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Reminder! New Tax Laws Coming into Effect in 2021
December 28, 2020
With tax year 2020 coming to an end, there are several new laws becoming effective on January 1, 2021. See below for a brief synopsis of the upcoming laws along with federal, state, and local tax updates.
Federal Updates
The Social Security Administration (SSA) announced the Social Security wage base limit would increase to $142, 800 for tax year 2021 an increase of $5,100 from $137,700, in 2020.
The Social Security and Medicare tax for tax year 2021 will remain unchanged. The Social security tax rate remains at 6.2% for 2021 up to the Social Security wage base limit. The maximum social security tax employees and employers will each pay in 2021 is $8,853.60 an increase of $316.20 from tax year 2020.
The Medicare tax rate for tax year 2021 remains at 1.45% and applies to all covered earnings for employees and employers. There is no wage base limit for Medicare. In addition, if an individual’s earned income exceeds $200,000 ($250,000 for married couples filing jointly), the excess income amount is subject to additional Medicare tax rate of 0.9%.
State Unemployment Insurance Wage Base Limits
Jurisdiction | 2021 Taxable Wage base | 2020 Taxable Wage Base | Jurisdiction | 2021 Taxable Wage base | 2020 Taxable Wage Base |
Alabama | $8,000 | $8,000 | Missouri | $11,000 | $11,500 |
Alaska | $43,600 | $41,500 | Montana | $35,300 | $34,100 |
California | $7,000 | $7,000 | Nebraska | $9,000 | $9,000 |
District of Columba | $9,000 | $9,000 | Nevada | $33,400 | $32,500 |
Colorado | $13,600 | $13,600 | New Hampshire | $14,000 | $14,000 |
Connecticut | $15,000 | $15,000 | New Jersey | $36,200 | $35,300 |
Delaware | $16,500 | $16,500 | New Mexico | $27,000 | $25,800 |
Federal | $7,000 | $7,000 | New York | $11,800 | $11,600 |
Arizona | $7,000 | $7,000 | North Carolina | $26,000 | $25,200 |
Arkansas | $10,000 | $7,000 | North Dakota | $38,500 | $36,400 |
Florida | $7,000 | $7,000 | Ohio | $9,000 | $9,000 |
Georgia | $9,500 | $9,500 | Oklahoma | $24,000 | $18,700 |
Hawaii | $47,400 | $48,100 | Oregon | $43,800 | $42,100 |
Idaho | $43,000 | $41,600 | Pennsylvania | $10,000 | $10,000 |
Illinois | $12,960 | $12,740 | Rhode Island | $24,600, or $26,100 | $24,000, or $25,500 |
Indiana | $9,500 | $9,500 | South Carolina | $14,000 | $14,000 |
Iowa | $32,400 | $31,600 | South Dakota | $15,000 | $15,000 |
Kansas | $14,000 | $14,000 | Tennessee | $7,000 | $7,000 |
Kentucky | $11,100 | $10,800 | Texas | $9,000 | $9,000 |
Louisiana | $7,700 | $7,700 | Utah | $38,900 | $36,600 |
Maryland | $8,500 | $8,500 | Vermont | $14,100 | $16,100 |
Maine | $12,000 | $12,000 | Virginia | $8,000 | $8,000 |
Massachusetts | $15,000 | $15,000 | Washington | $56,500 | $52,700 |
Minnesota | $35,000 | $35,000 | West Virginia | $12,000 | $12,000 |
Michigan | $9,500 | $9,000 or $9,500. | Wisconsin | $14,000 | $14,000 |
Mississippi | $14,000 | $14,000 | Wyoming | $27,300 | $26,400 |
State Minimum Wage Rates effective January 1st, 2021
Jurisdiction | 2021 Minimum Wage | 2020 Minimum Wage | Jurisdiction | 2021 Minimum Wage | 2020 Minimum Wage |
Alabama | $7.25 | $7.25 | Missouri | $10.30 | $9.45 |
Alaska | $10.34 | $10.19 | Montana | $8.75 | $8.65 |
Arizona | $12.15 | $12.00 | Nebraska | $9.00 | $9.00 |
Arkansas | $11.00 | $10.00 | Nevada | $8.00 | $8.00 |
California | $14 (large employer)/ $13 (small employer) | 13 Large ER/ | New Hampshire | $7.25 | $7.25 |
Colorado | $12.32 | $12.00 | New Jersey | $12 (large employer)/$11(small employer) | $11.00 |
Connecticut | $12.00 | $12.00 | New Mexico | $10.50 | $9.00 |
Delaware | $9.25 | $9.25 | New York | $12.50 | $11.80 |
District of Columbia | $15.00 | $15.00 | North Carolina | $7.25 | $7.25 |
Federal | $7.25 | $7.25 | North Dakota | $7.25 | $7.25 |
Florida | $8.65 | $8.56 | Ohio | $8.80 | $8.70 |
Georgia | $5.15 | $5.15 | Oklahoma | $7.25 | $7.25 |
Hawaii | $10.10 | $10.10 | Oregon | $12.00 | $12.00 |
Idaho | $7.25 | $7.25 | Pennsylvania | $7.25 | $7.25 |
Illinois | $11.00 | $10.00 | Rhode Island | $11.50 | $10.50 |
Indiana | $7.25 | $7.25 | South Carolina | $7.25 | $7.25 |
Iowa | $7.25 | $7.25 | South Dakota | $9.45 | $9.30 |
Kansas | $7.25 | $7.25 | Tennessee | $7.25 | $7.25 |
Kentucky | $7.25 | $7.25 | Texas | $7.25 | $7.25 |
Louisiana | $7.25 | $7.25 | Utah | $7.25 | $7.25 |
Maine | $12.15 | $12.00 | Vermont | $11.75 | $10.96 |
Maryland | $11.75 | $11.00 | Virginia | $7.25 | $7.25 |
Massachusetts | $13.50 | $12.75 | Washington | $13.69 | $13.50 |
Michigan | $9.87 | $9.65 | West Virginia | $8.75 | $8.75 |
Minnesota | $10.08 (large employer)/$8.21 (small employer) | $10.00 | Wisconsin | $7.25 | $7.25 |
Mississippi | $7.25 | $7.25 | Wyoming | $5.15 | $5.15 |
Local Minimum Wage Rates effective January 1st, 2021
Jurisdiction | Local | 2021 Rate | Jurisdiction | Local | 2021 Rate |
Arizona | Belmont | $15.90 |
| Petaluma | $15.20 |
California | Berkeley | $16.07 |
| Redwood | $15.21 |
| Burlingame | $15.00 |
| Richmond | $15.21 |
| Cupertino | $15.65 |
| San Carlos | $15.24 |
| Daly | $15.00 |
| San Diego | $14.00 |
| Daly | $15.00 |
| San Jose | $15.45 |
| El Cerrito | $15.61 |
| San Leandro | $15.00 |
| Emeryville | $16.84 |
| San Mateo | $15.62 |
| Flagstaff | $15.00 |
| Santa Clara | $15.65 |
| Freemont | $15.00 |
| Santa Monica | $17.13 |
| Half Moon Bay | $15.00 |
| South San Fran | $15.24 |
| Hayward | $15.00 (large employer)/$14.00 (small employer) |
| Sunnyvale | $16.30 |
| Los Altos | $15.65 | Colorado | Denver | $14.77 |
| Los Angeles | $17.13 | New Mexico | Bernalillo County | $8.35 w/ healthcare benefits / $9.35 |
| Mountain View | $16.30 |
| Las Cruces | $10.50 |
| Novato | $14.00 (small employers)/ $15.00 (large employers) | New York | Nassau County | $14.00 |
| Novato | 14/13 |
| Suffolk County | $14.00 |
| Oakland | $14.36 |
| Westchester County | $14.00 |
| Palo Alto | $15.65 | Washington | Seattle | $15.00 (employers with 500 or fewer employees)/ $16.30 (employers with 501 or more employees) |
| Pasadena | $15.00 (large employers)/ $14.25 (small employers) |
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Thank you for choosing Paylocity as your Payroll Tax and HCM partner.
This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.
