How Much Is the OASDI Tax?
Gain clarity on how your OASDI (Social Security) payroll tax is calculated, revealing the elements that shape your contribution.
The Old-Age, Survivors, and Disability Insurance (OASDI) tax funds Social Security benefits. These benefits provide financial support to millions of Americans, including retirees, individuals with disabilities, and the survivors of deceased workers. As a mandatory payroll tax, OASDI contributions are a fundamental part of the federal tax system, ensuring a continuous flow of funds for these social insurance programs. This tax directly supports the benefits paid out to current beneficiaries, operating on a pay-as-you-go system where today’s contributions fund today’s payouts.
The OASDI Tax Rate
The standard OASDI tax rate is a fixed percentage of an individual’s earnings, designed to ensure broad participation in the Social Security system. For employees, the rate is 6.2% of their gross wages. Employers contribute an equal matching share, also 6.2%, bringing the total combined tax rate to 12.4% on an employee’s earnings.
Individuals who are self-employed bear the full responsibility for both portions of the OASDI tax. This combined rate, known as the self-employment tax, amounts to 12.4% of their net earnings from self-employment. The OASDI tax rate generally remains stable for a given tax year, with any changes requiring legislative action by Congress. This rate is distinct from the Medicare tax, which is another component of the overall FICA (Federal Insurance Contributions Act) tax.
The Annual Wage Base Limit
A distinguishing feature of the OASDI tax is the annual wage base limit, often referred to as the “taxable maximum” or “contribution and benefit base.” This limit is the maximum amount of an individual’s earnings subject to the OASDI tax in a single calendar year; earnings above this amount are not taxed. For instance, for earnings in 2025, this limit is set at $176,100.
This wage base limit undergoes annual adjustments, typically in response to changes in the national average wage index and inflation. The limit correlates contributions with future benefit calculations, as Social Security benefits are also based on earnings up to this maximum. This ensures high earners contribute a capped amount, providing an upper boundary for taxable earnings.
Calculating Your OASDI Contribution
Individual contributions are determined by the OASDI tax rate and the wage base limit. For employees, their portion of the OASDI tax is 6.2% of their gross wages, up to the annual wage base limit. For example, if an employee earns $50,000 in 2025, their OASDI contribution would be $3,100 ($50,000 x 0.062).
If an employee’s gross wages exceed the wage base limit, their OASDI tax contribution will cap out. For instance, an employee earning $200,000 in 2025 would only pay OASDI tax on the first $176,100. Their maximum OASDI contribution for the year would be $10,918.20 ($176,100 x 0.062), even though their total earnings are higher.
Self-employed individuals calculate their OASDI tax on their net earnings from self-employment. They pay the combined 12.4% rate on 92.35% of their net self-employment earnings, up to the annual wage base limit. For example, if a self-employed individual has $70,000 in net earnings in 2025, their self-employment income subject to tax would be $64,645 ($70,000 x 0.9235). Their OASDI contribution would then be $8,015.98 ($64,645 x 0.124). Self-employed individuals are also permitted to deduct one-half of their self-employment tax liability when calculating their adjusted gross income for income tax purposes.