2021 Social Security Wage Base
For 2021, the Social Security Wage Base is $142,800 (Wage base limit) and 6.2% (Employee social security tax rate).
Effective 2021-01-01Source: Publication 15 (2021), (Circular E), Employer's Tax Guide (IRS)Verified 2026-09-01
Compared with 2020
| Item | 2020 | 2021 | Change |
|---|---|---|---|
| Wage base limit | $137,700 | $142,800 | +$5,100 (+3.7%) |
| Employee social security tax rate | 6.2% | 6.2% | +0% (+0.0%) |
Who it applies to
Employees and employers subject to Federal Insurance Contributions Act (FICA) taxes on wages paid in 2021.
What changed this year, and why
For 2021, the Social Security wage base limit increased to $142,800 from $137,700 in 2020. The employee social security tax rate remained at 6.2%.
Common questions
- What does the Social Security wage base limit mean?
- The wage base limit is the maximum amount of wages subject to the employee social security tax. For 2021, only the first $142,800 of an employee's wages are subject to the 6.2% social security tax; any wages above that amount are not subject to social security tax.
- Did the social security tax rate change from 2020 to 2021?
- No. The employee social security tax rate remained at 6.2% in both 2020 and 2021.
Only social security has a wage base
In the United States for 2021, social security and Medicare taxes have different rates and only the social security tax has a wage base limit. This means there is a cap on how much of an employee's wages are subject to the 6.2% social security tax; once wages reach $142,800 in a calendar year, no further social security tax is withheld on additional earnings. Medicare tax, by contrast, has no such cap and applies to all covered wages at its own rate. The wage base limit is therefore specific to social security and does not apply to the Medicare portion of FICA. Employers determine withholding by multiplying each payment by the applicable employee tax rate, stopping the social security tax once the $142,800 threshold is reached for the year.
Social security and Medicare taxes have different rates and only the social security tax has a wage base limit.
Publication 15 (2021), (Circular E), Employer's Tax Guide (IRS)
An acquisition does not restart the limit
Under U.S. rules for 2021, when a corporate acquisition meets certain requirements, the new (successor) employer does not get to start the social security wage base over from zero for employees it takes on from the prior (predecessor) employer. Instead, wages the predecessor already paid to those employees during the calendar year are counted toward the $142,800 social security wage base limit the successor must apply. In practice, the successor employer owes social security tax at 6.2% (employee share) and 6.2% (employer share) only on wages it pays the employee up to the remaining amount of the cap after subtracting what the predecessor already paid. The same carryover rule also applies to the $200,000 Additional Medicare Tax withholding threshold. This prevents the employee and employer from resetting the cap at each change of ownership and ensures the employee is taxed on no more than $142,800 of combined wages for social security in 2021.
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 (2021), (Circular E), Employer's Tax Guide (IRS)
When the employer pays the employee's share
When an employer pays the employee's share of social security and Medicare taxes instead of withholding them from wages, those tax payments themselves are treated as additional wages subject to employment taxes. The employee social security tax rate is 6.2% and applies to wages up to the $142,800 wage base limit. If the employer covers the employee portion rather than deducting it from pay, the employer must include those payments in the employee's wage total and calculate any additional social security and Medicare taxes due on that increased amount. This creates a circular effect because paying the tax generates more wages, which generates more tax. Employers who make this choice must still track wages against the annual wage base limit when determining when to stop withholding social security tax.
Amounts an employer pays as a bonus for signing or ratifying a con- tract in connection with the establishment of an em- ployer-employee relationship and an amount paid to an employee for cancellation of an employment contract and relinquishment of contract rights are wages subject to so- cial security, Medicare, and FUTA taxes and income tax withholding.
Publication 15 (2021), (Circular E), Employer's Tax Guide (IRS)
Household employers
Individuals who perform domestic services such as cleaning, cooking, childcare, or elder care in a private home are considered household employees for employment tax purposes. Their wages are generally exempt from social security and Medicare taxes unless both the employer and employee agree to voluntary withholding. However, if the employer pays total cash wages of $2,300 or more to a household employee in 2021, those wages become subject to social security and Medicare taxes. This threshold applies per employee per calendar year. The work must be performed in a private home, local college club, or local fraternity or sorority chapter to qualify as household employment. Household employers are not required to deposit federal unemployment taxes for these employees unless they report those wages on the standard employment tax returns.
Household employees: 1. Domestic service in private homes. Exempt (withhold if both employer and employee agree). Taxable if paid $2,300 or more in cash in 2021.
Publication 15 (2021), (Circular E), Employer's Tax Guide (IRS)
Who counts as an employee
Employment status for social security and Medicare tax purposes depends on common law rules rather than job titles or payment arrangements. A worker is considered an employee if the employer has the right to control what work is done and how it is done, regardless of whether the worker works full time or part time, or how compensation is calculated. Even if someone is not a common law employee, certain workers may be classified as statutory employees for social security and Medicare tax purposes under specific conditions. These include agent drivers delivering certain products, full-time life insurance salespersons, and homeworkers working with materials furnished by the employer. Motion picture project workers have special rules that apply a single wage base across multiple clients. The determination affects whether employers must withhold the 6.2% employee social security tax on wages up to the $142,800 wage base limit.
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 (2021), (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 (2021), (Circular E), Employer's Tax Guide (IRS)
- Wage base limit
For 2021, the social security tax rate is 6.2% (amount withheld) each for the employer and employee (12.4% to- tal). Qualified sick leave wages and qualified family leave wages aren't subject to the employer share of social se- curity tax; therefore, the tax rate on these wages is 6.2%. The social security wage base limit is $142,800.
- Employee social security tax rate
For 2021, the social security tax rate is 6.2% (amount withheld) each for the employer and employee (12.4% to- tal).