2021 STATE MINIMUM WAGES
As of publication, the 2021 federal minimum wage stays at $7.25. Below are the effective minimum wages for work performed on or after Jan. 1, 2021, for states with a minimum wage above the federal rate.
- Alaska. $10.34.
- Arizona. $12.15; tipped employees, $9.15.
- Arkansas. $11.00; tipped employees, $2.63.
- California. $14.00 for firms with 26 or more employees, $13.00 for 25 or fewer. Below, an * indicates that the 2021 minimum wage will be announced on July 1, 2021.
- Alameda. $15.00.*
- Belmont. $15.00.
- Berkley. $16.07*.
- Cupertino. $15.65.
- Daly City. $15.00.
- El Cerrito. $15.61.
- Emeryville. $16.84*.
- Fremont. $15.00 for businesses with 25 or fewer employees; * for 26 or more employees.
- Los Altos. $15.65.
- Los Angeles. $15.00.
- Malibu. $15.00, effective July 1, 2021.
- Menlo Park. $15.25.
- Milpitas. $15.40*.
- Mountain View. $16.30.
- Oakland. $14.14.
- Palo Alto. $15.65.
- Pasadena. $15.00*.
- Petaluma. $15.20.
- Redwood. $15.62.
- Richmond. $15.21.
- Sacramento. $14.00 for firms with 25 or fewer employees; $13.00 for 26 or fewer.
- San Diego. $14.00.
- San Francisco. $16.07*.
- San Jose. $15.45.
- San Leandro. $15.00*.
- San Mateo. $15.62.
- Santa Clara. $15.65.
- Santa Monica. $15.00, effective July 1, 2021.
- Sonoma. $15.00 for businesses with 26 or more employees; $14.00 for businesses with 25 or fewer.
- South San Francisco. $15.24.
- Sunnyvale. $16.30.
- Colorado. $12.32; tipped employees, $9.30.
- Connecticut. $13.00, effective Aug. 1, 2021.
- Delaware. $10.25.
- District of Columbia. $15.00; tipped employees $5.00.*
- Florida. $8.56, effective Sept. 30, 2021; tipped employees, $5.63.
- Guam. $9.25, as of Mar. 2021.
- Illinois. $11.00; tipped employees, $6.60; youths under 18, $8.50.
- Maine. $12.15; tipped employees, $6.08.
- Maryland. $11.75.
- Massachusetts. $13.50; tipped employees, $5.55.
- Michigan. $9.87; tipped employees, $3.75.
- Minnesota. $10.08 for firms with annual gross revenues of at least $500,000; $8.21 for firms with annual gross revenue under $500,000.
- Missouri. $10.30; tipped employees, $5.15.
- Montana. $8.75.
- Nevada. $10.75, effective July 1, 2020.
- New Jersey. $12.00; seasonal employees who work for firms with fewer than 6 employees, $11.10; agricultural, $10.44; tipped employees, $4.13.
- New Mexico. $10.50; tipped employees, $2.55.
- New York. $12.50; fast-food workers, $14.50; tipped employees, $8.35.
- New York City. $15.00
- Long Island and Westchester Counties. $14.00; tipped employees, $9.35.
- Ohio. $8.80; under age 16 or employees in firms whose annual gross revenues are less than $319,000, $7.25; tipped employees, $4.40.
- Oregon. $12.75, effective July 1, 2021.
- Rhode Island. $11.50.
- South Dakota. $9.45; tipped employees, $4.725.
- Vermont. $11.75; tipped employees, $5.88.
- Washington. $13.69.
- Seattle. $16.69 for firms with 501 or more employees; $16.69 for firms with 500 or fewer employees that do not offer medical benefits; $15.00 for firms with 500 or fewer employees that offer medical benefits.
- Sea Tac. $16.34.
- West Virginia. $8.75 * Will introduce a rate increase on July 1
Recent California Uber IC referendum does not affect small biz.
Uber and Lyft funded a ballot referendum in November’s election that exempts them from a recent state law classifying most workers as employees instead of independent contractors (ICs). The referendum passed by a wide margin. Changes in IC v. employee classification in one state are often a bellwether for firms in other states. But in this instance, most other employers do not benefit. The referendum narrowly applied to companies that employ drivers through apps. When certain conditions are met, those companies can treat the drivers as independent contractors.
Other employers in California still must classify most workers using the ABC test, the test used in various versions by most states, which requires employers to prevail on tests A, B and C for a worker to be treated as an IC, as follows: A: The worker must clearly be free from the hiring entity’s direction for the work, both in the terms of the contract and in the conduct of the relationship. B: The worker does work that is outside the hiring entity’s usual business—e.g., truck drivers who work for a trucking company do not do work outside the scope of the hiring entity’s business, so they are employees. A plumber doing work at a retail store is performing work outside the hiring entity’s usual business. C: The worker must be customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity
What you need to know about the new fiscal stimulus
At year-end, Congress approved a sweeping legislative package. Here’s what you need to know for now:
- Paycheck Protection Program (PPP) loans are funded up to $284 billion. n
- Effective from Jan. 1, 2021–June 30, 2021, the employee retention credit, enacted in March in the CARES Act, is extended and increased from 50% to 70% of an employee’s wages—and the wage ceiling to which the credit can be applied is increased from $10,000 per year to $10,000 per quarter.
- Effective, Jan. 1, 2021–June 30, 2021, businesses can use both PPP loans and the employee retention credit.
- For months we have reported that, when a business expense is paid with a PPP loan that is later forgiven, you cannot take a tax deduction for that expense; the tax code does not allow double-dipping. The new law stipulates that now you can double-dip. Effective retroactively to Mar. 27, 2020, you can pay a business expense with a PPP loan, then take a tax deduction for that expense, even if the PPP loan is forgiven.
- Effective for 2021-2022, business meal expenses are 100% deductible—instead of 50%.
Most expiring tax provisions, such as the work opportunity tax credit, were either extended through 2025 or made permanent. A few were extended for only one year.
Special provisions were included to provide support to movie theaters, live entertainment venues and businesses in low-income communities.
SSA letters should get immediate action.
The Social Security Administration (SSA) is just now mailing letters to employers that filed 2019 Forms W-2 with employee names/SSNs that did not jibe with SSA records. Because a mismatch can be caused by typos, unreported name changes, inaccurate or incomplete employer records, or other problems, the SSA letter says:
“This letter does not imply that you or your employee intentionally gave the government wrong information about the employee’s name or SSN. This letter does not address your employee’s work authorization or immigration status. Do not take adverse action against an employee, such as laying off, suspending, firing, or discriminating against that individual, just because this letter identifies a mismatch between his or her SSN or name as reported to us. Those actions could violate state or federal law and subject you to legal consequences.”
If you receive this letter, review it, then verify and correct the inaccurate data. The letter will include an attachment with instructions on how to register for and use Business Services Online (BSO) to view name/SSN mismatches and how to file a W-2C with the IRS. Why “immediate” action? To make sure your 2020 W-2s are correct so you do not have to file a 2020 W-2C.
IRS penalties, too
The SSA shares its data with the IRS, which can impose penalties for:
- failure to file timely (information returns with errors are considered information returns not filed);
- failure to include required information on a W-2
- incorrect W-2 information (a name and/or SSN that does not match government databases);
- files on paper when required to file electronically.
Penalties. $280-$560 per inaccurate W-2 (there can be multiple penalties for the same mistake on a W-2).
Tax filing season to start Feb. 12, IRS announces
On Friday, January 8, the IRS declared that on Friday, Feb. 12, it will start accepting and processing 2020 tax returns. This is later than in several previous years, when January saw the start of the tax season. The IRS claims the delay is due to the additional time it needs for programming and evaluating its programs following the tax law amendments made by the Consolidated Appropriations Act, 2021 (CAA 2021), P.L 116-260, which was passed Dec. 27.
The IRS says much of the additional program, if the taxpayers are not compensated with an economic benefit allowance, is a consequence of a second round of recovery discount credits approved by CAA 2021 that can demand returns from 2020.