2020 Tax Information

2020 Tax Information

2020 Tax Information

  • The social security wage base limit has increased from $132,900 to $137,700.  Based on this new amount, the maximum social security tax payable by each employee is $8,537.40, or 6.2% of the wage base.
  • The flat tax rate for withholding income tax from supplemental wages remains at 22% and at 37% for supplemental wages over $1 million.
  • Federal income withholding tax brackets remain at 10, 12, 22, 24, 32, 35, and 37%.

      New 2020 Form W-4

  • The new 2020 Form W-4, Employee’s Withholding Certificate, can be viewed here.
    • Before completing the 2020 Form W-4, please read the instructions that are included with the form.  You must complete Steps 1 and 5. Steps 2, 3, and 4 are optional, but completing them will help ensure that your federal income tax withholding will more accurately match your tax liability.  Step 1 is for your personal information; Step 2 is for households with multiple jobs; Step 3 is used to claim tax credits for dependents; Step 4 is for other adjustments (additional income such as interest and dividends, itemized deductions that exceed the standard deduction, and extra tax you want withheld); and Step 5 is where you sign the form.
    • The IRS takes your privacy seriously and suggests that, if you are worried about reporting income from multiple jobs in Step 2 or other income in Step 4(a), you check the box in Step 2(c) or enter an additional withholding amount in Step 4(c).  To determine the additional withholding amount, you can use the withholding estimator referenced next.
  • The IRS encourages everyone to use their Tax Withholding Estimator to perform a quick “paycheck checkup.”  This estimator may help employees ensure that an adequate amount of tax is withheld from paychecks each pay period.