---
title: "2020 Overview: Increased Tax Limits Affecting Businesses"
description: With many of the tax-related limits affecting businesses going up in 2020, it’s important to know how they affect you. Here are a few to watch for.
---

[Biz Tips | SVA Certified Public Accountants ](https://accountants.sva.com/biz-tips)

# [2020 Overview: Increased Tax Limits Affecting Businesses](https://accountants.sva.com/biz-tips/quick-overview-of-the-increased-tax-limits-affecting-businesses-for-2020)

 Written by [Holly Eisenhauer, CPA](https://accountants.sva.com/biz-tips/author/holly-eisenhauer) | Jan 30, 2020

An array of tax-related limits that affect businesses are annually indexed for inflation, and many have increased for 2020. Here are some that may be important to you and your business.

## Social Security Tax

The amount of employees’ earnings that are subject to Social Security tax is capped for 2020 at $137,700 (up from $132,900 for 2019).

### Deductions

- [Section 179](https://accountants.sva.com/biz-tips/how-manufacturers-benefit-from-section-179-expensing-deduction) expensing:

- Income-based phase-out for certain limits on the Sec. 199A qualified business income deduction begins at:

### Retirement Plans

- Employee contributions to 401(k) plans: $19,500 (up from $19,000)
- Catch-up contributions to 401(k) plans: $6,500 (up from $6,000)
- Employee contributions to SIMPLEs: $13,500 (up from $13,000)
- Catch-up contributions to SIMPLEs: $3,000 (no change)
- Combined employer/employee contributions to defined contribution plans (not including catch-ups): $57,000 (up from $56,000)
- Maximum compensation used to determine contributions: $285,000 (up from $280,000)
- Annual benefit for defined benefit plans: $230,000 (up from $225,000)
- Compensation defining a highly compensated employee: $130,000 (up from $125,000)
- Compensation defining a “key” employee: $185,000 (up from $180,000)

### Other Employee Benefits

- Qualified transportation fringe-benefits employee income exclusion: $270 per month (up from $265)
- Health Savings Account contributions:
- Flexible Spending Account contributions:

These are only some of the tax limits that may affect your business and additional rules may apply. If you have questions, please contact us.

*© 2019*

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