2020 Mileage Rates and Social Security Wage Base

The optional standard mileage rates for business use of a vehicle is forecasted to increase slightly from 2019. For business use of a car, van, pickup truck, or panel truck, the rate for 2020 will be 58.5 cents per mile up from 58 cents per mile in 2019. Taxpayers can use the optional standard mileage rates to calculate the deductible costs of operating an automobile.

The Social Security Administration (SSA) announced that the maximum amount of wages subject to the old age, survivors, and disability insurance (OASDI) tax will increase to $137,700 for 2020. The OASDI tax rate is 6.2%, so an employee with wages up to or above the maximum in 2020 would pay $8,537.40 in tax and the employer would pay an equal amount. Self-employed individuals pay tax at a 12.4% rate up to the limit. The 2019 wage base is $132,900, for a $8,239.80 maximum amount of OASDI tax.  The Medicare hospital insurance tax of 1.45% each for employees and employers, or 2.9% for the self-employed, has no wage limit.