Ever wondered what that OASDI tax on your paycheck means? Well, I used to wonder about it since it doesn’t feel good to pay a tax that you’re not aware of, right?
After conducting some detailed research, I’ve understood what OASDI actually is. But as a citizen of the United States, how much are you obliged to pay this tax to support this program?
Well, that’s what I am going to talk about in this article. Here, I’ll be discussing what this program actually is and what benefits it covers for deserving people.
Key Takeaways about the OASDI Tax
1. OASDI tax supports three main programs: retirement income (85% of funds), disability insurance (15%), and survivor benefits for families of deceased workers.
2. Employees pay 6.2% of their gross wages (up to the annual wage base limit), while employers match another 6.2%, totaling 12.4%
3. Workers earn “credits” (1 credit per $1,810 in 2025, max 4/year) to qualify for benefits. 40 credits (≈10 years of work) are needed for full retirement benefits.
4. Employers must withhold, match, and remit OASDI taxes quarterly (Form 941) or annually (Form 944 for small businesses)
What is OASDI Tax?
OASDI (Old-Age, Survivors, and Disability Insurance) is a Social Security program of the United States government that supports old-age, families of deceased, and disabled people by providing benefits.
This program is administered by SSA and uses two different trust funds to collect and distribute money to deserving people. These trust funds are:
- Old-Age and Survivors Insurance: It is for retired people and the families of insured workers who have died.
- Disability Insurance: It is for insured people who are unable to work due to disability.
OASDI Tax Meaning
OASDI Tax stands for Old-Age, Survivors, and Disability Insurance Tax, which is the official name for the U.S. Social Security tax.
OASDI Tax and Social Security Tax
The OASDI tax on your paycheck means you actually have to pay the Social Security tax. OASDI isn’t the same as SSI (Supplemental Security Income).
SSI, administered by SSA, is actually a support program for people who:
- Have low income and resources
- Are 65 years old (or older)
- Have qualifying disability
OASDI Tax on Paycheck
OASDI tax is levied on a person’s paycheck under the Federal Insurance Contribution Act (FICA). The percentage of this tax is 12.6% of an employee’s gross pay. However, this number is split between both employees and employers.
Both employees and employers have to pay 6.2% of their gross income as OASDI tax.
The tax limit is that every person’s first $176,100 will be subject it to the government. If you’re making more money than this, you’re not required to pay this tax.
OASDI Tax For Self-Employed and Non-Residents
The employees and employers who pay 6.2% of the total 12.6%, the self-employed are supposed to pay the total amount.
Non-residents, on the other hand, also have to pay this tax. However, people with the following visas are not required to do so:
| A-Visas | Employees and their families of foreign governments. |
| D-Visas | Crew member of an aircraft or a ship working under a U.S employer |
| G-Visas | Workers of an international organization operating in the U.S |
| H-Visas | Filipinos working in Guam or temporary farm laborers in the U.S |
| F-Visas, J-Visas, M-Visas, and Q-Visas | Professors, researchers, students, etc. |
Benefits of The OASDI Tax
Now that we have discussed the OASDI meaning in detail, let’s see what the benefits it offers.
The OASDI tax covers multiple things as benefits. It means its total amount is divided into providing different benefits. I’ve discussed it in detail below:
1. Retiree Benefits:
85% of the total tax amount is used for providing retiree benefits. The amount is provided to a trust that distributes the money to people after they retire from their jobs.
2. Disability Benefits:
Around 15% of this money goes to disabled people. A trust administered by the Social Security Disability Insurance (SSDI) program, which oversees the distribution of the money.
3. Survivor Benefits:
Some amount of the money is paid to the families of a deceased employee.
4. Program Management:
Besides the benefits, around 0.5% of the annual Social Security is utilized to manage and operate the whole program.
Benefits are provided to people only if they pass the eligibility criteria.
Eligibility Criteria for OASDI Benefits
| Recipient Type | Eligibility Criteria | Benefits |
|---|---|---|
| Retirees | The person must be 62 years old and have earned 40 work credits. | Benefits are calculated according to the person’s total career earnings. |
| Survivors | The person must be related to the deceased employee at the time of his/her death. | Benefits are calculated according to the deceased’s total earnings and the survivor’s relationship with the deceased person. |
| Disabled | The person uses a Recent Work Test and a Duration Test. It calculates the eligibility based on the employee’s age and career length. | Benefits are provided according to the person’s total career earnings. |
Who Doesn’t Have to Pay OASDI Tax?
OASDI tax is mandatory, and almost every employed person has to pay it. However, there are certain classes of people who don’t have to pay it. I’ve discussed them below:
1. Certain Religious Groups:
People related to certain religious groups and members of the clergy can choose not to pay this tax. However, since they won’t pay this tax, they won’t be eligible to receive benefits in the future.
2. Self-Employees Making Less Than $400:
Self-employed individuals whose total annual earnings are less than $400 don’t have to pay this tax as well. They also don’t get to enjoy the benefits later.
3. Local and State Government Employees:
Employees of local or state government can also be exempted from this tax payment by their state government. However, the employees should have a proper retirement plan that offers benefits that are at least as good as the Social Security program.
Besides that, this retirement program should begin paying the benefits at or before the age limit of the Social Security program.
How to Calculate the OASDI Tax?
Calculating the OASDI tax is an easy process, and you can do it by following these guidelines:
- First, define the gross wages of an employee. These are an employee’s total earnings before any deductions.
- Now, multiply the amount by 0.062.
- The received amount will be the OASDI tax.
Still Confused! Try our OASDI Tax Calculator for a hassle free calculation.
OASDI Tax Calculator
Calculate your Social Security (OASDI) tax based on current 2025 rates
2025 OASDI Tax Information
Tax Rate: 6.2% for employee, 6.2% for employer (12.4% total)
Wage Base Limit: $176,100 (wages above this amount are not subject to OASDI tax)
Note: OASDI stands for Old-Age, Survivors, and Disability Insurance, commonly known as Social Security tax.
Final Words
OASDI is a program that focuses on benefiting certain types of people under certain circumstances. Citizens of the United States are required to pay the this tax in order to fund this program so that deserving people can enjoy benefits.
The discussed rules and regulations apply to the tax, and almost every person has to pay it. However, there are certain classes of people who are not required to pay this tax.
People Also Ask
Is OASDI tax mandatory?
The OASDI tax is a mandatory tax and applies to both classes of these people.
Is OASDI The Same As Social Security?
Yes. OASDI is the same as Social Security. It means the amount, rules, and criteria are the same for each.
What Is The Maximum Social Security Benefit?
The maximum Social Security benefit for retiring at the full retirement age is around $3,822 per month. This amount can vary according to your total earnings history as well as the age you start collecting the benefits.
What Is The Maximum Social Security Tax Withheld?
The total amount of tax withheld from a person’s first $176,100 earnings is $10,918.20. For self-employed people, this amount is $21,836.40.
What Is OASDI On My Paycheck?
The OASDI on your paycheck is a mandatory payroll tax that funds retirement, disability, and survivor benefits.
What Does FICA Mean?
FICA stands for the Federal Insurance Contributions Act. It is a law that requires employees and employers to contribute payroll tax to fund Social Security.
