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2021 Earnings Threshold for Social Security and Medicare

The Social Security Administration has released the 2021 earnings threshold for household employers withholding Social Security and Medicare taxes (often jointly referred to as FICA).  Unlike many industries, for household employment, FICA taxes are not withheld until the earnings threshold is met.  Although the threshold represents the minimum that an employee must earn for FICA withholdings, it is important to note that once the threshold is met, taxes are owed on all wages (back to dollar 1).  For 2021, if a household employee earns $2300 or more in cash wages, Social Security and Medicare taxes must be withheld .  This is an increase of $100 from 2020.  

Employees pay 7.65% for their portion of FICA, and employers match the 7.65% contribution.

The Social Security tax pays for old-age, survivors, and disability benefits for workers and their families.  The Medicare tax pays for hospital insurance.

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