The new year brought several important payroll changes. Don’t worry, we’re here to keep you in the loop.
10 Payroll Changes to Know for 2021
- Missouri minimum wage for 2021: $10.30/hour
- Standard mileage rates for the use of a car (vans, pickups or panel trucks) will be 56 cents per mile for business miles driven, down 1.5 cents.
- Social Security wage base will be $142,800. The employee and employer match will now be 6.2%. The maximum deduction will be $8,853.60.
- Medicare Tax will still be applicable to all wages with a 1.45% tax. Wages paid in excess of $200,000 will be subject to an extra 0.9% Medicare Tax that will be withheld only from employees’ wages.
- Dependent Care FSA Limits will remain at $5,000 for an individual or a married couple filing jointly and $2,500 for a married person filing separately.
- Health Flexible Spending Arrangements will now include a dollar limitation on voluntary employee salary reductions for contributions to a health flexible spending arrangement (FSA) remains unchanged at $2,750.
- Health Savings Accounts, individuals with coverage under a qualifying high-deductible health plan (deductible not less than $1,400) can contribute up to $3,600 — up $50 from 2020 — for the year to their HSA. The maximum out-of-pocket has been capped at $7,000.
- Catch-up contributions, for individuals 55 and older to make additional catch-up contributions to an HSA until they are enrolled in Medicare, is $1,000.
- IRA contribution limit for 2021 for a Simple IRA is $13,500. The catch-up contribution for those age 50 or older, is $3,000. For defined contribution plans and Simplified Employee Pension (SEP) IRA plans, the total annual contribution limit is $58,000 per participant in 2021. This is a $1,000 increase from the 2020 contribution limit of $57,000. Cross-tested plans are also subject to this contribution limit. Annual additions paid to a plan participant’s account can’t be more than 100% of the participant’s compensation or $58,000 ($64,500 if they make catch-up contributions).
- 401(k), 403(b) and 457 contribution limits in 2021 will see a limit for employee deferrals of $19,500. The catch-up contribution for those age 50 or older, is $6,500.
Need some help better understanding these changes or knowing how they’ll impact your business? Let us know. We’re here to help!