Social Security Tax
The amount of employees’ earnings that are subject to Social Security tax is capped for 2020 at $137,700 (up from $132,900 for 2019).
Deductions
- Section 179 expensing:
- Limit: $1.04 million (up from $1.02 million for 2019)
- Phaseout: $2.59 million (up from $2.55 million)
- Income-based phase-out for certain limits on the Sec. 199A qualified business income deduction begins at:
- Married filing jointly: $326,600 (up from $321,400)
- Married filing separately: $163,300 (up from $160,725)
- Other filers: $163,300 (up from $160,700)
Retirement Plans
- Employee contributions to 401(k) plans: $19,500 (up from $19,000)
- Catch-up contributions to 401(k) plans: $6,500 (up from $6,000)
- Employee contributions to SIMPLEs: $13,500 (up from $13,000)
- Catch-up contributions to SIMPLEs: $3,000 (no change)
- Combined employer/employee contributions to defined contribution plans (not including catch-ups): $57,000 (up from $56,000)
- Maximum compensation used to determine contributions: $285,000 (up from $280,000)
- Annual benefit for defined benefit plans: $230,000 (up from $225,000)
- Compensation defining a highly compensated employee: $130,000 (up from $125,000)
- Compensation defining a “key” employee: $185,000 (up from $180,000)
Other Employee Benefits
- Qualified transportation fringe-benefits employee income exclusion: $270 per month (up from $265)
- Health Savings Account contributions:
- Individual coverage: $3,550 (up from $3,500)
- Family coverage: $7,100 (up from $7,000)
- Catch-up contribution: $1,000 (no change)
- Flexible Spending Account contributions:
- Health care: $2,750 (up from $2,700)
- Dependent care: $5,000 (no change)
These are only some of the tax limits that may affect your business and additional rules may apply. If you have questions, please contact us.
