The Social Security Administration has announced the Cost-of-Living Adjustments (COLAs) for calendar year 2021.
“Social Security and Supplemental Security Income (SSI) benefits for approximately 70 million Americans will increase 1.3 percent in 2021.
The 1.3 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 64 million Social Security beneficiaries in January 2021. Increased payments to more than 8 million SSI beneficiaries will begin on December 31, 2020. (Note: some people receive both Social Security and SSI benefits).”
“The maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $142,800.
The earnings limit for workers who are younger than “full” retirement age (see Full Retirement Age Chart) will increase to $18,960. (We deduct $1 from benefits for each $2 earned over $18,960.)
The earnings limit for people reaching their “full” retirement age in 2021 will increase to $50,520. (We deduct $1 from benefits for each $3 earned over $50,520 until the month the worker turns “full” retirement age.)
There is no limit on earnings for workers who are “full” retirement age or older for the entire year.”
Click here for the Fact Sheet of 2021 Social Security Changes.
The increase of the Social Security tax earnings threshold to $142,800 means the maximum amount of Social Security tax withholding for 2021 is $8,853.60. And the maximum Social Security component of the self-employment tax for 2021 is $17,707.20.