When Does OASDI Withholding Stop Each Year?

The Old-Age, Survivors, and Disability Insurance (OASDI) tax, more commonly known as Social Security tax, is a mandatory payroll deduction for most workers in the United States. It is one of two distinct taxes that fall under the Federal Insurance Contributions Act (FICA). For 2025, the employee tax rate for OASDI is 6.2% of their gross wages. This tax is matched by the employer, who also contributes 6.2%.

The Annual Wage Base Limit

The primary reason OASDI tax withholding stops during the year is an annual earnings limit set by the Social Security Administration. For 2025, this wage base limit is $176,100. An employee has the 6.2% OASDI tax withheld only until their year-to-date earnings from a single employer reach this amount, and the process resets each calendar year.

For example, an employee earning $200,000 annually pays OASDI tax on the first $176,100 of their income, amounting to a maximum contribution of $10,918.20 for 2025. After this threshold is met, their subsequent paychecks will not have this tax deducted.

It is important to distinguish the OASDI tax from the Medicare tax, the other FICA tax. Unlike Social Security, the 1.45% Medicare tax has no wage base limit and is withheld on all of an employee’s wages. High-income earners are also subject to an Additional Medicare Tax of 0.9%.

This extra tax applies to earnings over $200,000 for single individuals, $250,000 for married couples filing jointly, and $125,000 for married couples filing separately. Employers begin withholding this additional tax once an employee’s wages exceed $200,000.

Multiple Employer Scenarios

A complication arises when an employee works for more than one employer in a single year. Each employer is required to withhold OASDI tax on the wages they pay up to the annual wage base limit, without regard to what other employers may have paid the same employee. This can lead to a situation where the total OASDI tax withheld exceeds the legal maximum for the year.

Consider an individual who works two jobs, earning $100,000 from Employer A and $90,000 from Employer B during 2025. Since both amounts are below the $176,100 wage limit, each will withhold 6.2% from the entirety of the wages they paid.

Employer A would withhold $6,200, and Employer B would withhold $5,580. The employee’s total tax withheld is $11,780, but the maximum they should have paid is $10,918.20. This results in an overpayment of $861.80.

Claiming a Refund for Excess Withholding

An employee who has overpaid Social Security taxes due to working for multiple employers can have the excess amount refunded. This is accomplished by claiming a credit on their personal federal income tax return for the year the overpayment occurred.

The excess withholding is claimed as a refundable credit on Schedule 3 (Form 1040), on the line designated for “Excess social security and tier 1 RRTA tax withheld.” This credit is then applied toward the individual’s total tax liability, potentially increasing their refund or reducing the amount of tax they owe.

This credit is only available for overpayments resulting from multiple employers. If a single employer withholds too much Social Security tax, the employee cannot claim it on their tax return and must instead seek a reimbursement directly from that employer.

Exempt Wages and Employment

Beyond the wage base limit, certain types of employment and specific wage payments are exempt from OASDI tax withholding altogether. These situations result in no Social Security tax being taken out, regardless of the amount earned. Common examples include:

• Wages paid to certain student employees who work for the university or college they attend.
• Wages paid by a parent to their child who is under the age of 18 for work in a family-owned sole proprietorship or a partnership where each partner is a parent of the employee.
• Certain nonresident aliens, such as those on specific student or scholar visas, may be exempt from FICA taxes on their U.S. earnings.
• Members of particular religious groups who are conscientiously opposed to accepting public insurance benefits can also apply for an exemption from the tax.