The following information is provided to assist employers in understanding their employment and payroll tax obligations for 2021. Nevada Association of Employers (NAE) encourages employers to consult with their tax advisor for advice on implementing these tax obligations.
Unemployment Insurance
Effective January 1, 2021, the Nevada taxable wage base for calendar year 2021 is $33,400 (up from $32,500 in 2020). The taxable wage base is calculated each year at 66 2/3% of the average annual wage paid to Nevada workers.
The federal taxable wage base will continue to be $7,000 in 2021.
While total wages paid to each employee must be reported each quarter, unemployment insurance taxes are only paid on an individual’s wages up to the taxable wage base during a calendar year. Employers will continue to be assigned a contribution rate based on their individual experience rating.
Federal Social Security
Beginning January 1, 2021, the maximum amount of earnings subject to the Social Security payroll tax is $142,800—a $5,100 increase from 2020. Social Security and Medicare payroll taxes are collected together as the Federal Insurance Contributions Act (FICA) tax.
The FICA tax rate for employers (and employees) in 2021 is as follows:
| RATE* | MAX WAGE | |
|---|---|---|
| Social Security: | 6.2% | $142,800 |
| Medicare: | 1.45% | No limit |
*These rates are paid equally by employers and employees. Therefore, the total social security tax rate is 12.4% and the total Medicare tax rate is 2.9%. Self-employed individuals pay both the employer and employee portion.
The above tax rates do not include an additional 0.9% in Medicare taxes paid by highly compensated employees on earnings that exceed certain wage thresholds. Those thresholds, which are set by law and not subject to inflation, are $250,000 for married taxpayers who file jointly; $125,000 for married taxpayers who file separately; and $200,000 for single and all other taxpayers.
Certain Payroll Taxes Suspended Due to COVID
Due to the COVID-19 pandemic, relief was put in place allowing for the deferral or suspension of certain payroll taxes in 2020.
Pursuant to certain provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, eligible employers are permitted to defer the deposit and payment of the employer’s portion of social security FICA taxes. The deferral applies to the period of March 27 through December 31, 2020. The deferred taxes would need to be paid in full later, with half due by December 31, 2021 and the remainder due by December 31, 2022.
IRS Notice 2020-65 allows, but does not require employers to defer withholding and payment of employees’ portion of social security payroll taxes for certain employees for the period of September 1 through December 31, 2020. This deferral applies to employees making less that $4,000 per bi-weekly pay period. These deferred taxes would be withheld and paid from employees’ paychecks from January 1 though April 30, 2021.
