What Does OASDI Stand For on a Pay Stub?

Pay stubs often contain various acronyms and deductions that might seem unclear. Understanding these entries provides insight into how earnings are processed and where contributions are allocated. OASDI is a common acronym found on pay stubs, and understanding its meaning is important for financial planning and social support systems.

Understanding OASDI

OASDI stands for Old-Age, Survivors, and Disability Insurance. This acronym represents the primary component of Social Security, a social insurance program in the United States. Its purpose is to provide financial protection to workers and their families. This includes financial assistance in cases of retirement, severe disability, or the death of a working family member.

How OASDI Contributions Work

OASDI is funded through payroll taxes, which are part of the Federal Insurance Contributions Act (FICA) tax. FICA taxes also include contributions for Medicare. Both employees and employers share responsibility for these contributions, with each party contributing an equal percentage.

For wages paid in 2025, the OASDI tax rate is 6.2% for employees and 6.2% for employers. These contributions are mandatory for most workers and are deducted directly from their pay. Self-employed individuals are responsible for paying both the employee and employer portions.

The “wage base limit” or “taxable maximum” is the maximum amount of earnings subject to the OASDI tax each year. For 2025, this limit is $176,100. The wage base limit is adjusted annually based on changes in the national average wage index.

Benefits Funded by OASDI

OASDI contributions fund three main categories of benefits. These benefits are determined by a worker’s earnings history and the Social Security taxes paid throughout their working life, requiring a certain number of “work credits” to qualify. Work credits are earned as individuals work and pay Social Security taxes, with a maximum of four credits earnable per year. For 2025, one credit is earned for each $1,810 in earnings, up to the annual maximum of four credits.

Old-Age benefits, commonly known as retirement benefits, are paid to eligible retired workers and their spouses or dependents. To be eligible for retirement benefits, individuals need to have accumulated 40 work credits, which equates to about 10 years of work. The specific age at which a worker can begin receiving full retirement benefits depends on their birth year.

Survivors benefits provide financial support to eligible family members of a deceased worker who had earned sufficient work credits. These beneficiaries can include a spouse, minor children, or dependent parents. These benefits help replace a portion of the deceased worker’s earnings, supporting the family’s financial stability.

Disability benefits are paid to workers who become severely disabled and are unable to engage in substantial gainful activity due to a physical or mental condition. Their eligible family members may also receive benefits. Eligibility for disability benefits depends on meeting specific medical criteria and having a sufficient number of work credits, which varies based on the worker’s age at the onset of disability.