closeup

You may be wondering, what is FICA? FICA stands for the Federal Insurance Contributions Act and is a United States federal payroll tax used to fund Social Security and Medicare. This tax is deducted from each paycheck you receive and deducts contributions from employers. For those who are self-employed, there is an equivalent law known as the Self-Employed Contributions Act. Under FICA, there is a Medicare tax and a Social Security tax which both add up to a FICA tax of 6.2% on your earnings. For the Social Security tax, there are certain years when there are changes to the total tax amount to adjust the Social Security benefits for inflation. In 2020, the wage cap amount for the Social Security tax rate was $137,700. For 2021, this wage cap has increased, so you may be paying more tax this year. 

What Is the FICA Tax Rate For 2021?

There are two tax rates that apply to FICA. There is the Social Security tax and the Medicare tax. Currently, for single filers, there is a 1.45% Medicare tax on the first $200,000 of earnings and an additional .9% Medicare Tax on any earnings over $200,000 for a total 2.35% Medicare tax for people earning over $200,000. For joint returns, the Medicare tax rate of 1.45% is on the first $250,000, while the additional .9% tax is also applied to earnings over $250,000.

The current Social Security tax rate is 6.2% for both the employer and the employee. However, there is a wage cap amount, and any income earned above this amount is not subject to the Social Security payroll tax of 6.2%. The current wage cap amount for 2021 is $142,800. For example, if you earn $200,000 a year, you will be paying a 6.2% Social Security tax on $142,800 because that is the wage cap limit. On the other hand, if you earn $140,000 a year, you will be paying a 6.2% Social Security tax on $140,000. Therefore, the new Social Security cap limit for 2021 may have a more significant impact for those earning close to but less than the wage cap limit of $142,800. 

Here’s a more in-depth example using the numbers from above: Person 1 earns $200,000 a year, and Person 2 earns $140,000. Person 1 will be paying $8,853.60 in Social Security taxes ($142,800, the wage cap limit, multiplied by 6.2%). Person 2 will be paying $8,680 in Social Security taxes because they are earning less than the wage cap limit ($140,000, their salary, multiplied by 6.2%). Therefore, Person 1, who earns $60,000 more than Person 2, is paying only $173.60 more in Social Security tax. 

EPGD Business Law is located in beautiful Coral Gables. Call us at (786) 837-6787, or contact us through the website to schedule a consultation.

*Disclaimer: this blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns. Contacting us through our website does not establish an attorney-client relationship.*

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Eric Gros-Dubois

Founding partner Eric Gros-Dubois established EPGD Business Law in 2013. With over a decade of experience expanding the firm and leading it to its current success, Eric now primarily manages the corporate division of EPGD. Given Eric’s educational background, holding both a JD and MBA, combined with his own unique experience of starting a business from scratch and growing it to a multi-million dollar firm, he brings a specialized and invaluable perspective to those seeking legal assistance for themselves and their businesses. Having now instilled his same values in our team of skilled corporate associates, Eric leads a firm that is always ready, willing, and equipped to handle any and every legal matter that a business owner may have.


*The following comments are not intended to be treated as legal advice. The answer to your question is limited to the basic facts presented. Additional details may heavily alter our assessment and change the answer provided. For a more thorough review of your question please contact our office for a consultation.

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