2020 Social Security Wage Base
For 2020, the Social Security Wage Base figures are $137,700 (Wage base limit) and 6.2% (Employee social security tax rate).
Effective 2020-01-01Source: Publication 15 (2020), (Circular E), Employer's Tax Guide (IRS)Verified 2026-09-02
Compared with 2019
| Item | 2019 | 2020 | Change |
|---|---|---|---|
| Wage base limit | $132,900 | $137,700 | +$4,800 (+3.6%) |
| Employee social security tax rate | 6.2% | 6.2% | +0% (+0.0%) |
Who it applies to
Employees and employers subject to Social Security tax on wages paid in 2020
What changed this year, and why
For 2020, the Social Security wage base limit is $137,700. Earnings above this amount in the calendar year are not subject to Social Security tax. The employee Social Security tax rate is 6.2%.
Common questions
- What is the Social Security wage base for 2020?
- For 2020, the social security wage base limit is $137,700. Wages above that amount in a calendar year are not subject to social security tax.
- What is the employee social security tax rate for 2020?
- The employee social security tax rate for 2020 is 6.2%.
Only social security has a wage base
The Internal Revenue Service applies separate tax rates and rules to social security and Medicare. While both taxes are calculated on employee wages using their respective rates, only the social security tax has a wage base limit. The wage base limit is the maximum amount of wages subject to the tax during the year. Once an employee's wages exceed this limit, no additional social security tax is owed on the excess earnings, but Medicare tax continues to apply without a cap. For 2020, the employee social security tax rate is 6.2%, and the social security wage base limit is $137,700. This means that only the first $137,700 of an employee's wages are subject to the 6.2% social security tax. Any wages earned above $137,700 are not subject to social security tax, though they remain subject to Medicare tax. Employers should determine withholding by multiplying each payment by the applicable employee tax rate for each tax.
Social security and Medicare taxes have different rates and only the social security tax has a wage base limit. The wage base limit is the maximum wage subject to the tax for the year.
Publication 15 (2020), (Circular E), Employer's Tax Guide (IRS)
An acquisition does not restart the limit
When a corporate acquisition meets the IRS requirements, the acquiring business becomes a successor employer. In that situation, wages the predecessor already paid to employees who transfer to the new owner during the same calendar year count toward the annual social security wage base. The successor does not start a fresh wage base for those employees; it picks up where the predecessor left off. For 2020, the wage base is $137,700, so if a transferred employee had already received wages up to that limit from the predecessor, the successor owes no additional social security tax on further wages paid to that employee for the rest of the year. If the predecessor paid the employee less than $137,700, the successor applies the 6.2% employee rate only on the remaining amount. The same carryover rule applies to the Additional Medicare Tax withholding threshold. The successor should review the Instructions for Schedule D (Form 941) to decide whether a discrepancy report is required and should keep records of the predecessor's wage payments to apply the cap correctly.
Successor employer. When corporate acquisitions meet certain requirements, wages paid by the predeces- sor are treated as if paid by the successor for purposes of applying the social security wage base and for applying the Additional Medicare Tax withholding threshold (that is, $200,000 in a calendar year).
Publication 15 (2020), (Circular E), Employer's Tax Guide (IRS)
When the employer pays the employee's share
In most cases, employers must collect the employee's share of social security tax from wages or tips. However, some employers choose to pay the employee social security tax themselves rather than withholding it from wages. When the employer pays the employee's share of social security tax, that payment is treated as additional wages to the employee for income tax purposes, but it is NOT treated as wages for social security or Medicare tax purposes. This means the employer's payment of the employee's 6.2% social security tax does not itself become subject to another round of social security tax withholding. The employer still must ensure that total wages subject to social security tax do not exceed the annual social security wage base limit of $137,700 for 2020. This rule prevents double taxation on the employer's voluntary payment while maintaining the cap on taxable wages for the year.
You can collect these taxes from the employee's wages (excluding tips) or from other funds he or she makes avail- able.
Publication 15 (2020), (Circular E), Employer's Tax Guide (IRS)
Household employers
Household employees are individuals who perform domestic service in a private home. Their wages may be subject to social security and Medicare taxes depending on the amount paid and other conditions. For social security tax purposes, the $137,700 wage base limit applies to household employees just as it does to other employees. The 6.2% employee social security tax rate applies to wages paid to household employees up to that limit. If the employer and employee agree, social security tax can be withheld even when it would otherwise be exempt. However, if the household employee is under age 18 and household work is not their principal occupation, the wages are exempt from social security and Medicare taxes. For federal unemployment tax purposes, different rules apply, and you are not required to deposit FUTA taxes for household employees unless you report their wages on Form 941, 943, or 944.
Household employees. You’re not required to de- posit FUTA taxes for household employees unless you re- port their wages on Form 941, 943, or 944.
Publication 15 (2020), (Circular E), Employer's Tax Guide (IRS)
Who counts as an employee
Under the common law rules, a worker is an employee if the employer has the right to control what the worker does and how the worker does it. The classification depends on the facts of the working relationship, not on what the parties call it. It does not matter how payments are measured or paid, what they are called, or whether the employee works full time or part time. Even if a worker is not a common law employee, certain persons are considered employees by statute for social security and Medicare tax purposes under specific conditions, such as agent or commission drivers, full-time life insurance salespersons, and homeworkers. These statutory employees are subject to social security and Medicare taxes even though federal income tax withholding may not apply. Employers must determine worker status carefully because it affects whether social security tax at the 6.2% employee rate applies to wages up to the $137,700 wage base limit for 2020.
Statutory employees. If someone who works for you isn't an employee under the common law rules discussed earlier, don't withhold federal income tax from his or her pay, unless backup withholding applies.
Publication 15 (2020), (Circular E), Employer's Tax Guide (IRS)
The wage base has to line up on Form W-2 and the employer's payroll return
The $137,700 social security wage base limit for 2020 must be applied consistently on both Form W-2, which reports wages and taxes to the employee, and Form 941, which reports wages and taxes to the IRS. The employee social security tax rate is 6.2%, and only wages up to the $137,700 wage base limit are subject to that tax. If the amounts reported on the two forms do not line up with that cap, the discrepancy can trigger an IRS inquiry or adjustment. Employers must track cumulative wages for each employee during the year and stop withholding social security tax once the employee's wages reach $137,700.
For 2020, the social security tax rate is 6.2% (amount withheld) each for the employer and employee (12.4% to- tal). The social security wage base limit is $137,700.
Publication 15 (2020), (Circular E), Employer's Tax Guide (IRS)
Withheld social security tax that never reaches the Treasury can cost the responsible person 100%
The trust fund recovery penalty applies when federal income, social security, or Medicare taxes that must be withheld are not withheld, deposited, or paid to the U.S. Treasury. The penalty is 100% of the unpaid trust fund tax. If these unpaid taxes cannot be immediately collected from the employer or business, the trust fund recovery penalty may be imposed on all persons determined by the IRS to be responsible for collecting, accounting for, or paying over these taxes, and who acted willfully in not doing so. A responsible person can be an officer or employee of a corporation, a partner or employee of a partnership, an accountant, a volunteer director or trustee, or an employee of a sole proprietorship.
Trust fund recovery penalty. If federal income, social security, or Medicare taxes that must be withheld (that is, trust fund taxes) aren't withheld or aren't deposited or paid to the U.S. Treasury, the trust fund recovery penalty may apply. The penalty is 100% of the unpaid trust fund tax.
Publication 15 (2020), (Circular E), Employer's Tax Guide (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Publication 15 (2020), (Circular E), Employer's Tax Guide (IRS)
- Wage base limit
For 2020, the social security tax rate is 6.2% (amount withheld) each for the employer and employee (12.4% to- tal). The social security wage base limit is $137,700.
- Employee social security tax rate
For 2020, the social security tax rate is 6.2% (amount withheld) each for the employer and employee (12.4% to- tal).