What Is OASDI/EE Withholding on Your Paycheck?
Navigate OASDI/EE withholding: the mandatory payroll deduction funding Social Security and Medicare. Grasp its significance and impact on your earnings.
OASDI/EE withholding represents a mandatory deduction from most employees’ paychecks in the United States. This payroll tax plays a fundamental role in funding two significant federal programs: Social Security and Medicare. These withholdings are automatically taken from gross wages, contributing to a collective system designed to provide financial security and healthcare support.
Understanding OASDI and EE
The acronym OASDI stands for Old-Age, Survivors, and Disability Insurance, which constitutes the Social Security portion of the withholding. Old-Age benefits provide income to retired workers, Survivors’ benefits support families of deceased workers, and Disability benefits assist individuals unable to work due to a medical condition. This program protects millions of Americans and their families.
The “EE” in OASDI/EE refers to the employee contribution for Medicare. Medicare is a federal health insurance program. It primarily serves individuals aged 65 or older, along with some younger people who have specific disabilities. On a typical pay stub, the amounts for OASDI and EE are often combined under a single line item, commonly labeled as FICA, which stands for Federal Insurance Contributions Act.
Calculating OASDI/EE Withholding
The calculation for OASDI withholding involves a specific tax rate and an annual wage base limit. For 2025, the employee tax rate for OASDI is 6.2% of gross wages. This tax applies only to earnings up to the annual wage base limit, which is $176,100 for 2025.
For example, an employee earning $50,000 in 2025 would have 6.2% of their entire $50,000 wages withheld for OASDI. An employee earning $200,000 would only have 6.2% of the first $176,100 withheld for OASDI, totaling $10,918.20. The Medicare portion, or EE, is calculated differently. For 2025, the employee Medicare tax rate is 1.45% of all earned wages.
Unlike OASDI, there is no wage base limit for Medicare tax; all covered wages are subject to this 1.45% rate. Additionally, a 0.9% Additional Medicare Tax applies to wages exceeding certain thresholds. For 2025, this additional tax is levied on wages above $200,000 for single filers, $250,000 for married couples filing jointly, and $125,000 for married individuals filing separately. Employers are required to begin withholding this additional tax once an employee’s wages exceed $200,000 in a calendar year, regardless of the employee’s filing status.
The Purpose and Impact of Withholding
These withholdings operate on a “pay-as-you-go” system. The taxes collected from current workers are used to fund the benefits of current retirees, survivors, and individuals with disabilities. This structure ensures a continuous flow of funds to support those currently eligible for benefits, rather than holding individual accounts for future use.
These contributions also build an individual’s eligibility for future Social Security and Medicare benefits. As employees work and contribute through payroll deductions, they earn “credits” or “quarters of coverage.” The accumulation of these credits over a working career determines an individual’s eligibility for retirement, disability, and survivor benefits, as well as Medicare coverage upon reaching the qualifying age or condition.
OASDI/EE withholdings are mandatory federal taxes, not optional deductions. They reduce an employee’s net take-home pay, as these amounts are subtracted directly from gross wages. While these deductions impact immediate earnings, they support social programs that provide benefits for millions across the nation.