Higher Earners Will Pay More Social Security Tax in 2021
Millions of seniors rely on Social Security to make ends meet during retirement. The program needs money to keep paying beneficiaries. It gets the bulk of its revenue from payroll taxes, but there's a wage cap that spares higher earners from paying Social Security tax on all of their income.
That wage cap changes from year to year. In 2020, the Social Security wage cap is $137,700. In 2021, however, that cap will rise to $142,800, meaning higher earners will part with more of their money to help fund Social Security.
All workers are required to pay a 12.4% Social Security tax on earnings up to the annual wage cap limit. If you work for an employer, you'll pay half that amount, or 6.2%, and your employer will pay the other half. If you're self-employed, you'll be on the hook for the entire 12.4% yourself.
Source Fool.com
