At a Glance
The Social Security Administration meets annually to discuss the impact of inflation and cost of living. Using the consumer price index (CPI-W), the SSA decides on policy changes to address the approaching year’s economic outlook. As a result, the SSA increased the wage base limit for 2020 and provided a cost of living allowance to benefit recipients.
2020 Wage Base and Cost of Living Allowance Adjustments
The Social Security Administration announced that beginning January 2020 the Social Security wage base limit will be increased from $132,900 to $137,700. Additionally, Social Security and Supplemental Security Income (SSI) beneficiaries will receive a 1.6 percent cost of living allowance. The withholding tax rate remains unchanged at 7.65% / 15.30% (employee / self-employed) respectively. The additional 0.9% of Medicare taxes will continue being assessed against covered earned income of $200,000 ($250,000 married filing jointly) or more in 2020.
The full scope of the Social Security Administration’s changes goes beyond those highlighted in this tax alert. For additional information, please refer to the Social Security Administration’s website. Paylocity will continue to monitor legislation for changes and announcements to provide you with timely updates.
Thank you for choosing Paylocity as your Payroll Tax partner.
This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.