2021 Social Security Changes Announced
November 2, 2020
The Social Security Administration announced a 1.3% boost to monthly Social Security and Supplemental Security Income (SSI) benefits for 2021. The increase is based on the rise in the Consumer Price Index over the past 12 months ending in September 2020.
For those contributing to Social Security through wages, the potential maximum income subject to Social Security tax increases 3.7% this year, to $142,800.
Social Security Tax Key Amounts
| Maximum Taxable Earnings | $142,800 (up to $5,100 from 2020) |
| Retirement Earnings Test Limits: | Under full retirement age $18,960/year* |
| In year you reach full retirement age $50,520/year** | |
| SSI Federal Payment Standard | Individual: $794/month |
| Couple: $1,191/month | |
| SSI Student Exclusion | Monthly limit: $1,930 |
| Annual limit: $7,770 |
*one dollar in benefits will be withheld for every $2 in earnings above the limit (up from $18,240 in 2020)
**applies to earnings in months prior to attaining full retirements age. $1 in benefits will be withheld for every $3 in earnings above the limit (up from $48,600 in 2020)
What Does this Mean for You?
- Up to $142,800 in wages will be subject to Social Security taxes, up $5,100 from 2020. This amounts to $8,853.60 in maximum annual employee Social Security payments. Any excess amounts paid due to having multiple employers can be returned to you via a credit on your tax return.
- For all retired workers receiving Social Security retirement benefits the estimated average monthly benefit will be $1,543 per month in 2021 – an average increase of $20 per month.
- SSI is the standard payment for people in need. To qualify for this payment you must have little income and few resources ($2,000 if single/$3,000 if married).
- A full-time student who is blind or disabled can still receive SSI benefits as long as earned income does not exceed the monthly and annual student exclusion amounts listed above.
Social Security & Medicare Rates
| Tax Rate | 2020 | 2021 |
| Employee | 7.65% | 7.65% |
| Self-Employed | 15.30% | 15.30% |
The Social Security and Medicare tax rates do not change from 2020 to 2021.
Note: The above tax rates are a combination of 6.20 percent Social Security and 1.45 percent for Medicare. There is also 0.9 percent Medicare wages surtax for those with wages above $200,000 single ($250,000 joint filers) that is not reflected in these figures. Please note that your employer also pays Social Security and Medicare taxes on your behalf. These figures are reflected in the self-employed tax rates, as self-employed individuals pay both halves of the tax.