Will You Have to Pay $632 More in Social Security Tax Next Year?
Some changes are coming to Social Security next year, and one of them could mean more money comes out of your pocket. While the vast majority of earners will not be affected by this change, some Americans will end up owing more Social Security tax in 2021 than they did in 2020. In fact, the added tax bill could total as high as $632. Here's why.
To understand why Social Security taxes are going up for some Americans, you have to understand how these taxes work. Social Security is funded by a payroll tax, which is collected on income you earn. But it's not collected on all wages for every American. Instead, there is a wage base limit. You'll pay payroll taxes on all income you earn up to the limit, but no further Social Security tax on any money you earn once you exceed it.
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Source Fool.com
