What Is the OASDI Tax on My Paycheck?
Demystify the OASDI tax. Learn what this federal payroll deduction means for your earnings and its role in essential social programs.
Many individuals observe various deductions on their paychecks, and one common item is the Old-Age, Survivors, and Disability Insurance (OASDI) tax. This federal payroll tax directly impacts how much net pay an employee receives. Understanding this deduction helps clarify how earnings contribute to significant social insurance programs. This article explains what OASDI means, how it appears on a paycheck, the benefits it funds, and its relationship within the broader Federal Insurance Contributions Act (FICA) taxes.
What OASDI Means
OASDI represents a federal social insurance program providing financial security. This acronym breaks down into three components. The “Old-Age” portion funds retirement benefits for eligible workers who have contributed to the system, providing income during retirement.
The “Survivors” component offers financial support to eligible family members of a deceased worker. This can include spouses, minor children, or dependent parents, providing a safety net when a primary earner passes away.
“Disability Insurance” is the final part of OASDI, providing benefits to workers who become severely disabled and unable to engage in substantial gainful activity. This support helps individuals and their families cope with financial challenges. All three components collectively form a social safety net, funded through payroll contributions.
How OASDI Appears on Your Paycheck
The OASDI tax is a mandatory deduction from an employee’s gross wages, directly visible on a paycheck. For 2025, the employee contribution rate for OASDI is 6.2% of their taxable wages. Employers also contribute an equal 6.2% on behalf of each employee, bringing the total contribution to 12.4% of wages.
A significant aspect of the OASDI tax is the Social Security wage base limit. For 2025, this annual limit is $176,100. This means that any earnings above this threshold in a calendar year are not subject to the OASDI tax. For example, if an individual earns $200,000 in 2025, only the first $176,100 of their income will be taxed for OASDI purposes.
On a paycheck stub, this deduction might be labeled as “SS,” “Social Security Tax,” or “OASDI.” Employers are responsible for withholding this amount from employee wages and remitting it, along with their matching contribution, to the government.
The Benefits Funded by OASDI
OASDI taxes finance several types of benefits for millions of Americans. Retirement benefits are the most widely recognized, providing monthly income to eligible retired workers. These payments are calculated based on a worker’s lifetime earnings and the age they claim benefits. Individuals often plan their retirement around these anticipated Social Security payments.
Survivors benefits extend financial protection to the families of workers who have passed away. These benefits can support a deceased worker’s eligible spouse, children, or dependent parents. The program aims to replace a portion of the lost income.
Disability benefits provide income for workers who can no longer perform substantial work due to a severe medical condition. To qualify, individuals must meet specific medical and work history criteria established by the Social Security Administration. These benefits offer a financial lifeline during times of significant personal hardship. All these benefits are earned through an individual’s contributions over their working lifetime.
OASDI’s Role within FICA Taxes
OASDI is an integral component of the Federal Insurance Contributions Act (FICA) taxes, which are federal payroll taxes deducted from wages. FICA encompasses two primary federal taxes: Social Security and Medicare. The Social Security portion is what OASDI represents.
The other part of FICA is the Medicare tax, which funds the nation’s hospital insurance program. While both OASDI and Medicare taxes are combined as FICA on pay stubs, they serve distinct purposes. The OASDI tax funds the Old-Age, Survivors, and Disability Insurance programs, while the Medicare tax supports healthcare services for eligible individuals.
Employers and employees each pay a share of both the OASDI and Medicare taxes. Although collected together, these two components fund separate government programs designed to provide different forms of social protection.