Is OASDI the Same as FICA? A Clear Explanation
Gain clear insight into the often-confused terms FICA and OASDI. Understand these vital federal payroll contributions and their significance.
Payroll taxes often involve various acronyms and terms, such as FICA and OASDI. This article clarifies these terms, detailing what each represents and how they relate to mandatory deductions from your earnings. Understanding these taxes helps you comprehend how your contributions support federal programs.
Understanding FICA
FICA stands for the Federal Insurance Contributions Act. This mandatory payroll tax is a joint responsibility, with both employees and employers contributing to its funding. FICA comprises two primary components: Social Security tax and Medicare tax. These taxes collectively fund federal programs that provide financial assistance and healthcare benefits.
The Social Security portion of FICA supports programs for retirees, individuals with disabilities, and survivors of deceased workers. The Medicare portion helps finance healthcare services, primarily for those aged 65 and older, and certain younger individuals with disabilities. In 2025, the total FICA tax rate is 15.3% of an employee’s gross wages, split evenly between the employer and employee, each paying 7.65%. Self-employed individuals are responsible for the entire 15.3%.
Understanding OASDI
OASDI stands for Old-Age, Survivors, and Disability Insurance. This payroll tax is collected from workers’ earnings to fund benefits distributed by the Social Security Administration. OASDI provides retirement income to eligible workers, financial support to surviving spouses and children of deceased workers, and benefits for individuals who become disabled.
The OASDI tax rate for 2025 is 12.4% of taxable wages, with employees and employers each contributing 6.2%. For self-employed individuals, the rate is the full 12.4%. For 2025, earnings above $176,100 are not subject to this tax, and this limit adjusts annually based on changes in the national average wage index.
The Relationship Between FICA and OASDI
OASDI is not synonymous with FICA; rather, it is a significant component of the broader FICA tax. FICA is the umbrella term for mandatory payroll taxes collected to fund both Social Security and Medicare. FICA can be thought of as the entire pie, with OASDI representing the Social Security portion and Medicare representing the other.
FICA includes the 12.4% OASDI tax (Social Security) and the 2.9% Medicare tax, totaling 15.3%. While OASDI focuses on retirement, survivor, and disability benefits, Medicare covers hospital insurance and other medical expenses. Both are collected to support these federal programs.
On Your Paycheck
When reviewing your pay stub, you will see deductions for these federal payroll taxes. While the overarching law is FICA, paychecks often itemize deductions as “Social Security” and “Medicare” separately. Occasionally, you might see a combined “FICA” line item, but it is less common to see “OASDI” explicitly stated.
The “Social Security” deduction on your pay stub directly corresponds to the OASDI tax. For 2025, this deduction is 6.2% of your gross wages, up to the annual wage base limit of $176,100. The “Medicare” deduction, at 1.45% of all taxable wages with no income limit, is also listed. These deductions represent your share of the FICA taxes.