What Do FED, OASDI, and EE Mean on a Pay Stub?
Decode the essential payroll deductions like FED, OASDI, and EE on your pay stub. Gain clarity on what's withheld from your earnings and why.
Understanding pay stub deductions is important for personal financial management. These deductions represent contributions to federal programs and services funded through payroll taxes. Familiarizing oneself with these withholdings helps individuals understand their net pay and how their earnings contribute to the broader economy. It also provides transparency into how government services receive funding.
Federal Income Tax Withholding
Federal income tax withholding, labeled “FED” on a pay stub, represents an advance payment toward an individual’s annual income tax liability. This system collects taxes throughout the year as income is earned. The amount withheld from each paycheck is determined by the information an employee provides on Form W-4, the Employee’s Withholding Certificate.
When completing Form W-4, employees indicate their filing status, whether they have multiple jobs or a spouse who also works, and claim any dependents. They can also account for other income, deductions, or request additional withholding. Accurate W-4 completion ensures the amount withheld closely matches the actual tax owed at year-end, preventing a large tax bill or an excessively large refund. Adjusting a W-4 can help manage cash flow, aligning withholdings more precisely with tax obligations.
Social Security Tax
Social Security tax, abbreviated as “OASDI” (Old Age, Survivors, and Disability Insurance) on a pay stub, is a component of Federal Insurance Contributions Act (FICA) taxes. It funds benefits for retirees, survivors of deceased workers, and individuals with disabilities. Both employees and employers contribute.
For 2025, the employee’s contribution rate for Social Security is 6.2% of their wages. This tax applies only up to a certain annual income threshold, known as the Social Security wage base limit, which is $176,100 for 2025. Earnings above this limit are not subject to Social Security tax. The “EE” on a pay stub signifies the employee’s portion of this tax.
Medicare Tax
Medicare tax is the other part of FICA taxes, alongside Social Security. This tax funds healthcare benefits for individuals aged 65 or older, and some younger people with disabilities. Like Social Security, both employees and employers contribute.
The employee’s Medicare tax rate is 1.45% of all covered wages. Unlike Social Security, there is no wage base limit for Medicare tax, meaning all earned income is subject to this tax. An additional Medicare tax of 0.9% applies to individual wages exceeding $200,000, or $250,000 for married couples filing jointly, with no employer match for this extra amount. The “EE” designation on a pay stub confirms it is the employee’s contribution to Medicare.
Understanding Your Paycheck Deductions
Reviewing your pay stub allows you to see how federal income tax, Social Security, and Medicare contributions are itemized. These deductions are typically listed separately, often appearing as “FED WH” for federal income tax withholding, “OASDI” for Social Security, and “MEDICARE” or “FICA” (which combines Social Security and Medicare) for the respective taxes.
Understanding these line items helps verify that the correct amounts are being withheld and provides clarity on where portions of your earnings are allocated. Regularly reviewing your pay stub ensures that your withholdings align with your financial planning and tax obligations. This practice can help prevent surprises at tax time.