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Reminder! New Tax Laws Coming into Effect in 2021

December 28, 2020 Alert

With tax year 2020 coming to an end, there are several new laws becoming effective on January 1, 2021. Check out the upcoming laws along with federal, state, and local tax updates.

With tax year 2020 coming to an end, there are several new laws becoming effective on January 1, 2021. See below for a brief synopsis of the upcoming laws along with federal, state, and local tax updates.

Federal Updates

The Social Security Administration (SSA) announced the Social Security wage base limit would increase to $142, 800 for tax year 2021 an increase of $5,100 from $137,700, in 2020.

The Social Security and Medicare tax for tax year 2021 will remain unchanged. The Social security tax rate remains at 6.2% for 2021 up to the Social Security wage base limit. The maximum social security tax employees and employers will each pay in 2021 is $8,853.60 an increase of $316.20 from tax year 2020.

The Medicare tax rate for tax year 2021 remains at 1.45% and applies to all covered earnings for employees and employers. There is no wage base limit for Medicare. In addition, if an individual’s earned income exceeds $200,000 ($250,000 for married couples filing jointly), the excess income amount is subject to additional Medicare tax rate of 0.9%.

State Unemployment Insurance Wage Base Limits

Jurisdiction

2021 Taxable Wage base

2020 Taxable Wage Base

Jurisdiction

2021 Taxable Wage base

2020 Taxable Wage Base

Alabama

$8,000

$8,000

Missouri

$11,000

$11,500

Alaska

$43,600

$41,500

Montana

$35,300

$34,100

California

$7,000

$7,000

Nebraska

$9,000

$9,000

District of Columba

$9,000

$9,000

Nevada

$33,400

$32,500

Colorado

$13,600

$13,600

New Hampshire

$14,000

$14,000

Connecticut

$15,000

$15,000

New Jersey

$36,200

$35,300

Delaware

$16,500

$16,500

New Mexico

$27,000

$25,800

Federal

$7,000

$7,000

New York

$11,800

$11,600

Arizona

$7,000

$7,000

North Carolina

$26,000

$25,200

Arkansas

$10,000

$7,000

North Dakota

$38,500

$36,400

Florida

$7,000

$7,000

Ohio

$9,000

$9,000

Georgia

$9,500

$9,500

Oklahoma

$24,000

$18,700

Hawaii

$47,400

$48,100

Oregon

$43,800

$42,100

Idaho

$43,000

$41,600

Pennsylvania

$10,000

$10,000

Illinois

$12,960

$12,740

Rhode Island

$24,600, or $26,100

$24,000, or $25,500

Indiana

$9,500

$9,500

South Carolina

$14,000

$14,000

Iowa

$32,400

$31,600

South Dakota

$15,000

$15,000

Kansas

$14,000

$14,000

Tennessee

$7,000

$7,000

Kentucky

$11,100

$10,800

Texas

$9,000

$9,000

Louisiana

$7,700

$7,700

Utah

$38,900

$36,600

Maryland

$8,500

$8,500

Vermont

$14,100

$16,100

Maine

$12,000

$12,000

Virginia

$8,000

$8,000

Massachusetts

$15,000

$15,000

Washington

$56,500

$52,700

Minnesota

$35,000

$35,000

West Virginia

$12,000

$12,000

Michigan

$9,500

$9,000 or $9,500.

Wisconsin

$14,000

$14,000

Mississippi

$14,000

$14,000

Wyoming

$27,300

$26,400

 

State Minimum Wage Rates effective January 1st, 2021

Jurisdiction

2021 Minimum Wage

2020 Minimum Wage

Jurisdiction

2021 Minimum Wage

2020 Minimum Wage

Alabama

$7.25

$7.25

Missouri

$10.30

$9.45

Alaska

$10.34

$10.19

Montana

$8.75

$8.65

Arizona

$12.15

$12.00

Nebraska

$9.00

$9.00

Arkansas

$11.00

$10.00

Nevada

$8.00

$8.00

California

$14 (large employer)/ $13 (small employer)

13 Large ER/

New Hampshire

$7.25

$7.25

Colorado

$12.32

$12.00

New Jersey

$12 (large employer)/$11(small employer)

$11.00

Connecticut

$12.00

$12.00

New Mexico

$10.50

$9.00

Delaware

$9.25

$9.25

New York

$12.50

$11.80

District of Columbia

$15.00

$15.00

North Carolina

$7.25

$7.25

Federal

$7.25

$7.25

North Dakota

$7.25

$7.25

Florida

$8.65

$8.56

Ohio

$8.80

$8.70

Georgia

$5.15

$5.15

Oklahoma

$7.25

$7.25

Hawaii

$10.10

$10.10

Oregon

$12.00

$12.00

Idaho

$7.25

$7.25

Pennsylvania

$7.25

$7.25

Illinois

$11.00

$10.00

Rhode Island

$11.50

$10.50

Indiana

$7.25

$7.25

South Carolina

$7.25

$7.25

Iowa

$7.25

$7.25

South Dakota

$9.45

$9.30

Kansas

$7.25

$7.25

Tennessee

$7.25

$7.25

Kentucky

$7.25

$7.25

Texas

$7.25

$7.25

Louisiana

$7.25

$7.25

Utah

$7.25

$7.25

Maine

$12.15

$12.00

Vermont

$11.75

$10.96

Maryland

$11.75

$11.00

Virginia

$7.25

$7.25

Massachusetts

$13.50

$12.75

Washington

$13.69

$13.50

Michigan

$9.87

$9.65

West Virginia

$8.75

$8.75

Minnesota

$10.08 (large employer)/$8.21 (small employer)

$10.00

Wisconsin

$7.25

$7.25

Mississippi

$7.25

$7.25

Wyoming

$5.15

$5.15

 

Local Minimum Wage Rates effective January 1st, 2021

Jurisdiction

Local

2021 Rate

Jurisdiction

Local

2021 Rate

Arizona

Belmont

$15.90

 

Petaluma

$15.20

California

Berkeley

$16.07

 

Redwood

$15.21

 

Burlingame

$15.00

 

Richmond

$15.21

 

Cupertino

$15.65

 

San Carlos

$15.24

 

Daly

$15.00

 

San Diego

$14.00

 

Daly

$15.00

 

San Jose

$15.45

 

El Cerrito

$15.61

 

San Leandro

$15.00

 

Emeryville

$16.84

 

San Mateo

$15.62

 

Flagstaff

$15.00

 

Santa Clara

$15.65

 

Freemont

$15.00

 

Santa Monica

$17.13

 

Half Moon Bay

$15.00

 

South San Fran

$15.24

 

Hayward

$15.00 (large employer)/$14.00 (small employer)

 

Sunnyvale

$16.30

 

Los Altos

$15.65

Colorado

Denver

$14.77

 

Los Angeles

$17.13

New Mexico

Bernalillo County

$8.35 w/ healthcare benefits / $9.35

 

Mountain View

$16.30

 

Las Cruces

$10.50

 

Novato

 $14.00 (small employers)/ $15.00 (large employers)

New York

Nassau County

$14.00

 

Novato

14/13

 

Suffolk County

$14.00

 

Oakland

$14.36

 

Westchester County

$14.00

 

Palo Alto

$15.65

Washington

Seattle

$15.00 (employers with 500 or fewer employees)/ $16.30 (employers with 501 or more employees)

 

Pasadena

$15.00 (large employers)/ $14.25 (small employers)

 

 

 

 

Thank you for choosing Paylocity as your Payroll Tax and HCM 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.


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