How Much Is OASDI Tax and What Is the Current Rate?
Get a clear understanding of OASDI tax, its Social Security purpose, and how it impacts your earnings.
The Old Age, Survivors, and Disability Insurance (OASDI) tax is the primary funding mechanism for Social Security benefits. This mandatory federal payroll tax directly supports programs providing financial assistance to retirees, individuals with disabilities, and surviving family members of deceased workers. Its collection ensures the continuity of these benefits, which are a fundamental component of financial security for millions of Americans.
Understanding OASDI Tax
OASDI refers to the Social Security portion of Federal Insurance Contributions Act (FICA) taxes, which also include Medicare tax. FICA taxes are compulsory deductions from wages that fund Social Security and Medicare programs. Funds collected through OASDI provide retirement income, disability benefits for those unable to work due to a medical condition, and survivor benefits for eligible dependents after a worker’s death. This tax applies to earned income, including wages, salaries, bonuses, commissions, and self-employment income.
Unearned income, such as interest, dividends, or capital gains, is not subject to OASDI tax. The system operates on a pay-as-you-go basis, meaning current contributions largely fund current benefits. Your Social Security number tracks your contributions, and as you work and pay OASDI taxes, you earn credits that determine your eligibility for future benefits. These credits are fundamental to accessing the support provided by the Social Security Administration.
Current Rates and Wage Base Limit
The OASDI tax rate for employees is 6.2% of their gross wages, with employers paying an equal 6.2%, for a combined rate of 12.4%. For 2025, the Social Security Administration has set a wage base limit of $176,100. Only earnings up to this amount are subject to the OASDI tax.
Earnings above this annual wage base limit are not subject to OASDI tax, though they remain subject to Medicare taxes. Self-employed individuals are considered both employer and employee, paying the full 12.4% OASDI tax rate on their net earnings. They can deduct one-half of their self-employment taxes as a business expense when calculating adjusted gross income for federal income tax purposes, which helps to equalize the tax burden with that of traditional employees.
Calculating Your OASDI Tax
Calculating OASDI tax involves applying current rates and considering the wage base limit. For an employee earning below the wage base limit, such as $50,000 annually, the OASDI tax withheld would be $3,100 ($50,000 x 6.2%). The employer would contribute an additional $3,100.
For an employee earning above the wage base limit, such as $200,000 in 2025, the OASDI tax is capped. With the 2025 wage base limit at $176,100, the employee’s OASDI tax contribution would be $10,918.20 ($176,100 x 6.2%). The employer would also pay $10,918.20. Employers withhold the employee’s share and remit both shares to the government.
For a self-employed individual earning below the wage base limit, such as $70,000 in net earnings, they are responsible for the full 12.4% OASDI tax, amounting to $8,680 ($70,000 x 12.4%). A self-employed individual earning above the wage base limit, such as $200,000 in net earnings, would also be subject to the cap. Their OASDI tax would be $21,836.40 ($176,100 x 12.4%). Self-employed individuals pay these taxes quarterly through estimated tax payments, as they do not have an employer to withhold the amounts.